Document:

exv10w2

    EXHIBIT 10.2

 

    THIS
    DOCUMENT CONSTITUTES PART OF A PROSPECTUS

    COVERING SECURITIES THAT HAVE BEEN REGISTERED

    UNDER THE SECURITIES ACT OF 1933, AS AMENDED

 

    

 

    Pro-Rata Restricted
    Performance Share Unit Award

 

    Fiscal 2011 —
    Overview

 

    July 16, 2010

 

    THIS OVERVIEW IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
    THE MEMORANDUM TO PARTICIPANTS IN THE POLO RALPH LAUREN
    CORPORATION 1997 LONG-TERM STOCK INCENTIVE PLAN AND TO THE PLAN
    ITSELF. COPIES OF THE MEMORANDUM AND THE PLAN ARE AVAILABLE FROM
    YOUR HUMAN RESOURCES DEPARTMENT.

 

    OVERVIEW

 

    The Polo Ralph Lauren Corporation (the “Company”) 1997
    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 one type of RPSU that
    has three-year, pro-rata vesting (“Pro-Rata RPSU”).

 

    A Pro-Rata RPSU award provides the participant with 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 based on achievement of performance
    goals and continued service.

 

    AWARD
    OBJECTIVES

 

    Objectives of RPSUs are to:

 

    1. Motivate achievement of performance goals by linking
    equity-based compensation to Company results

 

    2. Attract and retain individuals of superior talent

 

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

 

    PLAN
    ADMINISTRATION

 

    The Company’s Human Resources Department administers the
    program and 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 Pro-Rata
    RPSUs. To open a brokerage account, or for questions
    regarding your account and account transactions, please contact
    Merrill Lynch at
    (609) 818-8908
    or (877) 765-POLO (7656).

 

    The Company’s Board of Directors reserves the right to
    amend, modify or terminate the Plan at any time. No such
    amendment to the Plan would adversely affect any Pro-Rata RPSU
    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.

 

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

 

    ELIGIBILITY
    FOR GRANT

 

    Equity awards, including Pro-Rata RPSU 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 year, or guarantee the type or the size of any grant, if a
    grant is made. 

    

    2

 

    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.

 

    VALUE OF
    RESTRICTED PERFORMANCE SHARE UNITS

 

    If Threshold or better performance against the fiscal year goal
    is achieved, Pro-Rata RPSUs can provide participants with
    ownership of the Company’s Class A Common Stock and
    offer the opportunity to recognize value in the following ways:

 

			
	 	    • 
	
    Receive shares of the Company’s Class A Common Stock
    without paying any exercise price

	 
	 	    • 
	
    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 on the following page illustrates the opportunity
    for gains in the Company’s Class A Common Stock price
    at different share prices.

 

    EXAMPLE:
    POTENTIAL VALUE

    Award of 300 Pro-Rata RPSUs

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
 
	
 
	
 
	
 
	
    Grant Price
	
 
	
    If Stock Price Reaches:

	
 
	
 
	
    # of Shares
	
 
	
    $75
	
 
	
    $85
	
 
	
    $90
	
 
	
    $95
	
 
	
    $100

	 

	

    Value (assumes shares vest)

	
 
	
 
	
    300
	
 
	
 
	
    $
	
    22,500
	
 
	
 
	
    $
	
    25,500
	
 
	
 
	
    $
	
    27,000
	
 
	
 
	
    $
	
    28,500
	
 
	
 
	
    $
	
    30,000
	
 

 

 

		
	    Note: 	
    Value is before tax and a portion of the shares would be
    withheld in satisfaction of withholding taxes 

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

 

    GRANT
    AMOUNT AND AWARD VESTING

 

    The number of units in a Pro-Rata RPSU award is set as of the
    grant date. The award will vest in equal, annual installments
    (tranches) over a three-year period. One third of the Pro-Rata
    RPSUs granted in fiscal 2011 will vest each year after the end
    of fiscal 2011, fiscal 2012 and fiscal 2013, subject to
    achievement of the applicable Company performance goal in the
    first year and the participant having continuous service through
    each vesting date (see examples on page 6).

