Neiman Marcus 2008 Annual Report Download - page 61

Table of Contents
Threshold Target Maximum
Neiman Marcus Group
Adjusted EBITDA (in millions) $ 685.9 $ 702.2 $ 746.9
ROIC 33.280% 34.780% 37.740%
Neiman Marcus Stores
Adjusted EBITDA (in millions) $ 507.8 $ 521.4 $ 551.4
Inventory Turnover 2.352x 2.368x 2.389x
Neiman Marcus Direct
Adjusted EBITDA (in millions) $ 134.0 $ 137.2 $ 146.1
Inventory Turnover 3.813x 3.830x 3.876x
Bergdorf Goodman
Adjusted EBITDA (in millions) $ 108.9 $ 111.2 $ 120.7
Inventory Turnover 3.606x 3.630x 3.677x
For fiscal year 2009, the Compensation Committee determined that, due to the overall market conditions as discussed above,
performance levels were below minimum and no annual incentive bonuses were paid to any of the named executive officers.
In calculating Adjusted EBITDA for purposes of evaluating performance and annual incentive compensation, the
Compensation Committee adjusts EBITDA upwards or downwards, as applicable, for events and circumstances that 1) were not
anticipated at the time performance targets were set and 2) were not impacted by or under the control of the named executives. This
adjustment is performed by the Compensation Committee at the end of each fiscal year, based upon any such events and
circumstances during such year. The adjustments that were made to EBITDA in order to calculate Adjusted EBITDA for fiscal year
2009 are described under Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations — Non-
GAAP Financial Measure-EBITDA and Adjusted EBITDA." In applying Adjusted EBITDA for fiscal year 2009 to performance
targets, the Compensation Committee added $21 million to the Adjusted EBITDA to reflect the costs related to the Company's
restructuring and expense reduction initiatives in fiscal year 2009. These initiatives were not anticipated at the time the performance
targets were set.
For purposes of evaluating performance and annual incentive compensation, the ROIC metric is calculated by dividing
earnings before interest and taxes by average invested capital excluding cash, accrued interest, deferred taxes and amounts related to
financial derivatives and is used to assess our efficiency at turning capital into profitable investments. The inventory turnover metric
is calculated by dividing sales by average inventory and is used to assess our efficiency in managing inventories.
Other Compensation Components
Health and Welfare Benefits. Executive officers are eligible to participate under the same plans as all other eligible
employees for medical, dental, vision, disability, and life insurance. These benefits are intended to be competitive with benefits
offered in the retail industry.
Retirement Plan. Prior to 2008, most non-union employees over age 21 who had completed one year of service with 1,000 or
more hours participated in The Neiman Marcus Group, Inc. Retirement Plan (referred to as the Retirement Plan), which paid benefits
upon retirement or termination of employment. Effective as of December 31, 2007, eligibility and benefit accruals under the
Retirement Plan were frozen for all participants except for those "Rule of 65" employees who elected to continue participation in the
Retirement Plan. "Rule of 65" employees included only those active employees who had completed at least 10 years of service and
whose combined years of service and age equaled at least 65 as of December 31, 2007. The Retirement Plan is a "career-
accumulation" plan, under which a participant earns each year a retirement annuity equal to one percent of his or her compensation for
the year up to the Social Security wage base and 1.5 percent of his or her compensation for the year in excess of such wage base. A
participant becomes fully vested after five years of service with us. Mr. Tansky, Ms. Katz, and Mr. Barnes were "Rule of 65"
employees as of December 31, 2007, and elected to continue participation in the Retirement Plan. For Messrs. Skinner and Gold,
benefits and accruals under the Retirement Plan were frozen effective as of December 31, 2007.
Savings Plan (401(k) Plan). Effective January 1, 2008, a new enhanced 401(k) plan, The Neiman Marcus Group,
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