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Exhibit 10.43  

 
 

SEARS HOLDINGS CORPORATION
  2006 LONG-TERM INCENTIVE PROGRAM (LTIP)    
    

SECTION 1

GENERAL  

        1.1.    Purpose.    The Sears Holdings Corporation 2006 Long-Term Incentive Program (the "LTIP") is a
performance-based program. The LTIP is designed to motivate the salaried employees of Sears Holdings Corporation (the "Company"), Sears Holdings Management Corporation, Sears, Roebuck and Co.,
Kmart Holding Corporation and their Subsidiaries, to achieve significant, lasting change that successfully positions the Company for future growth. Performance goals under the LTIP align Participants'
financial incentives with the financial goals of the Company. Awards under the LTIP are designed to vary commensurately with achieved performance. Both (i) Awards structured to satisfy the
requirements for "performance-based compensation" outlined in regulations issued under Section 162(m) of the Internal Revenue Code ("Code Section 162(m)"), and (ii) Awards not so
structured, may be issued hereunder. 

        1.2.    Operation, Administration, and Definitions.    The operation and administration of the LTIP, including the
Awards made under the LTIP, shall be subject to the provisions of Section 6 (relating to operation and administration). Capitalized terms in the LTIP shall be defined as set forth in the LTIP
(including the definitional provisions of Section 9). The LTIP is established under, and constitutes a part of, the Sears Holdings Corporation Umbrella Incentive Program (the "UIP"). All Awards
hereunder are contingent on shareholder approval of the UIP, as provided in subsection 3.1. 

SECTION 2

PARTICIPATION  

        2.1.    Eligible Employee.    The term "Eligible Employee" means those salaried employees of the Company or a
Subsidiary who are designated as Eligible Employees by the "Committee" (as such term is defined in subsection 6.2 and further described in Section 7). Subject to the terms and conditions of the
LTIP, the Committee shall determine and designate, from time to time, from among the Eligible Employees, those persons who shall be granted one or more Awards under the LTIP, and thereby become
"Participants" in the LTIP. 

        2.2.    New Hires.    The Committee may designate as Participants those employees whom the Committee determines have
been newly hired or promoted into the group of Eligible Employees, provided that, if Awards to such individuals are intended to meet the requirements of Code Section 162(m), the terms and
conditions of such Awards shall be subject to such adjustments as the Committee deems necessary or desirable to qualify such Awards as "performance-based compensation" for purposes of Code
Section 162(m). 

SECTION 3

CASH INCENTIVE AWARDS  

        3.1.    Target Cash Incentive Awards.    At one or more meetings of the Committee after February 1, 2006, the
Committee may award "Target Cash Incentive Awards" (as such term is defined in subsection 3.1(a) below) to each Participant designated by the Committee at such meeting, in an amount determined
by the Committee in its sole discretion. In connection with such Awards, the Committee shall establish "Target LTIP EBITDA", "Threshold LTIP EBITDA" and "Superior LTIP EBITDA" (each as defined in
subsection 3.3 below), provided, however, that Threshold LTIP EBITDA and Superior LTIP EBITDA shall each be expressed as a percentage of Target LTIP EBITDA. All Awards hereunder shall be
contingent on shareholder approval of the UIP in accordance with Code Section 162(m) and the regulations promulgated thereunder, and no amount shall be paid under any 

Award,
unless and until shareholder approval of the UIP has been obtained in accordance with Code Section 162(m) and the regulations thereunder. 

        (a)   A
Target Cash Incentive Award shall, at the date of grant, consist of a commitment by the Company to distribute, at the time specified in, and in accordance with the
provisions of, Section 4, below, as applicable, an amount equal to the Participant's Target Cash Incentive Award multiplied by the applicable Award Multiple set forth in subsection 3.4, below,
subject to approval of the final award amount by the Committee (the "Cash Incentive Award") and to the provisions of subsection 6.3. 

        (b)   A
Cash Incentive Award shall generally be satisfied by a distribution in cash to the Participant, provided, however, that, if permitted by the Committee, a Participant
may elect, by such deadline as specified under uniform and nondiscriminatory rules established by the Committee, to receive, in lieu of cash and in full satisfaction of such Cash Incentive Award, the
number of shares of Company common stock ("Stock") equal (i) to the cash amount described at paragraph (a) of this subsection 3.1, divided by (ii) the Fair Market value of
a share of Stock as of the day immediately preceding the date of distribution, provided that issuance of any shares of Stock in accordance with this subsection 3.1(b) shall be contingent on the
availability of shares of Stock under any shareholder-approved plan of the Company providing for the issuance of Stock in satisfaction of the Awards hereunder (which in no event shall be an employee
stock purchase plan). 