 

    PERFORMANCE
    MEASURES FOR RPSU VESTING

 

    The Company’s performance measure(s) are established by the
    Compensation Committee at the time of the grant 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

	 
	 	    • 
	
    Net Operating Profit

	 
	 	    • 
	
    Net Revenue or Net Revenue Growth

	 
	 	    • 
	
    Gross Profit or Gross Profit Growth

	 
	 	    • 
	
    Return on Assets

	 
	 	    • 
	
    Other measures of economic value added or other “value
    creation” metrics

 

    Once a Pro-Rata RPSU award is granted, the performance
    measure(s), vesting and payout schedule will not be modified
    during the term for that particular award. The Compensation
    Committee may only change the performance measure(s) and
    associated goals, and the vesting and payout schedule for any
    future Pro-Rata RPSU awards

    

    3

 

    not yet granted. In calculating performance against the goal for
    any fiscal year, the Company’s results may be adjusted to
    exclude effects of certain events and transactions as specified
    by the Compensation Committee at the time of grant.

 

    Fiscal
    2011 Grant Performance Measure and Performance Level for
    Vesting

 

    The performance measure for fiscal 2011 Pro-Rata RPSU awards is
    Corporate Net Income Before Tax (NIBT). This performance measure
    is also used for bonus awards under the Executive Incentive Plan
    (EIP).

 

    The performance level that must be achieved for Pro-Rata RPSU
    vesting is NIBT at Threshold (80% of Target) or
    better and is communicated in your on-line Total Rewards
    Statement.

 

    FISCAL
    2011 VESTING SCHEDULE

 

    All three tranches of the fiscal 2011 Pro-Rata RPSUs are deemed
    earned and available for vesting based on achievement of the
    fiscal 2011 performance goal as follows:

 

			
	 	    • 
	
    One-third would vest and be paid out after the end of fiscal
    2011 based on achievement of the fiscal 2011 Company performance
    goal and on the participant’s continuous service with the
    Company from the grant date to the vesting date

	 
	 	    • 
	
    One-third would vest and be paid out after the end of fiscal
    2012 (participant must have continuous service with the Company
    from the grant date to the vesting date)

	 
	 	    • 
	
    One-third would vest and be paid out after the end of fiscal
    2013 (participant must have continuous service with the Company
    from the grant date to the vesting date)

 

    All three
    tranches of the fiscal 2011 Pro-Rata RPSU award will be
    forfeited if the fiscal 2011

    performance goal (Corporate NIBT at Threshold or better) is not
    achieved.

 

    Vesting of the Pro-Rata RPSUs and the distribution of the
    Company’s Class A Common Stock will occur as soon as
    administratively practical following certification of
    achievement of the Company’s performance goals by the
    Compensation Committee. The vesting date typically occurs in
    June of each year, but may be earlier or later. Once the
    Pro-Rata RPSUs are vested and distributed as Company
    Class A Common Stock, the participant owns the shares and
    as a shareholder, will have voting rights and will receive
    dividends on such shares. Prior to the vesting date, dividends
    are not earned on Pro-Rata RPSUs and the participant does not
    have voting rights.

 

    VESTING
    EXAMPLES

 

    The examples on the following page illustrate how a Pro-Rata
    RPSU award granted in fiscal 2011 would vest, in equal
    installments, over three fiscal years. Vesting is subject to
    achievement of FY11 performance goal (Corporate NIBT at
    Threshold or better) and the participant’s continuous
    service with the Company from the grant date to each vesting
    date.

 

    EXAMPLE
    1: 300 FY11 Pro-Rata RPSUs (Granted July 2010)

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
 
	
 
	
 
	
 
	
 
	
 
	
    # Pro-Rata RPSUs

    
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
    Vested and

    
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
    Distributed if

    
	
 
	
 

	
 
	
 
	
    # Pro-Rata RPSUs

    
	
 
	
    Performance

    
	
 
	
    Vesting

    
	
 
	
    Vesting

    

	
    Performance Period
	
 
	
    Eligible to Vest
	
 
	
    Level(1)

	
 
	
    Criteria
    Met(2)

	
 
	
    Date(3)

	 

	

    FY11

	
 
	
 
	
    100
	
 
	
 
	
 
	
    Threshold
	
 
	
 
	
 
	
    100
	
 
	
 
	
 
	
    June 2011
	
 

	

    FY12

	
 
	
 
	
    100
	
 
	
 
	
 
	
    N/A
	
 
	
 
	
 
	
    100
	
 
	
 
	
 
	
    June 2012
	
 

	

    FY13

	
 
	
 
	
    100
	
 
	
 
	
 
	
    N/A
	
 
	
 
	
 
	
    100
	
 
	
 
	
 
	
    June 2013
	
 

	

    Total

	
 
	
 
	
    300
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
    300
	
 
	
 
	
 
	
 
	
 

    

    4

 

