Kellwood Company Corporate Development Incentive Plan (Restated)

Summary

This agreement outlines the Kellwood Company Corporate Development Incentive Plan, which provides long-term stock-based incentives to selected key executives. The plan aims to align executive and shareholder interests, encourage company-wide growth, and retain top employees. Awards are granted in company stock based on the achievement of specific long-term performance goals set by a committee. Shares earned are held in escrow and released to participants over a four-year period, subject to continued employment and other conditions.

EX-10.7 2 ex10p7.txt EXHIBIT 10.7 KELLWOOD COMPANY CORPORATE DEVELOPMENT INCENTIVE PLAN, AS RESTATED 1. PURPOSE A. To cause the interests of key executives and stockholders to coincide by basing certain of the executive long-term incentives on the achievement of long range corporate goals. B. To provide meaningful incentive to Participants to improve the Company's long-term growth and profitability. C. To encourage Participants to enhance the growth and profitability of the entire Company rather than concentrating efforts on only a specific segment of the Company. D. To encourage acceptance and continuation of employment. 2. NAME OF PLAN The Plan shall be known as the Kellwood Company Corporate Development Incentive Plan, as restated. 3. DEFINITIONS The following words and phrases, when used in this Plan, shall have the meanings indicated herein: (1) Award: A number of Shares in Stock earned by a Participant under the Plan. (2) Change in Control: Change in Control of the Company shall be defined to have occurred when (i) any one person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company, and such acquisition is deemed a "change in the ownership of a corporation" under Treasury regulation 1.409A-3(g)(5)(v); or (ii) either (1) any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent 1 Rev. 9/06 acquisition by such person or persons) ownership of stock of the Company possessing 35 percent or more of the total voting power of the stock of the Company, or (2) a majority of members of the Company's board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the member's of the Company's board of directors prior to the date of the appointment or election, and in the case of subparagraph (1) or (2) there is a "change in the effective control of the corporation" under Treasury regulation 1.409A-3(g)(5)(vi); or (iii) any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Corporation that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions, and such acquisition or acquisitions constitute a "change in the ownership of a substantial portion of a corporation's assets" under Treasury regulation 1.409A-3(g)(5)(vii). (3) Committee: The Compensation and Stock Option Committee of the Company's Board of Directors, comprised of non-employee directors (within the meaning set forth in Rule 16b-3 promulgated under the Exchange Act), none of whom shall be eligible to participate in this Plan. (4) Company: Kellwood Company (5) Disability: A physical or mental condition, which in the judgment of the Committee, based on medical evidence acceptable to the Committee, would result in a Participant being totally and permanently disabled 2 Rev. 9/06 under normal Company policy. (6) Employer: Kellwood Company and each of its subsidiaries, affiliates and related companies to which the Plan has been extended by the Committee. (7) Escrow Agent: The Escrow Agent selected by the Committee to receive and hold Stock awarded under the Plan. (8) Participant: An employee of the Employer selected by the Committee to participate in the Plan. A Participant will be selected by the Committee in its sole discretion, based upon the Committee's judgment of the employee's ability to significantly affect major decisions and actions which influence the continued profitable growth and development of the Company, the value of the employee's continuing service and the probable detriment of his or her employment with competitors. (9) Retirement: The termination of a Participant's employment with all Employers upon or after the attainment of age 65 or upon or after the attainment of both 15 years of service and age 55. (10) Shares or Stock: Shares of the Company's common stock. (11) Targeted Criterion: The level of performance during a performance period designated by the Committee which must be met for the full amount of an Award to be earned by a Participant. The measures and objectives may be based on earnings per share, return on assets or equity, cash flow, revenue or income growth, earnings before income taxes but excluding any gain on the sale of assets, economic value added or on other criteria which the Committee establishes. (12) Targeted Shares: The number of Shares which a Participant can earn at 100% of the Targeted 3 Rev. 9/06 Criterion. 