        3.2.    Performance Period.    The "Performance Period" shall be the Company's 2006, 2007 and 2008 Fiscal Years
(provided that, in the case of an employee who is newly hired or promoted into the group of Eligible Employees after the first day of the Company's 2006 Fiscal Year, the Performance Period shall be
such shorter period as established by the Committee, subject to the requirements of Code Section 162(m), if applicable. The amount of the Cash Incentive Award shall be determined at the
completion of the Performance Period in accordance with subsection 3.1, above, and subsection 4.1 below. 

        3.3.    "LTIP EBITDA."    

        (a)    LTIP EBITDA.    Subject to adjustment, if any, in accordance with paragraph (e) of this
subsection 3.3, "LTIP EBITDA" refers to total earnings of the Company and its affiliates and its predecessors, other than Sears Canada (referred to as the "Domestic Company") for the
Performance Period, determined before interest, taxes, depreciation and amortization, and excluding the following items: all litigation or claim judgments or settlements, the effect of purchase
accounting and changes in accounting methods; gains, losses and costs associated with acquisitions, divestitures and store closures; integration costs that are disclosed as merger related; and
bankruptcy-related matters of the predecessor company. 

        (b)    Target LTIP EBITDA.    Subject to adjustment, if any, in paragraph (e), "Target LTIP EBITDA" refers to
the target level of LTIP EBITDA, for the Performance Period, established by the Committee in accordance with subsection 3.1, above. 

        (c)    Threshold LTIP EBITDA.    Subject to adjustment, if any, in paragraph (e), "Threshold LTIP EBITDA"
refers to a level of LTIP EBITDA, for the Performance Period, established by the Committee, which
shall be equal 90 percent of Target LTIP EBITDA and, if exactly achieved, shall generate an AWARD Multiple (described in subsection 3.4, below) of 60 percent. 

        (d)    Superior LTIP EBITDA.    Subject to adjustment, if any, in paragraph (e), "Superior LTIP EBITDA" refers
to a level of LTIP EBITDA, for the Performance Period, established by the Committee, which shall equal 125 percent of Target LTIP EBITDA, and, if achieved, shall generate an Award Multiple
(described in subsection 3.4, below) of 200 percent. 

        (e)    Adjustments to Target LTIP EBITDA, Threshold LTIP EBITDA and Superior LTIP EBITDA.    The LTIP EBITDA incentive
targets contemplate that the Domestic Company remains approximately the same size over the period of the LTIP. If, after February 1, 2006, the Domestic 

Company
acquires or divests itself of assets or an entity that has associated EBITDA (measured using the same principles as those described in subsection 3.3(a)) in its last full fiscal year prior to
the acquisition or divestiture of greater than or equal to $250,000,000, Target LTIP EBITDA will be increased or decreased, as applicable, by such prior full fiscal year's EBITDA associated with such
entity or assets. 

        3.4.    "Award Multiple."    The Award Multiple shall be as outlined below: 

        (a)   if
LTIP EBITDA is 100% of Target LTIP EBITDA, the Award Multiple shall be 100%; 

        (b)   if
LTIP EBITDA is equal to Threshold LTIP EBITDA, the Award Multiple shall be 60%; 

        (c)   if
LTIP EBITDA is greater than Threshold LTIP EBITDA, but less than Target LTIP EBITDA, the Award Multiple shall be a whole percentage between 60% and 100%, determined
by interpolation on a straight line basis relative to such LTIP EBITDA, Threshold LTIP EBITDA and Target LTIP EBITDA amounts, and rounded down to the nearest whole percentage; 

        (d)   if
LTIP EBITDA is less than Threshold LTIP EBITDA, the Award Multiple shall be 0; 

        (e)   if
LTIP EBITDA is greater than Target LTIP EBITDA, but less than Superior LTIP EBITDA, the Award Multiple shall be a whole percentage between 100% and 200%, determined
by interpolation on
a straight line basis relative to such LTIP EBITDA, Target LTIP EBITDA and Superior LTIP EBITDA amounts, and rounded down to the nearest whole percentage; and 

        (f)    if
LTIP EBITDA is greater than or equal to Superior LTIP EBITDA, the Award Multiple shall be 200%. 

        3.5.    Limitation on Individual Awards.    Notwithstanding anything herein to the contrary, the total Cash Incentive
Award paid to any Participant pursuant to the LTIP shall in no event exceed $15 million. 

        3.6.    Limitations.    All Cash Incentive Awards awarded under the LTIP (and any Stock or cash otherwise
distributable pursuant thereto) are subject to the provisions of Sections 4, 5 and 6. 