 

			
	
    (1)		
    Threshold refers to attaining at least 80% of the fiscal 2011
    Corporate NIBT goal. If Threshold or better performance is not
    achieved in the first year, all three tranches will be
    forfeited
	 
	
    (2)		
    Vesting criteria includes a minimum of Threshold performance
    and the participant’s continuous service with the Company
    from grant date
	 
	
    (3)		
    The vesting date typically occurs in June of each year, but
    may be earlier or later

 

    Additionally, depending on any previous grants received, more
    than one Pro-Rata RPSU award may be eligible to vest each year,
    as shown below:

 

    EXAMPLE
    2: MULTIPLE PRIOR GRANTS WITH SHARES ELIGIBLE TO
    VEST

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
 
	
 
	
    # of Pro-Rata

    
	
 
	
    1/3 of Pro-Rata RPSUs Eligible to
    Vest(1)

	
    Year Granted
	
 
	
    RPSUs Granted
	
 
	
    June 2011
	
 
	
    June 2012
	
 
	
    June 2013

	 

	

    FY11 (July 2010)

	
 
	
 
	
    300
	
 
	
 
	
 
	
    100
	
 
	
 
	
 
	
    100
	
 
	
 
	
 
	
    100
	
 

	

    FY10 (July 2009)

	
 
	
 
	
    270
	
 
	
 
	
 
	
    90
	
 
	
 
	
 
	
    90
	
 
	
 
	
 
	
 
	
 

	

    FY09 (July 2008)

	
 
	
 
	
    300
	
 
	
 
	
 
	
    100
	
 
	
 
	
 
	
    —
	
 
	
 
	
 
	
 
	
 

	

    Total Pro-Rata RPSUs

	
 
	
 
	
    870
	
 
	
 
	
 
	
    290
	
 
	
 
	
 
	
    190
	
 
	
 
	
 
	
    100
	
 

 

 

			
	
    (1)		
    Assumes that goal measures, performance and service with the
    Company, applicable to each tranche of each grant are met. The
    vesting date typically occurs in June of each year, but may be
    earlier or later.

 

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

 

    Shares received from the vesting of a Pro-Rata RPSU award may be
    sold subject to the Company’s trading restrictions as set
    forth in the Company’s Securities Trading policy beginning
    on page 8. 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 Pro-Rata RPSUs have vested and you receive shares of the
    Company’s Class A Common Stock from the vesting of a
    particular Pro-Rata RPSU award, you retain all rights to those
    shares, regardless of employment status with the Company.

    

    5

 

    IF YOU
    LEAVE THE COMPANY

 

    This chart explains what happens to RPSUs if you leave Polo
    Ralph Lauren.

 

	 	 	 
	
    Event
	
 
	
    Status of Awards

	 

	

Retirement at (Age 65)(1)

Early Retirement (Age 55 through age 64 with 7 or more years of service(1))

Disability

Death

	
 
	

    •   In the fiscal year of retirement,
    disability or death, a
    pro-rated(2)

    number of the Pro-Rata RPSUs scheduled to vest that fiscal year
    will be determined and will be eligible to vest at their normal
    vesting date. Vesting is contingent upon achievement of the
    performance goal established for the performance period. Any
    pro-rated RPSUs that do not meet the vesting requirements will
    be forfeited.

	
 
	
 
	
 

	
 
	
 
	

    •   All remaining Pro-Rata RPSUs (for
    that fiscal year and any other fiscal years remaining) are
    forfeited

	
    Voluntary Resignation
	
 
	

    •   All unvested Pro-Rata RPSUs are
    forfeited

	
 
	
 
	
 

	

    Involuntary Termination (without cause)

	
 
	

    •   All unvested Pro-Rata RPSUs are
    forfeited

	
 
	
 
	
 

	
    Dismissal for Cause (as defined by the Company and if
    applicable, the participant’s employment agreement)
	
 
	

    •   All vested Pro-Rata RPSUs not yet
    distributed into shares of the Company’s Class A Common
    Stock are forfeited

    •   All unvested Pro-Rata RPSUs are
    forfeited

 

 

			
	
    (1)		
    Pro-rated RPSUs vest only if retirement date is on or
    after the last day of the first quarter of the fiscal
    year
	 
	
    (2)		
    The pro-rated portion is determined by taking the number of
    months worked in the fiscal year, dividing by 12 then multipying
    by the number of Pro-Rata RPSUs scheduled to vest for that
    fiscal year

 

    SECURITIES
    TRADING POLICY

 

    INSIDER
    TRADING

 

    As provided in the Polo 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. 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 stock.

