Long-Term Incentive Award Agreement – NIKE, Inc.
NIKE, INC.
FY _______ LONG-TERM INCENTIVE AWARD AGREEMENT
Pursuant to Section 6 of the Long-Term Incentive Plan (the “Plan”) of NIKE,
Inc., an Oregon corporation (the “Company”), the Company grants to
<<Name>> (“Recipient”) a performance-based award, subject to the
terms and conditions of this FY _______ Long-Term Incentive Award Agreement
between the Company and Recipient, including the provisions set forth in the
attached Appendix for Recipients outside the U.S., if applicable (collectively,
this “Agreement”). By accepting this Agreement, Recipient agrees to all of the
terms and conditions of the award.
On _________, 20__, the Compensation Committee (the “Committee”) of the
Company153s Board of Directors authorized this performance-based award to
Recipient. Compensation paid pursuant to this award is intended to qualify as
performance-based compensation under Section 162(m) of the Internal Revenue Code
of 1986, as amended (the “Code”).
1. Award. Subject to the terms and conditions of this Agreement, the
Company shall pay to Recipient the dollar amount (the “Dollar Target Award
Payment”) determined under this Agreement based on (a) the Company153s financial
performance during the _______-year period from June 1, 20__ to May 31, 20__
(the “Performance Period”) as described in Section 2 and (b) Recipient153s
continued employment during the Performance Period as described in Section 3.
Recipient153s “Dollar Target Award” for purposes of this Agreement is
$<<Target>>.
2. Revenue and EPS Performance Conditions.
2.1 Subject to Section 3, the Dollar Target Award Payment to be paid to
Recipient shall be determined by multiplying the Payout Factor by the Dollar
Target Award. The “Payout Factor” equals the average of the Revenue-Related
Percentage Level for the Performance Period and the EPS-Related Percentage Level
for the Performance Period. The Revenue-Related Percentage Level for the
Performance Period shall be determined under the table below based on the
Company153s Cumulative Revenue (as defined below) for the Performance Period. The
EPS-Related Percentage Level for the Performance Period shall be determined
under the table below based on the Company153s Cumulative EPS (as defined below)
for the Performance Period. For example, if the Company153s Cumulative Revenue for
the Performance Period is $_______ and the Company153s Cumulative EPS for the
Performance Period is $_______, then the Revenue-Related Percentage Level will
be 110%, the EPS-Related Percentage Level will be 140%, and the Payout Factor
will therefore equal 125%.
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Cumulative Revenue |
Revenue-Related Percentage Level |
Cumulative EPS |
EPS-Related Percentage Level |
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(in millions) |
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Less than $____ |
0% |
Less than $____ |
0% |
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$____ |
50% |
$____ |
50% |
|
Cumulative Revenue |
Revenue-Related Percentage Level |
Cumulative EPS |
EPS-Related Percentage Level |
|||
|
(in millions) |
||||||
|
$____ |
60% |
$____ |
60% |
|||
|
$____ |
70% |
$____ |
70% |
|||
|
$____ |
80% |
$____ |
80% |
|||
|
$____ |
90% |
$____ |
90% |
|||
|
$____ |
100% |
$____ |
100% |
|||
|
$____ |
110% |
$____ |
110% |
|||
|
$____ |
120% |
$____ |
120% |
|||
|
$____ |
130% |
$____ |
130% |
|||
|
$____ |
140% |
$____ |
140% |
|||
|
$____ |
150% |
$____ |
150% |
|||
|
$____ |
160% |
$____ |
160% |
|||
|
$____ |
170% |
$____ |
170% |
|||
|
$____ |
180% |
$____ |
180% |
|||
|
$____ |
190% |
$____ |
190% |
|||
|
$____ or more |
200% |
$____ or more |
200% |
If the Company153s Cumulative Revenue is between any two data points set forth
in the first column of the above table, the Revenue-Related Percentage Level
shall be determined by interpolation between the corresponding data points in
the second column of the table as follows: the difference between the Cumulative
Revenue and the lower data point shall be divided by the difference between the
higher data point and the lower data point, the resulting fraction shall be
multiplied by the difference between the two corresponding data points in the
second column of the table, and the resulting product shall be added to the
lower corresponding data point in the second column of the table, with the
resulting sum being the Revenue-Related Percentage Level. If the Company153s
Cumulative EPS is between any two data points set forth in the third column of
the above table, the EPS-Related Percentage Level shall be similarly determined
by interpolation between the corresponding data points in the fourth column of
the table. For example, if the Company153s Cumulative Revenue is $_______ and the
Company153s Cumulative EPS is $_______, then the Revenue-Related Percentage Level
will be 115%, the EPS-Related Percentage Level will be 165%, and the Payout
Factor will therefore equal 140%.