SECTION 4

DISTRIBUTION  

        4.1.    General.    Subject to Sections 5 and 6, the shares of Stock or the cash that result from the payout formula
described at Section 3 shall be distributed, in a single lump sum, as soon as practicable after the first Committee meeting after the LTIP EBITDA results for the Company's 2008 Fiscal Year are
available to the Committee. Notwithstanding anything herein to the contrary, no distribution shall be made hereunder until after the Committee has certified the attainment of the performance goals and
the amount to be paid to each Participant. The date as of which payment is made in accordance with this subsection 4.1 is referred to herein as the "payment date." 

        4.2.    Termination and Other Provisions.    All distributions are subject to the provisions of Sections 5 and
6, below. 

SECTION 5

TERMINATION  

        5.1.  The
effect of termination of employment on a Participant's right to receive a Cash Incentive Award (whether payable in cash or Stock) depends both on the reason for the
termination and the point in the Performance Period that the termination occurs, as described below. 

        (a)   Voluntary Termination or Involuntary Termination with Cause.    In the event that a Participant voluntarily
terminates employment (unless the Participant retires (in accordance with the definition of "retires" or "retirement" contained in the written Company Human Resources Policy as in effect from time to
time, or with written Committee consent)), or is involuntarily terminated for "poor performance" or with "Cause" (each as defined in the Participant's Executive 

Severance/Noncompete
Agreement or other employment contract, or if such term does not appear therein, or, if the Participant has no Executive Severance/Noncompete Agreement or other employment
contract, then as defined in Section 9) prior to the payment date of his or her Award, such Participant shall forfeit all of his or her Award. 

        (b)   Retirement,
Disability or Involuntary Termination without Cause. In the event that, prior to the payment date of his or her Award, a Participant (i) retires (as
defined in subsection 5.1(a) above), (ii) suffers a permanent and total disability (as defined in the written Company Human Resources Policy) while employed by the Company or a Subsidiary, or
(iii) is involuntarily terminated on account of job elimination (rather than poor performance) and without Cause (as defined in subsection 5.1(a) above), subject to Section 6, below,
such individual shall be entitled to a distribution in an amount equal to the Cash Incentive Award, if any, that would otherwise be payable to the Participant under subsection 3.1, above,
pro-rated through the date of termination in accordance with subsection 5.1(d) below; provided, however, that in no event shall a Participant receive any payment hereunder unless
(A) LTIP EBITDA for the period from the inception of the Performance Period through the last completed full month that occurs on or preceding the Participant's date of termination is equal to
or greater than Target LTIP EBITDA (pro-rated in accordance with subsection 5.1(d) below), (B) LTIP EBITDA is equal to or greater than Target LTIP EBITDA for the Performance Period,
and (C) as of his date of termination, the Participant had been employed by one or more of the Company, Sears Holdings Management Corporation, Sears, Roebuck and Co., Kmart Holding Corporation
or one of their Subsidiaries, for at least 12 months of the Performance Period applicable to such individual. 

        (c)   Death.
In the event that a Participant dies while employed by the Company or a Subsidiary and prior to the payment date for his or her Award, his or her Target Cash
Incentive Award shall be prorated through the date of death, in accordance with subsection 5.1(d) below, and, subject to Section 6, below, his or her estate shall be entitled to receive a Cash
Incentive Award, equal to his or her prorated Target Cash Incentive Award and payable in cash, provided, however, that in no event shall a payment be made with respect to a deceased Participant
hereunder unless as of his date of termination he had been employed by one or more of the Company, Sears Holdings Management Corporation, Sears, Roebuck and Co., Kmart Holding Corporation or one of
their Subsidiaries, for at least 12 months. 

        (d)   All
pro rations of the Cash Incentive Award, the Target Cash Incentive Award, or Target LTIP EBITDA, as applicable, under this Section 5 are based on a fraction,
the numerator of which is the number of full months during the Performance Period in which the Participant was employed by the
Company or any Subsidiary, and the denominator of which is the full number of months in the Performance Period. 

SECTION 6

OPERATION AND ADMINISTRATION  

        6.1.    Source of Awards.    In the case of Awards under the LTIP that are settled in shares of Stock, such shares
shall be distributed under a stock plan adopted by the Company and approved by the shareholders thereof that provides for the issuance of Stock in satisfaction of Awards hereunder, (which in no event
shall be an employee stock purchase plan.) In the event of any conflict between this document and such stock plan, the provisions of the stock plan shall govern. 

