DESCRIPTION OF 162(m) CASH BONUS PLAN
As a result of the enactment in 1993 of 162(m) of the Internal Revenue Code, compensation paid to a
publicly-traded company's chief officer and any of the next four highest paid executive officers in exces
of $1 million (per executive) will generally be non-deductible, subject to certain exceptions, including
exception for stockholder-approved "performance-based" compensation programs.
The Board of Directors of Liz Claiborne, Inc. (the "Company") adopted, on March 9, 1994, subject to
stockholder approval, the 162(m) Cash Bonus Plan, which is a separate annual bonus plan for certain senio
executive officers (the "162(m) Plan"), so as to qualify bonuses paid under that Plan for the 1995 fiscal
year and later years as "performance-based".
Eligible Executives. For each fiscal year commencing on or after January 1, 1995, the 162(m) Plan will
cover all employees (i) having a base salary in excess of $500,000, or whose compensation may reasonably
expected to exceed the $1 million threshold as determined by the Compensation Committee prior to the star
of such year, and (ii) who are executive officers at the start of such year or are hired or promoted into
that status during such year. Participants in the 162(m) Plan will not participate in the Company's
Annual Bonus Plan already in place. The Compensation Committee reserves the right to establish alternati
incentive compensation arrangements for otherwise eligible executives if it determines, in its discretion
that it would be in the best interests of the Company and its stockholders to do so.
Business Criteria Under the 162(m) Plan for 1995 and Later Fiscal Years. Under the 162(m) Plan, the
Compensation Committee will set one or more objective performance goals for each participant each year us
one or more earnings-based measures (which may be based on net income, operating income, cash flows, or a
combination thereof), and if the Compensation Committee