 

    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 Polo
    Ralph Lauren and its Subsidiaries and Affilitates, 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

    

    6

 

    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 Pro-Rata 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, Legal and
    Human Resources departments must clear all trades with the
    Corporate Counsel, whether they occur within a blackout period
    or not.

 

    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 Pro-Rata 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

 

    All
    transactions in Company stock (purchases, sales, transfers,
    etc.) by members of the Board of

    Directors, Officers (any employee who is a Vice President or
    above), and personnel in the Finance,

    Legal and Human Resources departments must be cleared by the
    Corporate Counsel.

    If you contemplate a transaction, please provide a written
    request via
    e-mail to
    the Corporate

    Counsel specifying the number of shares that you wish to
    purchase or sell before contacting

    Merrill Lynch 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 Pro-Rata RPSU
    Overview and either the Plan or the provision under which the
    Plan is administered and governed 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.

    

    7exv10w3

    EXHIBIT 10.3

 

    THIS
    DOCUMENT CONSTITUTES PART OF A PROSPECTUS

    COVERING SECURITIES THAT HAVE BEEN REGISTERED

    UNDER THE SECURITIES ACT OF 1933, AS AMENDED

 

    

    Stock
    Option

    Fiscal 2011 —
    Overview

 

    July 16, 2010

 

    THIS OVERVIEW IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
    THE MEMORANDUM TO PARTICIPANTS IN THE POLO RALPH LAUREN
    CORPORATION 1997 LONG-TERM STOCK INCENTIVE PLAN AND TO THE PLAN
    ITSELF. COPIES OF THE MEMORANDUM AND THE PLAN ARE AVAILABLE FROM
    YOUR HUMAN RESOURCES DEPARTMENT.

 

    OVERVIEW

 

    The Polo Ralph Lauren Corporation (the “Company”) 1997
    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.

 

    This Overview explains the Company’s current Stock Option
    program under the Plan, describes its benefits to you as a
    participant, and outlines the various steps needed to be taken
    in regard to your Stock Option grant.

 

			
	 	    • 
	
    A Stock Option granted under the Plan provides a participant the
    opportunity to purchase, within a specified period of time, a
    stated number of shares of the Company’s Class A
    Common Stock (traded on the New York Stock Exchange under the
    symbol RL) at a fixed price (the option grant price)

	 
	 	    • 
	
    The option grant price equals the Fair Market Value (the average
    of the high and the low trading prices) of a share of the
    Company’s Class A Common Stock on the grant date

	 
	 	    • 
	
    Stock Options increase in value when the price of the
    Company’s Class A Common stock moves above the option
    grant price

	 
	 	    • 
	
    Unlike actual share ownership, Stock Options do not provide
    voting rights or earn dividends

 

    AWARD
    OBJECTIVES

 

    Objectives of the Stock Option program are to:

 

    1. Motivate key contributors to continuously improve the
    Company’s performance, which should ultimately result in
    increased stock value

 

    2. Attract and retain individuals of superior talent

 

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

 

    PLAN
    ADMINISTRATION

 

    The Company’s Human Resources Department administers the
    program and Merrill Lynch is the recordkeeper. Participants
    must have an open brokerage account at Merrill Lynch in order to
    exercise vested stock options. To open a brokerage account,
    or for questions regarding your account and account
    transactions, please contact Merrill Lynch at
    (609) 818-8908
    or (877) 765-POLO (7656).

 

    The Company’s Board of Directors reserves the right to
    amend, modify or terminate the Plan at any time. No such
    amendment to the Plan would adversely affect any stock options
    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.

 

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

 

    ELIGIBILITY
    FOR STOCK OPTION GRANT

 

    Equity awards, including Stock Option grants, may be made
    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 fiscal
    year for which the grant is being made.

    

    2

 

    Guidelines have been established for the number and types of
    equity awards 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 these guidelines do not constitute a
    guarantee that any specific individual will receive an equity
    award in any given year, or guarantee the type 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.

 

    OPTION
    PRICE

 

    The option grant price, which is equal to the Fair Market Value
    on the date of grant, is provided in your on-line Total Rewards
    statement and on your Merrill Lynch statement. Though the stock
    price may fluctuate over the term of the option, the option
    grant price does not change, except in the event of a stock
    split or other similar event.