        6.2.    Committee.    The LTIP is administered by the Compensation Committee of the Board (the "Committee"), as
further described at Section 7. Any determinations by the Committee regarding this LTIP are binding on all Participants. The Committee may make additional changes that it deems appropriate for
the effective administration of the LTIP. Subject to subsection 6.3, these changes may not increase the benefits to which Participants may become entitled under the LTIP, nor change the
pre-established measures in goals that have been approved. 

        6.3.    Negative Discretion.    Notwithstanding anything in the LTIP to the contrary, prior to the settlement of any
Cash Incentive Award, the Committee may (i) reduce the amount of such Award, or 

the
number of shares of Stock or amount of cash to be delivered in connection with such Award, and (ii) with respect to Awards that are not designated as intended to meet the requirements of
"performance based compensation" under Code Section 162(m) and the regulations issued thereunder, may change the pre-established measures in goals that have been approved for such
Award and increase the amount of such Award or the number of shares of stock or amount of cash to be delivered in connection with such Award. 

        6.4.    General Restrictions.    Delivery of shares of Stock under the LTIP, in satisfaction of a Cash Incentive
Award, shall be subject to the following: 

        (a)   Notwithstanding
any other provision of the LTIP, the Company shall have no obligation to deliver any shares of Stock or make any other distribution of benefits under the
LTIP unless such delivery or
distribution complies with all applicable laws (including, without limitation, the requirements of the Securities Act of 1933), and the applicable requirements of any securities exchange or similar
entity. 

        (b)   To
the extent that the LTIP provides for issuance of Stock certificates to reflect the issuance of shares of Stock, the issuance may be effected on a
non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any exchange or similar entity. 

        6.5.    Tax Withholding.    All distributions under the LTIP are subject to withholding of all applicable taxes, and
the Committee may condition the delivery of any shares or other benefits under the LTIP on satisfaction of the applicable withholding obligations. To the extent permitted by the Committee, such
withholding obligations may be satisfied (i) through cash payment by the Participant; (ii) through the surrender of shares of Stock which the Participant already owns (provided, however,
that to the extent shares described in this clause (ii) are used to satisfy more than the minimum statutory withholding obligation, as described below, then, except as otherwise provided by the
Committee, payments made with shares of Stock in accordance with this clause (ii) shall be limited to shares held by the Participant for not less than six months prior to the payment date (or
such other period of time as the Company's accountants may require)); or (iii) through the surrender of shares of Stock to which the Participant is otherwise entitled under the LTIP, provided,
however, that such shares under this clause (iii) may be used to satisfy not more than the Company's minimum statutory withholding obligation (based on minimum statutory withholding rates for
Federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income). 

        6.6.    Settlement of Awards.    The obligation to make payments and distributions with respect to Awards may be
satisfied through cash payments, the delivery of shares of Stock, or a combination thereof, subject, in the case of settlement in shares, to the terms of the stock plan under which the Stock is
issued. Satisfaction of any such obligations under an Award, which is sometimes referred to as the "settlement" of the Award, may be subject to such conditions, restrictions and contingencies as the
Committee shall determine. Each Subsidiary shall be liable for payment of cash due under the LTIP with respect to any Participant to the extent that such benefits are attributable to the services
rendered for that Subsidiary by the Participant. Any disputes relating to liability of a Subsidiary for cash payments shall be resolved by the Committee. 

        6.7.    Transferability.    Except as otherwise provided by the Committee, Awards under the LTIP are not transferable
except as designated by the Participant by will or by the laws of descent and distribution. 

        6.8.    Form and Time of Elections.    Unless otherwise specified herein, each election required or permitted to be
made by any Participant or other person entitled to benefits under the LTIP, and any permitted modification, or revocation thereof, shall be in writing filed with the Committee at such times, in such
form, and subject to such restrictions and limitations, not inconsistent with the terms of the LTIP, as the Committee shall require. 

        6.9.    Agreement With Company.    Any Award under the LTIP shall be subject to such terms and conditions, not
inconsistent with the LTIP, as the Committee shall, in its sole discretion, prescribe. The terms and conditions of any Award to any Participant shall be reflected in such form of written 

(including
electronic) document as is determined by the Committee. A copy of such document shall be provided to the Participant, and the Committee may, but need not, require that the Participant sign
a copy of such document. Such document is referred to as an "Award Agreement" regardless of whether any Participant signature is required. 

        6.10.    Action by Company or Subsidiary.    Any action required or permitted to be taken under the LTIP by the
Company, Sears Holdings Management Corporation, Sears Roebuck and Co., Kmart Holding Corporation or any Subsidiary, if any, of the foregoing shall be by resolution of its board of directors, or by
action of one or more members of the board of directors of such company (including a committee of the board) who are duly authorized to act for such board with respect to the applicable action, or
(except to the extent prohibited by applicable law or applicable rules of any securities exchange or similar entity) by a duly authorized officer of such company. 

