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FIFTH AMENDMENT TO THE EMPLOYMENT AGREEMENT
THE FIFTH AMENDMENT TO THE EMPLOYMENT
AGREEMENT (the “Fifth
Amendment”) is made and entered effective the 23 day of April, 2010, by
Ross Stores, Inc. (the “Company”) and Michael Balmuth (the “Executive”). The
Executive and the Company previously entered into an Employment Agreement
effective May 31, 2001; a First Amendment to the Employment Agreement effective
January 30, 2003; a Second Amendment to the Employment Agreement effective May
18, 2005; a Third Amendment to the Employment Agreement effective April 6, 2007;
and a Fourth Amendment to the Employment Agreement effective June 9, 2009 (the
original Agreement; First Amendment to the Employment Agreement; Second
Amendment to the Employment Agreement; Third Amendment to the Employment
Agreement; and Fourth Amendment to the Employment Agreement are attached and
collectively referred to herein as the “Agreement”), and it is now the intention
of the Executive and the Company to further amend the Agreement as set forth
below. Accordingly, the Executive and the Company now enter into this Fifth
Amendment.
| I. | The Executive and the Company amend the Agreement by deleting Paragraph 1 of the Agreement in its entirety and replacing it with the following new Paragraph 1: |
1. Term. The employment of the Executive by the
Company will continue as of the date hereof and end on February 2, 2013, unless
extended or terminated in accordance with this Agreement, including the
extensions contemplated both in paragraphs 1 and 4(b). During March 2011, and
during March every year thereafter (every one year) for so long as the Executive
is employed by the Company, upon the written request of the Executive, the Board
shall consider extending the Executive’s employment with the Company. Such
request must be delivered to the Chairman of the Compensation Committee no later
than the last day in February which precedes the March in which the requested
extension will be considered. The Board shall advise the Executive, in writing,
on or before the April 1st following its consideration of the
Executive’s written request, whether it approves of such extension. The failure
of the Board to provide such written advice shall constitute approval of the
Executive’s request for the extension. If the Executive’s request for an
extension is approved, this Agreement shall be extended one additional
year.
| II. | The Executive and the Company further amend the Agreement by deleting the first sentence of Paragraph 4(a) of the Agreement in its entirety and replacing it with the following new sentence: |
4(a). Salary. During his
employment, the Company shall pay the Executive a base salary of not less than
One Million One Hundred and Twenty-Seven Thousand and Five Hundred Dollars
($1,127,500.00) per annum.
| III. | The Executive and the Company further amend the Agreement by deleting the first sentence of Paragraph 4(i) of the Agreement in its entirety and replacing it with the following new three sentences: |
4(i). Subject
to the third sentence of this paragraph 4(i), the Executive and his spouse shall
be entitled to continue, until their respective deaths, to participate (at no
cost to the Executive and his spouse) in the following Company employee benefit
plans and arrangements (or other benefit plans or arrangements providing
substantially similar benefits) in which the Executive participates on the date
hereof): medical, dental, vision and behavioral health insurance; life
insurance; accidental death and dismemberment insurance; group excess personal
liability (collectively, “Benefits”); and the Company shall annually provide the
Executive for as long as he lives an amount equal to the maximum employer
matching contribution permitted under the terms and limits of the Company’s
401(k) plan in effect during the year of such payment (assuming the Executive
remained employed with the Company and made the maximum contribution to such
plan permitted by law), grossed up to reflect the pretax nature of a 401(k)
contribution (the “Matching Contribution”).
Notwithstanding the preceding
sentence, no payment provided in paragraph 4(a) [Salary] of this Agreement shall
be considered a benefit plan or arrangement pursuant to this paragraph 4(i) and
the Executive, or his spouse, shall not be entitled to continuation of any
payment provided in paragraph 4(a) pursuant to this paragraph 4(i).