2.2 Subject to adjustment in accordance with Sections 2.4, 2.5 and 2.6 below,
the Company153s “Cumulative Revenue” for the Performance Period shall equal the
sum of the Company153s revenues for the _______ fiscal years of the Company in the
Performance Period. For this purpose, the Company153s revenues for each fiscal
year of the Company during the Performance Period shall be as set forth in the
audited consolidated financial statements of the Company and its subsidiaries.
2.3 Subject to adjustment in accordance with Sections 2.4, 2.5 and 2.6 below,
the Company153s “Cumulative EPS” for the Performance Period shall equal the sum of
the Company153s diluted earnings per common share for the _______ fiscal years of
the Company in
2
the Performance Period. The Company153s diluted earnings per common share for
each fiscal year of the Company during the Performance Period shall be as set
forth in the audited consolidated financial statements of the Company and its
subsidiaries.
2.4 In the event that any acquisition of a business shall occur during the
Performance Period, the Company153s Cumulative Revenue for the Performance Period
shall be appropriately adjusted to exclude the revenues of the acquired
business, and the Company153s Cumulative EPS for the Performance Period shall be
appropriately adjusted to approximate the Cumulative EPS as if the acquisition
had not occurred, by (a) excluding any costs of the acquisition recorded by the
Company, (b) excluding the operating income of the acquired business, (c)
reducing interest expense for any cash paid or debt incurred to fund the
acquisition based on the actual interest rate of such debt or the Company153s
average interest rate for borrowed funds, (d) adjusting the tax provision to
reflect the adjusted amount of pre-tax income after making the above
adjustments, and (e) reducing weighted average shares outstanding used for the
EPS calculation by the number of Company shares, if any, issued in the
acquisition.
2.5 In the event that any divestiture of a business shall occur during the
Performance Period, the Company153s Cumulative Revenue for the Performance Period
shall be appropriately adjusted as provided in Section 2.5(i) below to reflect
an assumed level of revenue of the divested business for that portion of the
Performance Period occurring after the divestiture, and the Company153s Cumulative
EPS for the Performance Period shall be appropriately adjusted (a) to exclude
any gain or loss on the sale, (b) as provided in Section 2.5(ii) below to
reflect an assumed level of operating income of the divested business for that
portion of the Performance Period occurring after the divestiture, (c) to reduce
interest income for any cash or notes received in the divestiture based on the
actual interest rate on such notes or the Company153s average interest rate for
borrowed funds, and (d) to adjust the tax provision to reflect the adjusted
amount of pre-tax income after making the above adjustments.
(i) The Company153s Cumulative Revenue for the Performance Period shall be
appropriately adjusted to include the Imputed Revenues of the divested business.
“Imputed Revenues” shall mean the result obtained by multiplying the Average
Daily Revenues of the divested business by the number of calendar days in the
Performance Period occurring after the divestiture. “Average Daily Revenues”
shall mean the result obtained by dividing (x) the revenues of the divested
business during that portion of the Performance Period occurring prior to the
divestiture by (y) the number of calendar days in the Performance Period
occurring prior to the divestiture.
(ii) The Company153s Cumulative EPS for the Performance Period shall be
appropriately adjusted to reflect the Imputed Operating Income of the divested
business. “Imputed Operating Income” shall mean the result obtained by
multiplying the Average Daily Operating Income of the divested business by the
number of calendar days in the Performance Period occurring after the
divestiture. “Average Daily Operating Income” shall mean the result obtained by
dividing (x) the operating income of the divested business during that portion
of the Performance Period occurring prior to the divestiture by (y) the number
of calendar days in the Performance Period occurring prior to the divestiture.
3
2.6 If the Company implements a change in accounting principle during the
Performance Period either as a result of issuance of new accounting standards or
otherwise, and the effect of the accounting change was not reflected in the
Company153s business plan at the time of approval of this award, then Cumulative
Revenue and Cumulative EPS shall be adjusted to eliminate the impact of the
change in accounting principle.