 

    VESTING
    PERIOD AND EXPIRATION OF OPTIONS

 

    Stock Options vest in three equal, annual installments beginning
    on the first anniversary of the grant, and are 100% vested after
    three years. Vested Stock Options must be exercised by the end
    of their “contractual term.” Currently, Stock Options
    have a seven-year contractual term. Stock Options granted prior
    to June 2006 have a ten-year contractual term.

 

    VESTING/EXPIRATION
    SCHEDULE(1)

 

     

 

    Although participants have the right to exercise Stock Options
    once they have vested, they may choose to hold vested options in
    anticipation of future gains from an increase in the stock price.

 

    VALUE OF
    STOCK OPTIONS

 

    Stock Options increase in value when the market price of the
    Company’s Class A Common Stock rises above the Stock
    Option grant price. Upon exercise, the difference between the
    market price and the option grant price is considered the gain
    received from the exercise.

 

    This example demonstrates how the value of the award increases
    as stock price increases.

 

 

     (1) Vesting

    contingent upon continuous service to the respective vesting
    dates. In addition, option expiration dates may be accelerated
    based on certain employment events such as Retirement. Refer to
    the If You Leave The Company chart on page 7.

    

    3

 

    EXAMPLE:
    POTENTIAL VALUE

    

 

    AWARD OF
    1,000 STOCK OPTIONS

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
 
	
 
	
    Grant Price
	
 
	
    If Future Stock Price Reaches:

	
 
	
 
	
    $75
	
 
	
    $85
	
 
	
    $90
	
 
	
    $100

	 

	

    Gain per Share (assumes all shares granted have vested)

	
 
	
    $
	
    0
	
 
	
 
	
    $
	
    10
	
 
	
 
	
    $
	
    15
	
 
	
 
	
    $
	
    25
	
 

	

    Gain per Share x 1000 Shares

	
 
	
    $
	
    0
	
 
	
 
	
    $
	
    10,000
	
 
	
 
	
    $
	
    15,000
	
 
	
 
	
    $
	
    25,000
	
 

 

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

 

    STOCK
    OPTION EXERCISE

 

    All Stock Option exercise transactions and recordkeeping are
    performed for the Company by Merrill Lynch. Participants must
    have an open brokerage account at Merrill Lynch in order to
    exercise Stock Options.

 

    The exercise of vested Stock Options has tax consequences in
    most jurisdictions. Contact your financial advisor for important
    information about how Stock Option exercise impacts you.

 

    For employees at the Vice President level or above
    (“Officers”) and all employees in the Finance, Legal
    and Human Resources 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. If contemplating a transaction, please
    provide a written request via
    e-mail to
    the Corporate Counsel, specifying the number of Stock Options
    you wish to exercise
    and/or the
    number of shares you wish to purchase or sell before
    contacting Merrill Lynch or taking any other step to initiate a
    transaction.

 

			
	 	    • 
	
    Once you receive pre-clearance from the Corporate Counsel,
    Officers and all employees in the Finance Legal and Human
    Resources departments must indicate your intent to exercise by
    contacting the Executive Advisory Team at Merrill Lynch at
    (800) 937-0526
    between 8:30 a.m. and 6:00 p.m. (ET) on any day the
    New York Stock Exchange is open. Outside the U.S., Puerto Rico
    or Canada, call
    (212) 236-5574.

	 
	 	    • 
	
    All transactions in the Company’s securities, including
    cash or cashless exercise of Stock Options and sales and
    purchases of the Company’s Class A Common Stock as
    described below, are prohibited during a Company trading
    blackout period as defined in the Company’s Securities
    Trading policy which is included in this Overview beginning on
    page 8.

 

    METHODS
    OF EXERCISING STOCK OPTION

 

    When exercising Stock Options, participants purchase shares of
    the Company’s Class A Common Stock at the grant price
    set at the time the option was granted. Stock Options may be
    exercised in three ways:

 

    1. Cash Exercise: Paying cash for the shares
    exercised

 

    2. Cashless Exercise: Exercising a number of
    Stock Options and paying for the exercise by simultaneously
    selling the stock and retaining the net gain

 

    3. Stock-for-Stock
    Exchange: Delivering shares of the Company’s
    Class A Common Stock owned for at least six months and that
    are not subject to any pledge or other security interest, to pay
    for the shares exercised

 

    SALE OF
    SHARES SUBSEQUENT TO EXERCISE

 

    When shares acquired from the exercise of Stock Options are sold
    at a later date, participants benefit from any price
    appreciation that may have occurred since the date the shares
    were acquired. As noted above, shares realized from a Stock
    Option exercise may be sold at any time, except when such sale
    would be considered insider trading or during blackout periods
    as described in more detail by the Company’s Securities
    Trading policy beginning on page 8.