4. SHARES RESERVED FOR AWARDS The total number of Shares reserved for issuance under this Plan shall be 1,000,000 Shares plus the number of Shares remaining available for issuance under the Plan prior to its restatement. In the event Shares of Common Stock are retained by the Company pursuant to a Participant's election to satisfy his or her tax withholding obligation, the number of Shares retained shall be available for issuance under the Plan. The maximum number of Shares subject to an Award to any Participant in any fiscal year shall be 50,000 Shares. The number of Shares reserved for issuance hereunder and the maximum number of Shares subject to an Award to any Participant shall be subject to adjustment as provided in Section 9 hereof. 5. AWARD PROCEDURE A. The Committee, upon the recommendation of the Chief Executive Officer, shall determine each Participant, each Participant's Targeted Shares and shall make Awards to the Participants in accordance with further provisions of the Plan. B. The Committee shall determine the following at the time of setting the Targeted Criterion: 1. The Targeted Criterion level for the performance period necessary for a Participant to earn any Award. 2. The Targeted Criterion level for the performance period necessary to earn the Target Shares. 3. Any known or anticipated Board actions or changes in tax laws or regulations which are to be excluded, if any, from the Targeted Criterion levels identified by the Committee. C. The Committee shall determine the following at the time of making each Award: 1. The extent that the Targeted Criterion of the Company have been met. 2. The number of Shares earned. 6. ADJUSTMENTS TO TARGETED CRITERION The Committee shall have the power, exercisable at its sole discretion, to adjust the Targeted Criterion to reflect any major alterations in the course of the business or to exclude the effects of any action by the Board or of any changes in the tax laws or regulations which impact significantly on the Targeted Criterion and which were not anticipated on the date a Participant's Targeted Shares were determined. However, the Committee may not exercise its discretion to increase the amount of any Award to a 4 Rev. 9/06 Participant who is a "covered employee" under Section 162(m) of the Internal Revenue Code. 7. PAYMENT A. The payment of a Participant's Award shall be made in Company Stock. B. The Company shall place in escrow with the Escrow Agent, in the name of the Participant or a trust established for the Participant's benefit, 100% of the stock earned by the Participant under this Plan. The restrictions on the Stock placed in escrow shall lapse, and the Stock shall be transferred to the Participant from the escrow at the rate of 25% a year, with the first release on the date selected by the Committee in the year of the award, and the remaining 75% in three equal installments commencing on the first business day in March of the year following the calendar year in which the award is earned and on each first business day of each March thereafter. C. In the event of the death, Disability or Retirement of a Participant during the performance period, the Participant or his beneficiary shall earn, at the conclusion of the performance period, a pro rata portion of the Award which would otherwise have been due to him had he remained an Employee until the end of the performance period based on the number of full months during which the Participant was employed during the performance period. D. In the event of Disability of the Participant, any stock which was in escrow as of the date of the Participant's Disability, or was added thereto at the end of the then current performance period, shall be released from escrow in accordance with the release dates at the same rate as if the Participant continued as an Employee. E. In the event of the death of a Participant, any Stock which was in escrow as of the date of the Participant's death, or was added thereto at the end of the then current performance period, shall be released from escrow and delivered to such one or more beneficiaries as the Participant may have designated in writing and filed with the Secretary of the Committee. Beneficiaries may be named contingently or successively and may share in different portions, if so designated by the Participant. If no beneficiary has been designated, delivery shall be made to the estate of the decedent. F. In the event of Retirement of a Participant, any Stock which was in escrow as of the date of the Participant's Retirement, or was added thereto at the end of the then current performance period, shall be released from escrow and delivered to the Participant; provided that in the event of Retirement of a Key Employee, no Stock shall be released from escrow and delivered to the Participant prior to the earlier of the date provided in Section 7B or the date that is 6 months after the Participant's Retirement. A Key Employee is an employee determined under Section 416(i) of the Internal Revenue Code (without regard to Paragraph (5) thereof), and includes (i) an officer of an Employer (but not more than 50) having 5 Rev. 9/06 an annual compensation greater than $135,000 (as adjusted to reflect cost-of-living increases); (ii) a 5-percent owner of an Employer; or (iii) a 1-percent owner of an Employer having annual compensation from the Employers of more than $150,000. 