2.7 All financial computations required to effect adjustments pursuant to
Sections 2.4, 2.5 and 2.6 shall be calculated by the Company in accordance with
generally accepted accounting principles applied in a manner consistent with the
application of such principles to the preparation of the audited consolidated
financial statements of the Company and its subsidiaries.
3. Employment Condition. In order to receive the Dollar Target Award
Payment determined under Section 2, Recipient must be employed by the Company or
a subsidiary of the Company on the last day of the Performance Period. If
Recipient153s employment by the Company and its subsidiaries is terminated at any
time prior to the end of the Performance Period, for any reason or no reason,
with or without cause, including because of death or disability, Recipient shall
not be entitled to receive the Dollar Target Award Payment or any portion
thereof.
4. Certification and Payment. As soon as practicable following the
completion of the audit of the Company153s consolidated financial statements for
the final year of the Performance Period, the Company shall calculate the Dollar
Target Award Payment payable to Recipient. This calculation shall be submitted
to the Committee. Notwithstanding anything to the contrary in this Agreement,
the Committee may, in its sole discretion, reduce or eliminate the calculated
Dollar Target Award Payment based on circumstances relating to the performance
of the Company or Recipient. Without limiting the generality of the foregoing,
if at any time during the Performance Period Recipient153s base pay is reduced or
Recipient is assigned a different title, job or set of responsibilities
resulting in a decrease in Recipient153s level of responsibility for the Company
(any such reduction in base pay or assignment resulting in a decrease in
Recipient153s level of responsibility for the Company, a “Demotion”), the
Committee may, in its sole discretion, reduce or eliminate the calculated Dollar
Target Award Payment. Recipient acknowledges and agrees that, in the event the
Committee reduces or eliminates the calculated Dollar Target Award Payment in
connection with any Demotion occurring during the Performance Period, the
Company intends for such reduction or elimination to constitute the “proration”
of Recipient153s Dollar Target Award with respect to such Demotion described in
Plan-related documents prepared by the Company and delivered to Recipient; and
that, in connection with any Demotion, in the event of any inconsistency between
the “proration” provisions of any such Plan-related documents and the provisions
of this Agreement, the provisions of this Agreement shall control.
The Committee shall certify in writing (which may consist of approved minutes
of a Committee meeting) the level of Cumulative Revenue and Cumulative EPS
attained by the Company and the Dollar Target Award Payment (if any) payable to
Recipient. The Recipient shall receive the Dollar Target Award Payment so
certified, subject to applicable tax withholding, in cash on August 15, 20__.
Notwithstanding the foregoing, if Recipient shall have made a valid election to
defer receipt of all or any portion of the Dollar Target Award Payment
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pursuant to the terms of the Company153s Deferred Compensation Plan (a
“Deferral Election”), payment of all or such portion of the Dollar Target Award
Payment so deferred shall be made in accordance with the terms of the Deferred
Compensation Plan and the Deferral Election.
5. Tax Withholding. Recipient acknowledges that the amount of the
Dollar Target Award Payment payable to Recipient (other than any amount deferred
pursuant to a Deferral Election) will be treated as ordinary compensation income
for federal and state income and FICA tax purposes, and that the Company will be
required to withhold taxes on this income amount.
6. Promotions. If at any time during the Performance Period
Recipient153s base pay is increased or Recipient is assigned a different title,
job or set of responsibilities resulting in an increase in Recipient153s level of
responsibility for the Company (any such increase in base pay or assignment
resulting in an increase in Recipient153s level of responsibility for the Company,
a “Promotion”), the Company may, but shall not be required to, grant to
Recipient an additional award (the “Mid-Plan Grant”) on terms similar to those
provided in this Agreement. Any such Mid-Plan Grant shall constitute a grant
separate from and independent of the grant represented by this Agreement, and
any such Mid-Plan Grant shall not be granted under the Plan and shall not
qualify as performance-based compensation under Section 162(m) of the Code. The
terms and conditions of any Mid-Plan Grant shall be set forth in a separate,
Mid-Plan Grant agreement between the Company and Recipient in the form
determined by the Company in its sole discretion (a “Mid-Plan Grant Agreement”).