        6.11.    Gender and Number.    Where the context admits, words in any gender shall include any other gender, words in
the singular shall include the plural and the plural shall include the singular. 

        6.12.    Limitation of Implied Rights.    

        (a)   Neither
a Participant nor any other person shall, by reason of participation in the LTIP, acquire any right in or title to any assets, funds or property of the Company
or any Subsidiary whatsoever, including, without limitation, any specific funds, assets, or other property which the Company or any Subsidiary, in its sole discretion, may set aside in anticipation of
a liability under the LTIP. A Participant shall have only a contractual right to the cash or Stock, if any, payable under the LTIP, unsecured by any assets of the Company or any Subsidiary, and
nothing contained in the LTIP shall constitute a guarantee that the assets of the Company or any Subsidiary shall be sufficient to pay any benefits to any person. 

        (b)   The
LTIP does not constitute a contract of employment, and selection as a Participant shall not give any participating employee the right to be retained in the employ of
the Company or any Subsidiary, nor any right or claim to any benefit under the LTIP, unless such right or claim has specifically accrued under the terms of the LTIP. Except as otherwise provided in
the LTIP, no Award under the LTIP shall confer upon the holder thereof any rights as a shareholder of the Company prior to the date on which the individual fulfills all conditions for receipt of such
rights. 

        6.13.    Evidence.    Evidence required of anyone under the LTIP may be by certificate, affidavit, document or other
information, which the person charged with acting on such evidence considers pertinent and reliable, and which has been signed, made or presented by the proper party or parties. 

        6.14.    Corporate Transaction.    In the event of a corporate transaction involving the Company (including without
limitation, any Stock dividend, Stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, sale of assets or
subsidiaries, combination or exchange of shares), the Committee may adjust Awards to preserve but in no event increase the benefits or potential benefits of the
Awards; provided, however, that no such adjustment may be made to the extent such adjustment would cause Awards that are designated as intended to
constitute "performance-based compensation" under Code Section 162(m) and the regulations issued thereunder, to cease to qualify as "performance-based compensation" under Code
Section 162(m). Actions permitted under the preceding sentence by the Committee may include any adjustments that the Committee determines to be equitable (which may include, without limitation,
(a) replacement of Awards with other Awards which the Committee determines have comparable value and which are based on stock of a company resulting from the transaction, and
(b) cancellation of the Award in return for cash payment of the current value of the Award, determined as though the Award is fully vested at the time of the payment.) 

SECTION 7

COMMITTEE  

        7.1.    Administration.    As provided in subsection 6.2, the authority to control and manage the operation and
administration of the LTIP shall be vested in the Compensation Committee of the Board of Directors of the Company (the "Committee"). 

        7.2.    Powers of Committee.    The Committee's administration of the LTIP shall be subject to the following: 

        (a)   As
provided in subsection 2.1 above, the Committee shall have the authority and discretion to determine those key employees who are Eligible Employees, to select from
among the Eligible Employees those persons who shall receive Awards. 

        (b)   Subject
to the other provisions of the LTIP, the Committee shall have the authority and discretion to determine the time or times of receipt, to determine the types of
Awards, to establish the terms,
conditions, restrictions, and other provisions of such Awards, and (subject to the restrictions imposed by Section 8) to amend, cancel, or suspend Awards. However (and subject to the
requirements of Code Section 162(m), if applicable) to the extent that the Committee determines that the restrictions imposed by the LTIP preclude the achievement of the material purposes of
the Awards in jurisdictions outside the United States, the Committee shall have the authority and discretion to modify those restrictions as the Committee determines to be necessary or appropriate to
conform to applicable requirements or practices of jurisdictions outside of the United States. 

        (c)   The
Committee shall have the authority and discretion to interpret the LTIP, to establish, amend, and rescind any rules and regulations relating to the LTIP, to
determine the terms and provisions of any Award Agreement made pursuant to the LTIP, and to make all other determinations that may be necessary or advisable for the administration of the LTIP. 

        (d)   Any
interpretation of the LTIP by the Committee and any decision made by it under the LTIP are final and binding on all persons. 

        7.3.    Delegation by Committee.    Except to the extent prohibited by applicable law or the applicable rules of a
securities exchange or similar entity, or would cause Awards designated as intended to constitute performance-based compensation under Code Section 162(m) to not satisfy the requirements
thereunder, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to
any person or persons selected by it. The Committee may revoke any such allocation or delegation at any time. 

