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ROST » Topics » EXECUTIVE EMPLOYMENT AGREEMENT TERM SHEET

This excerpt taken from the ROST 10-Q filed Jun 13, 2007.

EXECUTIVE EMPLOYMENT AGREEMENT TERM SHEET

  EVENT   PROVISIONS
  Proposed Term
  • March 22, 2007 – March 31, 2011
  Renewal Term
  • Two year extension of current term.
  Renewal Process
  • Executive submits written request to CEO no sooner than 12 months prior to end of current term.
  • Within 30 days of receipt of request, CEO discusses request with Compensation Committee. Within 30 days of Committee's consideration, CEO advises Executive in writing whether extension is approved.
  Cash Compensation
  • Annual Salary: $595,000
  • Lump sum Insurance Premium: $6,610
  Annual Bonus
  • Eligible under the Incentive Compensation Plan.
  • Bonus target is 65% of Annual Salary.
  Equity Plan Participation
  • Eligible for awards under 2004 Equity Incentive Plan
  • Restricted Stock: Number of shares equal to $450,000 divided by closing market price on March 22, 2007. Vesting: 100% to vest on March 22, 2012.
  • Performance Shares: Target number of performance shares equal to $250,000 divided by closing market price on March 22, 2007. Number of performance shares earned is determined by performance against pre-established adjusted pre-tax profit target. Vesting of common shares issued in settlement of earned performance shares: 30% on settlement date, 30% on 1st anniversary and 40% on 2nd anniversary of settlement date.
  Benefits
  • Eligible to participate in all plans for employees and senior executives.
  • Eligible for reimbursement up to $15,000 per fiscal year for estate tax planning expenses.
  Life Insurance Coverage
  • Face Value $2 million
  Governing Law
  • California
  • Mandatory arbitration of disputes, other than breach of confidentiality, IP protection and restrictive covenants.
  Restrictive Covenants
  • During term of employment and for 24 months thereafter, Executive is subject to non-competition, non-solicitation and non-disparagement covenants. However, non-compete covenants will not apply if executive is (i) terminated without cause, (ii) termination for good reason, or (iii) the Company fails to renew the agreement.
  • Company remedies for breach: termination of compensation and equity award vesting; forfeiture of equity awards; Executive obligation to repay gains realized on equity awards after commencement of "forfeiture period" (earlier of 6 months prior to Board's determination of breach or termination of employment).

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  Mitigation
  • Executive has no duty to seek other employment following termination. However, certain salary, bonus and benefit amounts due Executive under this agreement are reduced by cash remuneration and benefits from another employer paid during same period.

  Expiration of Agreement due to
  Nonrenewal

  Provided Executive signs general release of claims:
  • Salary: paid through termination date.
  • Bonus: pro-rated bonus for year of termination, based on greater of prior year bonus earned or current year bonus that would be earned absent termination, capped at lesser of 100% of prior year or current year targets.
  • Options: vesting ceases upon termination.
  • Restricted Stock: pro-rata vesting based on applicable vesting schedule and number of days since grant date.
  • Performance Shares: number of performance shares earned is based on actual performance against target. Common shares issued in settlement vest pro rata based on period of employment.

  Termination for Cause;
  Voluntary Termination (other
  than Good Reason);
  and Death
  • Salary: paid through termination date
  • Bonus: no bonus unless fully earned by termination date
  • Options: vesting ceases upon termination
  • Restricted Stock: unvested restricted shares are forfeited
  • Performance Shares: unvested award is forfeited. In the event of Death, the number of performance shares earned is based on actual performance against target. Common shares issued in settlement are vested in full

  Termination without Cause;
  Termination due to Disability;
  and Termination For Good
  Reason

   Provided Executive signs general release of claims:
  • Salary: paid through end of current term
  • Bonus: annual bonuses for remainder of current term, based on greater of bonus earned for year prior to termination or bonus that would be earned for year of termination, absent termination, capped at lesser of 100% of target in either year. Bonus for fiscal year of contract termination is pro rated for the portion of remaining contract term occurring within fiscal year.
  • Options: 100% accelerated vesting
  • Restricted Stock: pro-rata vesting based on applicable vesting schedule and number of days since grant date.
  • Performance Shares: number of performance shares earned is based on actual performance against target. Common shares issued in settlement are vested in full.

  Change in Control – Single
  Trigger (with no Voluntary
  Termination or Termination for
  Cause)
  • Additional Salary: $62,500 per month for 2 years
  • Options: 100% accelerated vesting if not assumed
  • Restricted Stock: 100% accelerated vesting
  • Performance Shares: 100% accelerated vesting of target number of performance shares and 100% of vesting of common shares issued in settlement.
  • Excise Tax: Gross-up for any excise tax on parachute payments

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  Change in Control – Double
  Trigger (Termination without
  Cause or for Good Reason within
  one month before and 12 months
  after Change in Control)
  • Everything stated in change in control – single trigger, plus (provided Executive signs general release of claims):
  • Salary: paid through end of current term or two years, whichever is greater
  • Health Coverage and Estate Planning Benefits: paid through end of current term or two years, whichever is greater
  • Bonus: annual bonuses for greater of 2 years or remainder of current term, based on greater of bonus earned for year prior to termination or bonus that would be earned for year of termination, absent termination, capped at lesser of 100% of target in either year. Bonus for fiscal year of payment termination is pro rated for the portion final payment term occurring within fiscal year.
  • Options: 100% accelerated vesting
  • Restricted Stock received after change in control: pro-rata vesting based on applicable vesting schedule and number of days since grant date.
  • Performance Shares received after change in control: number of performance shares earned is based on actual performance against target. Common shares issued in settlement are vested in full.
  • Excise Tax: Gross-up for excise tax on parachute payments

Note regarding Performance Share Awards: The impact of employment termination and change in control on Performance Share Awards is included in this term sheet for reference. The applicable provisions are included in the executive's performance share agreement rather than in the employment agreement.

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