Recipient acknowledges and agrees that no Mid-Plan Grant shall be payable to
Recipient unless Recipient executes and delivers a Mid-Plan Grant Agreement in
connection therewith. Recipient acknowledges and agrees that any Mid-Plan Grant
granted to Recipient in connection with any Promotion during the Performance
Period will be intended to constitute the “proration” of Recipient153s Dollar
Target Award with respect to such Promotion described in Plan-related documents
prepared by the Company and delivered to Recipient; and that, in connection with
any Promotion, in the event of any inconsistency between the “proration”
provisions of any such Plan-related documents and the provisions of this Section
6 and the Mid-Plan Grant Agreement, the provisions of this Section 6 and the
Mid-Plan Grant Agreement shall control.
7. Clawback Policy. The Recipient acknowledges and agrees that any
amount paid to the Recipient under this Agreement shall be subject to possible
repayment to the Company under the NIKE, Inc. Policy for Recoupment of Incentive
Compensation as approved by the Board of Directors and the Committee and in
effect on the date the Committee authorized the award under this Agreement.
8. No Right to Employment. Nothing contained in this Agreement shall
confer upon Recipient any right to be employed by the Company or any of its
subsidiaries or to continue to provide services to the Company or any of its
subsidiaries or to interfere in any way with the right of the Company or any of
its subsidiaries to terminate Recipient153s services at any time for any reason,
with or without cause.
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9. Miscellaneous.
9.1 Entire Agreement; Amendment. This Agreement constitutes the entire
agreement of the parties with regard to the subjects hereof and may be amended
only by written agreement between the Company and Recipient.
9.2 Notices. Any notice required or permitted under this Agreement
shall be in writing and shall be deemed sufficient when delivered personally to
the party to whom it is addressed or when deposited into the United States Mail
as registered or certified mail, return receipt requested, postage prepaid,
addressed to the Company, Attention: Secretary, at its principal executive
offices or to Recipient at the address of Recipient in the Company153s records, or
at such other address as such party may designate by ten (10) days153 advance
written notice to the other party.
9.3 No Assignment; Rights and Benefits. Recipient shall not sell,
assign, pledge or otherwise transfer this Agreement or any rights hereunder,
whether voluntarily or by operation of law, or by gift, bequest or otherwise.
Any purported sale, assignment, pledge or transfer by Recipient shall be null
and void. The rights and benefits of this Agreement shall inure to the benefit
of and be enforceable by the Company153s successors and assigns and, subject to
the foregoing restriction on assignment, be binding upon Recipient153s heirs,
executors, administrators, successors and assigns.
9.4 Further Action. The parties agree to execute such further
instruments and to take such further action as may reasonably be necessary to
carry out the intent of this Agreement.
9.5 Applicable Law; Attorneys153 Fees. The terms and conditions of this
Agreement shall be governed by the laws of the State of Oregon. For purposes of
litigating any dispute that arises under this Agreement, the parties hereby
submit to and consent to the jurisdiction of, and agree that such litigation
shall be conducted in, the courts of Washington County, Oregon or the United
States District Court for the District of Oregon, where this Agreement is made
and/or to be performed. In the event either party institutes litigation
hereunder, the prevailing party shall be entitled to reasonable attorneys153 fees
to be set by the trial court and, upon any appeal, the appellate court.
9.6 Headings. The headings in this Agreement are for convenience only
and will not control or affect the meaning or construction of the provisions of
this Agreement.
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NIKE, INC. |
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By |
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Title |
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6
NIKE, INC.
APPENDIX TO THE
FY ____ LONG-TERM INCENTIVE AWARD AGREEMENT
FOR NON-U.S. RECIPIENTS
This Appendix includes additional terms and conditions that govern the awards
for Recipients residing outside of the U.S. on the date the Committee authorized
the award under this Agreement. Moreover, if the Recipient relocates outside of
the U.S. during the Performance Period or prior to the payment of the Dollar
Target Award Payment, the additional terms and conditions in this Appendix will
apply to the Recipient to the extent the Company determines that the application
of such terms and conditions is necessary or advisable in order to comply with
local law or facilitate the administration of the Plan. Capitalized terms not
explicitly defined in this Appendix but defined in this Agreement shall have the
same definitions as in this Agreement.