        7.4.    Information to be Furnished to Committee.    The Company, Sears Holdings Management Corporation, Sears,
Roebuck and Co., Kmart Holding Corporation, and their Subsidiaries, shall furnish the Committee with such data and information as it determines may be required for it to discharge its duties. The
records of the Company, Sears Roebuck and Co., Kmart Holding Corporation and their Subsidiaries, as to an employee's or Participant's employment, termination of employment, leave of absence,
reemployment, and compensation shall be conclusive on all persons unless determined to be incorrect. Participants and other persons entitled to benefits under the LTIP must furnish the Committee such
evidence, data or information as the Committee considers desirable to carry out the terms of the LTIP, subject to any applicable privacy laws. 

SECTION 8

AMENDMENT AND TERMINATION  

        The Board or Committee may, at any time, amend or terminate the LTIP, or any Award, provided that no amendment or termination may, in the absence of written
consent to the change by the affected Participant (or, if the Participant is not then living, the affected beneficiary), adversely affect the rights of any Participant or beneficiary under any Award
granted under the LTIP prior to the date such 

amendment
is adopted by the Board (or the Committee, if applicable), and no amendment may be made, without the consent of the shareholders of the Company, that would cause any Awards designated as
intended to meet the requirements of "performance based compensation" under Code 162(m) and the regulations thereunder, to cease to be deductible under Code Section 162(m). Notwithstanding
anything herein to the contrary, (i) no amendment shall be made that would cause the Plan not to comply with the requirements of Code Section 409A or any other applicable law or rule of
any applicable securities exchange or similar entity, and (ii) the LTIP and any Award thereunder may be amended without Participant consent to the extent that the Committee determines such
amendment necessary to cause the LTIP or Award to comply with the requirements of Code Section 409A or any other applicable law or rule of any applicable securities exchange or similar entity. 

SECTION 9

DEFINED TERMS  

        In addition to the other definitions contained herein, the following definitions shall apply: 

        (a)    Award.    The term "Award" means any Cash Incentive Award, whether settled in cash or Stock. 

        (b)    Board.    The term "Board" means the Board of Directors of the Company. 

        (c)    Cause.    The term "Cause" shall mean (1) a material failure by a Participant (other than a failure
resulting from employee's incapacity due to a mental or physical disability) to perform the Participant's duties and responsibilities, which failure is demonstrably willful and deliberate on the
Participant's part, is committed in bad faith or without reasonable belief that such failure is in the best interests of the Company and its affiliates and is not remedied in a reasonable period of
time after receipt of written notice from the Company or its affiliate specifying such failure, (2) the commission by the Participant of a felony, or a misdemeanor involving moral turpitude, or
(3) dishonesty or willful misconduct in connection with the Participant's employment. 

        (d)    Code.    The term "Code" means the Internal Revenue Code of 1986, as amended. A reference to any provision of
the Code shall include reference to any successor provision of the Code. 

        (e)    Fair Market Value.    The term "Fair Market Value" shall mean the reported closing price of a share of Stock on
the principal securities exchange or market on which the Stock is then listed or admitted to trading. 

        (f)    Fiscal Year.    The term "Fiscal Year" shall mean the twelve (12) month period beginning on
January 28, 2006, and thereafter the twelve (12) month period beginning on the Saturday closest to January 31 of each of calendar year 2007 and 2008. 

        (g)    Performance-Based Compensation.    The term "performance-based compensation" shall have the meaning ascribed to
it under Code Section 162(m) and the regulations thereunder. 

        (h)    Poor Performance.    The term "poor performance" shall mean the circumstance in which a Participant receives a
below-expectations rating in any primary performance category per the Company performance management system within six months prior to the date that the Participant is terminated. 

        (i)    Subsidiary.    The term "Subsidiary" means any company during any period in which it is a "subsidiary
corporation" (as that term is defined in Section 424(f) of the Code) with respect to the Company. 

SECTION 10

Expiration of LTIP  

        The LTIP shall expire, subject to earlier termination pursuant to Section 8, on the date on which all Cash Incentive Awards (if any) are paid in full in
accordance with the provisions of the LTIP (or, if earlier, on the date that the Committee determines that the LTIP EBITDA is less than Threshold LTIP EBITDA.) 

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Exhibit 10.44  

 
 

Sears Holdings Corporation 2006
  Annual Incentive Plan  
  

 
 

Annual Incentive Plan Document    
    

Overview  

	

	

Plan Objective	
 	

The Sears Holdings Corporation 2006 Annual Incentive Plan ("AIP") is designed to:
	

 	
 	

•	
 	

Reward eligible associates for sustained company financial performance
	

 	
 	

•	
 	

This AIP is established under the Sears Holdings Corporation Umbrella Incentive Program.
	