8. FORFEITURES Upon the termination of employment of a Participant from the services of all Employers due to any reason other than death, Disability, or Retirement, any Stock in escrow on the date of termination shall be forfeited by the Participant. Any Stock forfeited hereunder shall be available for further awards under the Plan. 9. CHANGE IN CAPITALIZATION A. In the event of any stock dividend, stock split, reclassification or other changes in the Stock, the Committee shall make such adjustments in the Targeted Shares, Stock in escrow, reserved Shares and maximum Shares awarded to any Participant as it deems equitable to accomplish the purpose of the Plan. A Committee's determination as to any adjustments shall be final and conclusive. B. Each participant who receives an Award of Stock under the Plan shall be entitled to dividends on the Shares and to all the rights of a stockholder with respect to the Stock from the date Stock was issued and placed in escrow. Any Stock received as a result of a stock dividend or stock split, or otherwise in respect of any Stock in escrow, shall be subject to the same restrictions as the original Stock and placed in escrow. 10. ADMINISTRATION AND INTERPRETATION OF THE PLAN The Committee shall have full responsibility for the administration of the Plan and may establish rules deemed by it to be appropriate to carry out the purposes of the Plan. The decision of the Committee with respect to selection of Participants, the amount of Targeted Shares and Awards, and the interpretation of the Plan shall be conclusive and binding on all parties. 11. MISCELLANEOUS A. By acceptance of any Award under this Plan, the Participant agrees that the value of any Stock issued to him pursuant to an Award is special compensation and that the value of the Stock will not be taken into account in determining the amount of any pension or other retirement benefits under any Employer's retirement program, the amount of life insurance coverage under any Employer's program, or be considered as "income" in determining the gross monthly indemnity under any Employer's long-term disability benefit program. B. No interest of a Participant may be sold, donated, pledged, or otherwise assigned or transferred in whole or in part, except by will or the laws of descent and distribution. 6 Rev. 9/06 C. Participation in the Plan does not give a Participant any right to be retained as an employee of any Employer. D. The delivery of any Stock under the Plan to a Participant may also be subject to such other provisions as the Committee determines appropriate, including any which may be considered necessary to comply with federal or state securities laws, stock exchange requirements or tax withholding requirements. 12. ADOPTION OF AMENDMENTS OR TERMINATION OF THE PLAN The Committee shall have the right to amend or modify this Plan from time to time, or to terminate this Plan entirely or to suspend the establishment of Targeted Shares; provided, however, no amendment or modification of this Plan or its termination shall affect or impair the provisions of any Targeted Shares theretofore established or any Award theretofore earned without the written consent of each Participant whose Targeted Shares or Award would be affected or impaired by the amendment, modification or termination. 13. IMMEDIATE RELEASE FROM ESCROW Notwithstanding the other provisions of this Plan, (i) upon a Change in Control of the Company, or (ii) pursuant to a resolution of the Committee passed after commencement of a tender offer or other acquisition plan or program by any person which, if consummated in accordance with its terms, would result in a Change in Control of the Company or its merger, consolidation, share exchange or sale of substantially all of its assets; then all restrictions on Stock in escrow shall immediately lapse, and the Stock shall be released from escrow and delivered to the Participants. 14. WITHHOLDING When a participant is required to pay to the Company an amount to be withheld under applicable tax laws in connection with the release of Shares under the Plan, the Committee may, in its discretion and subject to such rules as it may adopt, permit the Participant to satisfy the obligation, in whole or in part, by electing to have the Company withhold Shares having a fair market value equal to the amount required to be withheld. The election must be irrevocable and made on or before the date that the amount of tax to be withheld is determined (the "Tax Date"). The fair market value of the shares to be withheld is the average of the high and low market price of the Common Stock on the New York Stock Exchange on the Tax Date. The fair market value of any fractional shares will be paid in cash. 7 Rev. 9/06