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September 2, 2014

Mr. Gebhard F. Rainer

2017 West Shakespeare Ave

Chicago, IL 60647

Dear Gebhard:

It is with great pleasure that I confirm our offer of the position of President and Chief Operating Officer of Coach, Inc. (“Coach” or the “Company”), reporting to Victor Luis, Chief Executive Officer of Coach. You will be a member of Coach’s Operating Group. If you accept our offer, we would like you to start work by September 29, 2014 (the “Effective Date”).  If you would prefer another starting date, please let us know. You will be considered an “officer” under Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as well an “Executive Officer” of Coach pursuant to Rule 3b-7 of the Exchange Act.

 

 

$750,000 per annum.

Your salary will be paid monthly on the last Thursday of each calendar month.

Performance reviews are typically conducted at the end of our fiscal year, which presently runs from approximately July 1 through June 30. Any merit increases for which you may be eligible also would be determined at that time, and would take effect in September. You will first be eligible for a merit increase in September 2015.

You will be eligible to participate in the Coach, Inc. 2013 Performance-Based Annual Incentive Plan ("SOPS"), a cash incentive program under which your payout is based on Coach's financial performance (as well as your individual performance). The target bonus will be 100% of your salary actually earned during the fiscal year. The actual bonus payout will range from 0% of target for performance below established thresholds to 200% of target for maximum performance, with performance components, measures and target values to be established by the Company’s Board of Directors. You will be eligible for SOPS beginning in fiscal year 2015, and any such SOPS bonus earned will be pro-rated in accordance with the Effective Date.

Any SOPS bonus is paid within three months of the end of the fiscal year and you must be an employee in good standing with Coach on the SOPS bonus payment date in order to be eligible to receive any such SOPS bonus payment. After you are hired, please refer to the My Pay section of the Coach’s intranet, Coachweb, for governing terms of the SOPS bonus plan. In

addition, Coach’s Board of Directors has adopted an incentive repayment policy (attached) for members of the Operating Group, which you must sign and return to me coincident with your acceptance of this offer of employment.

 

Your compensation package includes a guideline annual equity grant value of $1,500,000 to be granted in a fixed proportion of different equity vehicles as determined annually by the Committee. Your first grant, with a grant date fair value at target of $1,500,000 will be made on the first business day of the fiscal month coincident with or following the Effective Date. One-third of that value will be in the form of restricted stock units (“RSUs”), one-third of the value will be in performance restricted stock units (“PRSUs”) (at target) and one-third of the value will be in the form of stock options. All equity awards are subject to approval by the Human Resources Committee (“the Committee”) of the Coach Board of Directors. The target number of PRSUs and the RSUs that you will receive will be based on the closing price of Coach stock on the grant date (the “Grant Price”). PRSUs and RSUs cliff vest on the third anniversary of the grant date, with the number of PRSUs vesting varying from 0 – 170% of target subject to the performance conditions set forth in the grant agreement, which are expected to be based on Coach’s FY15-17 long-range plan. The number of stock options that you will receive will be based on the Grant Price and on an industry standard valuation model, Black-Scholes, which determines the value of a stock option. Stock options are exercisable one-third after one year of the grant date, one-third after two years, and one-third after three years, and such options will expire 10 years after the date of grant.

Coach may make additional, annual equity grants, and as an Operating Group member your annual grants will be in a fixed proportion of different equity vehicles and performance requirements as determined annually by the Committee. Any future grants will be determined based on your position, performance, time in job and other criteria Coach determines it its discretion, which are subject to change. After you are hired, you will receive an email alert to view and accept your grant agreements and have access to the Coach, Inc. 2010 Incentive Award Plan (as it may be amended from time to time, the “Stock Plan”) prospectus through Coachweb. You are subject to the terms and conditions of the grant agreements, including, but not limited to, the provisions relating to clawback of equity gains in certain post-employment scenarios. Notwithstanding anything to the contrary in this letter, the Stock Plan’s terms and related grant agreements, as they may be changed from time to time, are controlling.

To replace the long term compensation you are forfeiting with your current employer, and to incent you to join Coach, within six weeks of the Effective Date, you will be paid a sign-on cash bonus in the amount of $500,000, subject to normal tax withholding. In addition, you will receive a one-time PRSU award with a target grant date value of $1,000,000, subject to approval by the Committee. The target number of PRSUs that you receive will be based on the Grant Price, and the grant date will be the first business day of the fiscal month coincident with or following the Effective Date. These PRSUs also cliff vest on the third anniversary of the grant date, with the number of PRSUs vesting varying from 0-170% of target subject to the performance conditions set forth in the grant agreement. The PRSU award will be subject to the same performance criteria and conditions as your annual PRSU award described above. After the grant is made, you will receive an email alert to view and accept your grant agreement and have

access to the Stock Plan prospectus through Coachweb. Notwithstanding anything to the contrary in this letter, the Stock Plan's terms and related grant agreements, as they may be changed from time to time, are controlling.