	

Participation	
 	

All salaried associates.
	

	

Plan Description	
 	

The AIP will consist primarily of two financial components consisting of EBITDA and Merchandise Margin.
	

 	
 	

The AIP EBITDA definition will be consistent with the definition of EBITDA in the Sears Holdings Corporation 2006 Long-Term Incentive Program (LTIP).
	

 	
 	

Sears Canada EBITDA will be measured in Canadian dollars and will be consistent with the definition of EBITDA (earnings before interest, taxes, depreciation and amortization) as reported in the external financial statements.
	

 	
 	

The Merchandise Margin for Sears, Roebuck and Co. business will be defined as Sears Internal Gross Margin; Gross profit (merchandise sales less cost of goods and shrink, including impact of associate discounts) plus vendor subsidy (excluding
advertising subsidy), plus vendor penalties and audit recoveries, less expenses related to repairing items under warranty, less net markdowns on returns, less internal 0% financing charge (5.5% of net 0% sales—eliminated at
Corporate).
	

 	
 	

The Merchandise Margin for Kmart Holding Corporation businesses will be defined as Kmart Gross Margin with Allowances; Gross profit (merchandise sales less cost of goods and shrink, excluding impact of
associate discounts) plus vendor and advertising subsidy. Does not include vendor penalties and audit recoveries.
	

	

Performance and Award Periods	
 	

The performance period (i.e., period of time by which participants are evaluated on the established performance criteria) for the AIP will follow the Sears Holdings Corporation fiscal year. AIP awards will be paid to eligible participants on an
annual basis, within a reasonable time following the close of the performance period.
	

 	
 	
The 2006 AIP performance period ends on 2/3/2007.
	

	

Incentive Award Opportunity	
 	

Incentive award opportunity will be determined by job based on the competitive marketplace. Incentive opportunity for each job is defined as a percentage of base salary and includes minimum, target, and maximum values.
	

 	
 	

Incentive award is based on actual performance versus goals established.
	

 	
 	
2006 AIP provides a minimum opportunity equal to 0% of target incentive and maximum opportunity equal to 200% of target incentive. Also, the Compensation Committee reserves the right to apply discretion to any
incentive award, except with respect to 162(m) performance awards in which no positive discretion is permitted.
	

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Individual Modifier	
 	

•	
 	

Individual modifier allows the calculated financial award to be modified, positively or negatively, based on individual performance
	

 	
 	

 	
 	

— Total incentive award can not be modified above the 200% maximum
	

 	
 	

•	
 	

Individual performance will modify the incentive award in the following manner
	

 	
 	

 	
 	

 	
 	

	
 	

 
	 	 	 	 	 	 	Performance	 	Rating	 	Modifier	 	 
	 	 	 	 	 	 	
	 	 
	 	 	 	 	 	 	Exceeds	 	5	 	0% - 25%	 	 
	 	 	 	 	 	 	Above	 	4	 	0% - 15%	 	 
	 	 	 	 	 	 	Average	 	3	 	No adjustment	 	 
	 	 	 	 	 	 	Below	 	2	 	- 25%	 	 
	 	 	 	 	 	 	Poor	 	1	 	- 100%	 	 

	

	

Goal-Setting	
 	
Financial Goals
	

 	
 	

Financial goals include threshold, target, and maximum/excellence levels of performance.
	

 	
 	

•	
 	
Threshold performance reflects the minimum hurdle that must be achieved before any AIP award is earned. This level of performance should approximate the previous year's performance, but may
need to be modified depending on the level of previous year's performance (e.g. 90% of target).
	

 	
 	

•	
 	
Target performance reflects an expected level of performance, consistent with the business strategy. The level of performance should represent plan.
	

 	
 	

•	
 	
Maximum/Excellence performance reflects performance that significantly exceeds company and shareholder expectations (125% of target).
	

 	
 	

The Compensation Committee approves company financial goals for the AIP.
	

 	
 	
2006 AIP performance levels:
	

 	
 	

•	
 	
Threshold = 60% payout
	

 	
 	

•	
 	
Target = 100% payout
	

 	
 	

•	
 	
Maximum/Excellence = 200% payout
	

 	
 	
Financial performance falling in-between is straight-lined interpolated.
	

	

Administration	
 	

Administration Policies follow.
	

	

Roles and Responsibilities	
 	

Roles and Responsibilities follow.
	

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Administration Policies  

	Policy
	 	Description

	

	
 	
 	

 	
 	

 
	Award Date	 	Earned incentive awards will be paid to eligible participants within 75 days from the close of the performance period.
	