Tax Withholding
The following provision replaces Section 5 of this Agreement in its entirety:
Regardless of any action the Company or Recipient153s employer (the “Employer”)
takes with respect to any or all income tax, social insurance, payroll tax,
payment on account or other tax-related withholding related to the award and
legally applicable to Recipient (“Tax-Related Items”), Recipient acknowledges
that the ultimate liability for all Tax-Related Items legally due by him or her
is and remains Recipient153s responsibility and may exceed the amount actually
withheld by the Company or the Employer. Recipient further acknowledges that the
Company and/or the Employer (1) make no representations or undertakings
regarding the treatment of any Tax-Related Items in connection with any aspect
of the award including the grant, vesting or payout of the award; and (2) do not
commit to structure the terms of the award or any aspect of the award to reduce
or eliminate Recipient153s liability for Tax-Related Items or achieve any
particular tax result.
Prior to any relevant taxable or tax withholding event, as applicable,
Recipient will pay or make adequate arrangements satisfactory to the Company
and/or the Employer to satisfy all Tax-Related Items. In this regard, Recipient
authorizes the Company and/or the Employer to withhold all applicable
Tax-Related Items legally payable by Recipient from his or her wages or other
cash compensation paid to Recipient by the Company and/or the Employer or from
the Dollar Target Award Payment. Finally, Recipient shall pay the Company or the
Employer any amount of Tax-Related Items that the Company or the Employer may be
required to withhold or account for as a result of the award that cannot be
satisfied by the means previously described. The Company may refuse to pay the
Dollar Target Award Payment to Recipient if Recipient fails to comply with his
or her obligations in connection with Tax-Related Items.
Nature of Grant
By accepting the grant of the award evidenced by this Agreement, Recipient
acknowledges, understands and agrees that:
APP-1
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(a) |
the award is granted voluntarily by the Company, is discretionary in nature |
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(b) |
the award is voluntary and occasional and does not create any contractual or |
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(c) |
all decisions with respect to future awards, if any, will be at the sole |
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(d) |
Recipient is voluntarily accepting the grant of the award; |
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(e) |
the award is an extraordinary item that does not constitute compensation of |
|
(f) |
the award is not part of normal or expected compensation or salary for any |
|
(g) |
the award will not be interpreted to form an employment contract with the |
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(h) |
no claim or entitlement to compensation or damages shall arise from |
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(i) |
notwithstanding any terms or conditions of this Agreement to the contrary, |
APP-2
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(j) |
it is Recipient153s sole responsibility to investigate and comply with any |
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(k) |
the Company is not providing any tax, legal or financial advice, nor is the |
Data Privacy
Recipient hereby explicitly and unambiguously consents to the
collection, use and transfer, in electronic or other form, of Recipient153s
personal data as described in this Appendix by and among, as applicable, the
Employer, the Company and its subsidiaries for the exclusive purpose of
implementing, administering and managing the award.
Recipient understands that the Company and the Employer hold
certain personal information about Recipient, including, but not limited to,
Recipient153s name, home address and telephone number, date of birth, social
insurance number or other identification number, salary, nationality, job title,
any shares of stock or directorships held in the Company, details of any
entitlement to shares of stock awarded, canceled, vested, unvested or
outstanding in Recipient153s favor, for the purpose of implementing, administering
and managing the award (“Data”). Recipient understands that Data may be
transferred to any third parties assisting in the implementation, administration
and management of the award, that these recipients may be located in Recipient153s
country or elsewhere, and that the transferee153s country may have different data
privacy laws and protections from Recipient153s country. Recipient understands
that Recipient may request a list with the names and addresses of any potential
recipients of the Data by contacting Recipient153s local human resources
representative. Recipient authorizes the transferees to receive, possess, use,
retain and transfer the Data, in electronic or other form, for the purposes of
implementing, administering and managing the award. Recipient understands that
Data will be held only as long as is necessary to implement, administer and
manage the award. Recipient understands that he or she may, at any time, view
Data, request additional information about the storage and processing of Data,
require any necessary amendments to Data or refuse or withdraw the consents
herein, in any case without cost, by contacting in writing Recipient153s local
human resources representative. Recipient understands, however, that refusing or
withdrawing his or her consent may affect Recipient153s ability to benefit from
the award. For more information on the consequences of Recipient153s refusal to
consent or withdrawal of consent, Recipient understands that he or she may
contact his or her local human resources representative.
APP-3
Language
If Recipient has received this Agreement or any other document related to the
award translated into a language other than English and if the meaning of the
translated version is different from the English version, the English version
will control.
APP-4
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