You are eligible for relocation under the Coach U.S. Domestic Relocation Policy for Vice Presidents and Above. Please see the enclosed packet of information. Upon your acceptance, a member of the Benefits Department will be in touch with you to get started. Should you resign your employment within two years of your start date, or if your employment is terminated for “cause,” as defined below, Coach may require you to repay relocation expenses.

If your employment at Coach should cease involuntarily for any reason other than for “cause,” as defined below (e.g. position elimination), you will receive the number of months of base salary you would be entitled to under the Coach, Inc. Severance Pay Plan. For more information, please view the Severance Plan document on Coachweb or contact Human Resources. To receive separation pay, you will be required to sign a waiver and release agreement in the form provided by Coach. This agreement will include restrictions on your ability to compete with Coach and solicit Coach employees.

It is expressly intended and contemplated that this letter comply with the provisions of Section 409A of the Code and the applicable guidance thereunder (“Section 409A”) and that the payments hereunder will either be exempt from Section 409A or will comply with the provisions of Section 409A. This letter will be administered and interpreted in a manner consistent with this intent, and, notwithstanding any provision of this letter to the contrary, in the event that Coach determines that any amounts payable hereunder would be immediately taxable to you under Section 409A, Coach reserves the right (without any obligation to do so or to indemnify you for failure to do so) to amend this letter to satisfy Section 409A or be exempt therefrom (which amendment may be retroactive to the extent permitted by Section 409A). Notwithstanding any other provision of this letter, if you are a “specified employee” within the meaning of Treas. Reg. §1.409A-1(i)(1), then the payment of any amount or the provision of any benefit under this letter which is considered deferred compensation subject to Section 409A of the Code shall be deferred for six (6) months after your “separation from service” or, if earlier, your death to the extent required by Section 409A(a)(2)(B)(i) of the Code (the “409A Deferral Period”). In the event payments are otherwise due to be made in installments or periodically during the 409A Deferral Period, the payments which would otherwise have been made in the 409A Deferral Period shall be accumulated and paid in a lump sum on the Company’s first standard payroll date that arises on or after the 409A Deferral Period ends, and the balance of the payments shall be made as otherwise scheduled. For purposes of any provision of this letter providing for reimbursements to you, such reimbursements shall be made no later than the end of the calendar year following the calendar year in which you incurred such expenses, and in no event shall the unused reimbursement amount during one calendar year be carried over into a subsequent calendar year. For purposes of this letter, you shall not be deemed to have terminated employment unless you have a “separation from service” within the meaning of U.S. Treasury Regulations Section 1.409A-1(h) All rights to payments and benefits under this

letter shall be treated as rights to receive a series of separate payments and benefits to the fullest extent allowed by Section 409A of the Code. In no event shall any liability for failure to comply with the requirements of Section 409A be transferred from you or any other individual to Coach or any of its affiliates, employees or agents.

Your other major benefits will include medical, dental, vision, life insurance, short and long term disability, Coach, Inc. Savings & Profit Sharing Plan, Employee Stock Purchase Plan, employee discount program and 25 business days of vacation per calendar year, as generally provided by the Company at a comparable level in accordance with the plans, practices and programs of the Company. We are enclosing a summary of executive benefits highlighting these programs in Your Coach Benefits Summary Kit.

 

As an employee of Coach, and as a part of this offer of employment, you will be subject to various Company policies set forth in the attached Addendum as well as those set forth in the Your Coach Benefits Summary Kit that accompanies this offer. Such policies include, but are not limited to the following:

 

By accepting this offer of employment, you are also expressly accepting to be bound by the Company policies set forth in the attached Addendum and in the packet of materials that accompany this offer letter.

Gebhard, I am excited at the prospect of your joining us at Coach to build a great future. This is Coach's entire offer of employment. As you review this offer, please feel free to contact me at ###-###-#### or ###-###-#### with any questions. To accept the offer, and acknowledge you are not relying on any promise or representation that is not contained in this letter, please sign in the space below and return one of the attached copies to me by September 5, 2014.

Sincerely,

Sarah J. Dunn

Global Human Resources Officer

Coach, Inc.

 

Agreed and accepted by:

 

__/Gebhard F. Rainer_______    _____09/05/2014_____________

Gebhard F. Rainer                         Date