EX-10.1 2 l10252aexv10w1.txt EXHIBIT 10.1 Exhibit 10.1 ABERCROMBIE & FITCH October 20, 2004 Tom Mendenhall XXXXXXXXXXXXXXX XXXXXXXXXXXXXXX Dear Tom: We are thrilled that you are considering joining us here at Abercrombie & Fitch, and we are excited to extend the following offer of employment: POSITION Sr. Vice President & General Manager - Abercrombie & Fitch and abercrombie BASE SALARY $700,000 annually You will be reviewed in March, 2006 and at least annually thereafter, with annual salary adjustments based on: (1) Your performance (2) Economic factors (i.e. business conditions, inflation, job market, etc.) SIGN-ON BONUS Upon hire, Abercrombie & Fitch will pay you a one-time bonus payment of $50,000. This bonus payment will be made along with your first regular paycheck. If you voluntarily resign from A&F during your first 12 months of employment, or are terminated for gross misconduct, you will be required to reimburse the Company for the full amount of the bonus. INCENTIVE BONUS COMPENSATION You will be eligible to participate in our Incentive Compensation (cash bonus) Program at a target payout level of 50% of your annual base earnings, with a maximum payout of 100% of your annual base earnings. At the income level quoted in this offer, your target annual payout is $350,000, and your maximum annual payout is $700,000. - Incentive Compensation is paid in two installments during the year (40% in August and 60% in February). Your first Incentive Compensation payout will occur in February, 2005 and will be pro rated based on your date of hire. - All Incentive Compensation (IC) payouts are based on Abercrombie and Fitch's profit results and can vary from zero (0) to a maximum of double your target level. STOCK OPTIONS Upon hire you will receive stock options covering 75,000 Abercrombie & Fitch shares of Class A common stock. The options will be valued according to the closing price of A&F Class A common stock on the New York Stock Exchange (NYSE) on your date of hire as a regular, full-time employee. Stock Options are exercisable on each anniversary date of the grant in accordance with the following vesting schedule: Year 1 Year 2 Year 3 Year 4 ------ ------ ------ ------ 25% 25% 25% 25% P.O. BOX 182168, COLUMBUS, OH 43218 - TEL (614) 283-6500 - FAX (614) 283-6565 RESTRICTED STOCK GRANT Upon your date of hire you will receive 15,000 Abercrombie & Fitch shares of restricted stocks. These shares are also exercisable on each anniversary date of the grant in accordance with the following 4 year vesting schedule: Year 1 Year 2 Year 3 Year 4 ------ ------ ------ ------ 10% 20% 30% 40% SEVERANCE IN THE EVENT OF If Abercrombie & Fitch terminates your TERMINATION employment for any reason (excluding resignation or termination for cause) within 12 months of your start date, the Company agrees to provide salary continuance for a period of 12 months from the termination date. 401(k) QUALIFIED SAVINGS PLAN After 1 year of employment, you will be eligible to participate in the Abercrombie & Fitch Qualified 401(k) Savings Plan. As a participant in this plan, you will be eligible to defer up to 50% of your base salary and bonus, or up to the IRS maximum annual deferral limit of $13,000, whichever is less. The first 3% of your base salary and bonus that you defer into this plan (up to the IRS maximum considered compensation of $205,000) will be matched by A&F at 100%. The next 2% of your base salary and bonus that you defer into this plan will be matched at 50%. At the base salary and target bonus quoted in this offer, and assuming at least a 5% base salary and target bonus deferral into the plan, this would result in an annual company match of $8,200. A&F QUALIFIED RETIREMENT PLAN Also after 1 year of employment, you will eligible to participate in the Abercrombie & Fitch Qualified Retirement Plan. As a participant in this plan, you will be eligible to receive an annual retirement plan contribution from the company equal to 5% of your annual base pay below the Social Security wage base of $87,900, and 8% of the remainder of your base pay which is above the social security wage base, but below $205,000. At the base salary quoted in this offer, this would result in a total annual qualified retirement plan contribution of $13,763. A&F NON-QUALIFIED SAVINGS PLAN After 30 days of employment, you will be eligible to participate in the Abercrombie & Fitch Non-Qualified Savings Plan. This Plan will allow you to defer up to 75% of your base salary each year, and up to 100% of your bonus. The company will match the first 3% that you defer on a dollar for dollar basis. At the base salary quoted in this offer, this would result in a company match of $31,500 on a 3% base and target bonus deferral. A&F NON-QUALIFIED RETIREMENT PLAN After 1 year of employment, you will be eligible to participate in the Abercrombie & Fitch Non-Qualified Retirement Plan. As a participant in this plan, you will be eligible to receive an annual retirement plan contribution from the company equal to 8% of your annual base pay which exceeds the IRS Qualified Plan compensation limit of $205,000. You will also receive a "make-up" match in this plan equal to the company match that you forfeit in the 401(k) Qualified Savings Plan due to the IRS Qualified Plan compensation limit of $205,000. At the base salary quoted in this offer, this would result in an annual Non-Qualified Retirement Plan contribution of $73,400. MEDICAL, DENTAL, LIFE & On your 31st calendar day of employment, DISABILITY INSURANCE you will be eligible to participate in our Medical, Dental, Life & Disability Insurance plans. The current employee contribution required for all of these benefits combined is as follows: Single Coverage $10 per week Single (+) One $20 per week Family Coverage $30 per week FLEXIBLE SPENDING ACCOUNT (FSA) On your 31st day of employment, you will be eligible to participate in A&F's Flexible Spending Account (FSA) plan. FSA's allow you to save money by paying for certain healthcare and childcare expenses with pre-tax dollars via automatic payroll deductions. EMPLOYEE ASSISTANCE PROGRAM On your 31st calendar day of employment, you will automatically be enrolled in our Employee Assistance Program. The EAP gives you or any covered dependents access to free, confidential psychological, financial, or legal counseling through our EAP provider, Matrix Psychological Services. Up to 6 free visits, per specific issue, are available through the EAP. A&F GYM Effective upon hire, you will be eligible to join The A&F Gym, our state of the art 8,000 square foot on-site fitness facility. The cost of membership is only $10 per month, which is paid via automatic payroll deduction after you enroll. EXECUTIVE LIFE INSURANCE You will be eligible to receive group INSURANCE term life insurance equal to 4 times your base annual salary (maximum of $2,000,000 coverage). MERCHANDISE DISCOUNT You will receive a discount of 40% on qualified purchases at all Abercrombie & Fitch, abercrombie, & Ruehl stores. You will also receive a discount of 30% on qualifying purchases at all Hollister Co. stores. VACATION/PERSONAL HOLIDAYS Beginning 1/1/2005, you will be eligible for 20 vacation days (four weeks) and three personal days annually. Additional vacation time accrues based on your length of service with the company. At the beginning of your 6th calendar year of employment with the company, you will receive an additional week of vacation. Total vacation eligibility at Abercrombie & Fitch is capped at 25 days (five weeks). Abercrombie & Fitch also grants 8 paid holidays to all home office associates annually. Tom, as you review this information, please call me to clarify any issues. We look forward to welcoming you to the A&F team. Sincerely, /s/ Mike Jeffries Mike Jeffries Chairman and CEO I accept Abercrombie & Fitch's offer of employment as outlined in this letter, and I am returning a signed copy to Human Resources. /s/ Tom Mendenhall 10/22/2004 ------------------------ -------------------------- Tom Mendenhall Date