Notwithstanding the first sentence of this paragraph 4(i) to the contrary and
subject to COBRA, Executive's spouse as of March 1, 2010 shall cease to be
entitled to the Benefits as of the date that Executive and such spouse are no
longer legally married (other than as a result of Executive's
death).
| IV. | The Executive and the Company further amend the Agreement by adding the following new Paragraph 4(k): |
4(k). Restricted Stock Award. The Executive shall receive a restricted
stock award with a face value of Four Million and Eight Hundred Thousand Dollars
($4,800,000). The number of shares awarded will be determined based on the
Company’s stock price at the close of the market on March 17, 2010 as reported
on Nasdaq. Except as otherwise provided by this Agreement, the shares will
“cliff” vest in full (100%) on March 18, 2013 (thirty-six months from grant
date), provided the Executive continues service with the Company through such
date, provided however, that restricted stock that would otherwise vest on a
date on which a sale of such shares by the Executive would violate the Insider
Trading Policy shall vest as set forth in the Restricted Stock Agreement. The
terms and conditions of this restricted stock award will be set forth in the
Notice of Grant of Award, the Ross Stores, Inc. Restricted Stock Agreement (the
“Restricted Stock Agreement”), and the Ross Stores, Inc. 2008 Equity Incentive
Plan. The term “restricted stock” in this Agreement shall mean shares of stock
granted under the terms of a Restricted Stock Agreement.
| V. | The Executive and the Company further amend the Agreement by adding the following new Paragraph 4(l): |
4(l). Performance Share Award. The Executive shall receive for the
fiscal year ending on January 29, 2011 a target number of Performance Shares
equal to Three Million Dollars ($3,000,000) divided by the closing market price
on March 17, 2010 as reported on Nasdaq. The Performance Shares shall represent
the right to receive Common Shares of the Company’s stock determined by the
extent to which the target level of adjusted pretax profit for the fiscal year
ending January 29, 2011, approved by the Compensation Committee of the Ross
Stores, Inc. Board of Directors, has been attained and certified by the
Compensation Committee. Except as otherwise provided in the Performance Share
Agreement, the Company shall issue, based on performance attained, Unvested
Common Shares of the Company’s stock in settlement of Performance Shares on the
Settlement Date of March 21, 2011. Except as otherwise provided in the
Performance Share Agreement, Unvested Common Shares issued in settlement of the
Performance Shares shall vest and become Vested Common Shares on January 14,
2013, provided the Executive continues service with the Company through such
date, provided however, that Unvested Common
Shares that would otherwise become Vested Common Shares on a date on which a
sale of such shares by the Executive would violate the Insider Trading Policy
shall become Vested Common Shares as set forth in the Performance Share
Agreement. The terms and conditions of the Performance Shares shall be set forth
in the Notice of Grant of Performance Shares, the Ross Stores, Inc. Performance
Share Agreement (the “Performance Share Agreement”), and the Ross Stores, Inc.
2008 Equity Incentive Plan. Capitalized terms in this paragraph 4(j) shall have
the same meanings assigned to such terms in the Performance Share
Agreement.
| VI. | The Executive and the Company further amend the Agreement by deleting Paragraph 9(e) of the Agreement in its entirety and replacing it with the following new Paragraph 9(e) of the Agreement: |
(e) Non-Renewal. If the Agreement expires as set forth
in paragraph 7(h) [Non-Renewal], the Company shall have no further obligations
to the Executive except as set forth in paragraphs 7(h) and 13 and except that
the Executive shall immediately become fully vested in any restricted stock
granted to the Executive by the Company under the Ross Stores, Inc. Restricted
Stock Agreement which has not become vested as of such expiration date. The
Company shall also pay the Executive an annual bonus for the Company’s fiscal
year ending February 2, 2013. Such bonus shall not be paid until due under the
applicable Company bonus plan.
| VII. |
The Executive and the Company further amend the Agreement by adding
the following new Paragraph 10(c) of the
Agreement:
|
Recoupment: Executive
hereby understands and agrees that the Executive is subject to the Company’s
recoupment policy. Under the current policy applicable to the Company’s senior
executives, subject to the discretion and approval of the Company’s Board of
Directors (the “Board”), the Company may, to the extent permitted by governing
law, require reimbursement and/or cancellation of any Performance Share or
Common Shares issued in settlement of a Performance Share to the Executive where
all of the following factors are present: (1) the award was predicated upon the
achievement of certain financial results that were subsequently the subject of a
material restatement, (2) the Board determines that the Executive engaged in
fraud or intentional misconduct that was a substantial contributing cause to the
need for the restatement, and (3) a lower award would have been made to the
Executive based upon the restated financial results. In each instance, the
Company may seek to recover the Executive’s entire gain received by the
Executive within the relevant period, plus a reasonable rate of interest.
Except for the amendments set forth above, the Agreement and all of its
terms remain in force and in effect.
| ROSS STORES, INC. | EXECUTIVE | ||
| /s/ Norman A. Ferber | /s/ Michael Balmuth | ||
| Norman Ferber | Michael Balmuth | ||
| 4/30/10 | 4/26/10 | ||
| Date | Date |