    

    4

 

    IF YOU
    LEAVE THE COMPANY

 

    This chart explains what happens to your Stock Options if you
    leave Polo Ralph Lauren.

 

	 	 	 	 	 
	
    Event
	
 
	
    Vested Options
	
 
	
    Unvested Options

	 

	
 
	
 
	
 
	
 
	
 

	
    Normal Retirement (Age 65)
	
 
	

    •   Up to three years to exercise any vested
    stock options after retirement, provided they do not expire
    sooner. If not exercised within the three years following
    retirement, the options expire.

	
 
	

    •   All unvested stock options are
    forfeited

	
 
	
 
	
 
	
 
	
 

	
    Early Retirement (Age 55 through Age 64, with seven or
    more years of service)
	
 
	

    •   Up to one year to exercise any vested
    stock options after early retirement, provided they do not
    expire sooner. If not exercised within one year following
    retirement, the options expire. However, any vested options
    are forfeited if a participant goes to work for a
    competitor(1).

	
 
	

    •   All unvested stock options are
    forfeited

	
 
	
 
	
 
	
 
	
 

	

    Disability

	
 
	

    •   Up to three years to exercise any vested
    stock options after long-term disability begins, provided they
    do not expire sooner. The options expire if not exercised
    within the three years following onset of LTD.

	
 
	

    •   Options continue to vest according to
    the original vesting schedule (1/3 each year for
    3 years). If vested options are not exercised within
    three years of the date of disability, the options expire.

	
 
	
 
	
 
	
 
	
 

	

    Death

	
 
	

    •   The optionee’s estate has up to
    three years to exercise any vested stock options, provided they
    do not expire sooner. Options expire if not exercised within
    the three years.

	
 
	

    •   Options continue to vest according to
    the original vesting schedule (1/3 each year for 3 years).
    If vested options are not exercised within three years of the
    date of death, the options expire.

	
 
	
 
	
 
	
 
	
 

	
    Dismissal for Cause (as defined by the Company and if
    applicable, the participant’s employment agreement), or
    Voluntary Resignation
	
 
	

    •   All vested stock options are
    forfeited as of the date of termination

	
 
	

    •   All unvested stock options are
    forfeited

	
 
	
 
	
 
	
 
	
 

	

    Involuntary
    Termination(2)

	
 
	

    •   Up to three months to exercise any
    vested stock options, provided they do not expire sooner

	
 
	

    •   All unvested stock options are
    forfeited

 

 

			
	
    (1)		
    For purposes hereof, a “competitor” shall mean any
    business engaged in the designing, marketing or distribution of
    premium lifestyle products, including but not limited to
    apparel, home, accessories and fragrance products, which
    competes in any material respect with the Company or any of its
    Subsidiaries, Affiliates or Licensees
	 
	
    (2)		
    Refers to termination by Polo without cause, and when the
    employee has executed a general release with terms satisfactory
    to the Company

    

    5

 

 

    SECURITIES
    TRADING POLICY

 

    INSIDER
    TRADING

 

    As provided in the Polo 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. 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 the Company’s Common Stock —
    either positively or negatively — or affect a
    person’s decision to buy, hold or sell securities. The
    prohibition on insider trading applies to all transactions in
    the Company’s securities, including cash exercises,
    cashless exercises of Stock Options and sales and purchases of
    the Company’s stock.

 

    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 Polo
    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
    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, cashless exercise of Stock Options and
    cash exercises of Stock Options. 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, Legal and
    Human Resources departments must clear all trades with the
    Corporate Counsel, whether they occur within a blackout period
    or not.

 

    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

    

    6

 

			
	 	
	
    extended this prohibition to all employees. The receipt of
    shares pursuant to the exercise of Stock Options 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

 

    All transactions in Company stock (purchases, sales,
    transfers, etc.) by members of the Board of Directors, Officers
    (any employee who is a Vice President or above), and all
    personnel in the Finance, Legal and Human Resources departments
    must be pre-cleared by the Corporate Counsel. If you contemplate
    a transaction, please provide a written request via
    e-mail to
    the Corporate Counsel, specifying the number of shares that you
    wish to purchase or sell before contacting Merrill Lynch
    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 Stock Option
    Overview, and either the terms of the Plan or the provisions
    under which the Plan is administered and governed 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.

    

    7

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