 	
 	

An eligible participant must be actively employed on the award date in order to receive any earned AIP award (unless otherwise required by law).
	

	

Job Change	
 	

In general, an associate's target annual incentive will reflect the target of the new job, while maintaining a comparable level of target total cash compensation opportunity. Accordingly, any adjustment to target incentive should be assessed in
conjunction with any concurrent base pay adjustments.
	

 	
 	

If an individual's target incentive changes during the plan year, any earned incentive will be pro-rated (see "Pro-ration" policy for more detailed information) on a daily basis, based on the time in each incentive-eligible assignment.
	

 	
 	

Below are several common types of job changes and the typical target incentive action:
	

 	
 	
Promotions: target incentive should immediately reflect that of the new job.
	

 	
 	
Developmental: if target incentive for new job is lower than that of current job, target incentive may be reduced. However, overall target total cash compensation opportunity (i.e., sum
of salary and target incentive) for the new job should be comparable to the current job's target total cash compensation opportunity.
	

 	
 	
Demotions: target incentive should be immediately reduced to that of the new job.
	

 	
 	

Exceptions will be handled on a case by case basis, under the discretion of the Human Resources Generalist and business executive. (See "Incentive Exceptions" for additional information.)
	

	

Incentive Target Standardization	
 	

All associates within the same job category will have a standard target incentive. For those jobs that have not been "standardized", incumbents will retain their current target incentive until the pre-determined standardization date. Upon
standardization, all incumbents will immediately assume the standard target incentive for that job.
	

	

Incentive Pro-ration	
 	

Any pro-ration of AIP awards will take place on a daily basis, based on the actual event date of a participant's job change or employment status change.
	

	

Employment Status Change	
 	
Termination with cause: A participant whose employment is terminated for cause will forfeit any earned AIP award.
	 	 	 	 	 

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Voluntary termination: A participant who voluntarily terminates employment (resigns) prior to the AIP award date will forfeit any earned AIP award.
	

 	
 	
Involuntary termination: A participant who terminates employment due to job elimination, unit closing, reorganization, business exit, or layoff will forfeit any earned AIP
award.
	

 	
 	
Leave of absence: A participant who is on a leave of absence during the plan year will be eligible for a pro-rata portion of the incentive payment based on the number of days on active
payroll during the plan year.
	

 	
 	
Retirement: If a participant retires during the plan year, any earned incentive award will be pro-rated based on the number of active days during the plan year and will be paid on the
award date. If a participant retires after the end of the plan year but before the award date, the participant will be eligible to receive full payment of any earned incentive on the award date.
	

 	
 	
Death: If a participant dies during the plan year, any earned incentive award will be pro-rated based on the number of days on active payroll during the plan year and will be paid on
the award date. If a participant dies after the end of the plan year but before the award date, the participant will be eligible to receive full payment of any earned incentive on the award date.
	

 	
 	
Disability: Any time on short-term disability during the plan year will be treated as actively working and will be eligible for any earned incentive award.
	

 	
 	
Reinstatement: If a participant is reinstated during the plan year, any earned incentive award will be pro-rated based on the number of active days during the plan year following
reinstatement. Any incentive earned prior to employment termination will be forfeited.
	

	

Incentive Exceptions	
 	

For associates below the Named Executive Officers, business realities may dictate the need for an incentive exception in certain situations. Examples may include:
	

 	
 	

1.	
 	

Business reorganization
	

 	
 	

2.	
 	

Unit opening, conversion, and/or remodel
	

 	
 	

3.	
 	

Field management jobs—transfer to unit or district with significantly different performance
	

 	
 	

A request for incentive exception must be submitted to Corporate Compensation for review and requires approval of the Office of the Chairman.
	

	

Taxation	
 	

All AIP awards are subject to applicable taxes and withholding as defined by law. Applicable taxes are the responsibility of the participant.
	 	 	 	 	 

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Plan Amendment or Termination	
 	

Participation in the AIP is at the discretion of the company and shall not constitute a guarantee of employment. No incentive amounts under this program are guaranteed. The AIP may be amended or terminated at any time at the Company's sole
discretion.
	

 

	

 	

 	

 	

 	

 

Roles and Responsibilities  

	Role
	 	AIP Responsibilities

	

	
 	
 	

 	
 	

 
	
Sears Holdings Corporation Compensation Committee	
 	

•	
 	

Final approval for Plan, incentive plan assignments, performance goals, and Plan administration.
	

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QuickLinks

Sears Holdings Corporation 2006 Annual Incentive Plan

Annual Incentive Plan Document

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