Commission Agreement This Agreement is provided to create a shared understanding of how the commission plan works at Nordstrom. For purposes of the Agreement, the term “salesperson” refers to an employee who is paid commissions. Commissions are designed to compensate the salesperson for all time spent on selling and activities that support the selling process even if there are no customers present. When Commissions Are Earned •Each pay period, including the final pay period of employment, Nordstrom advances commissions to salespeople based on net sales as defined below. •Commissions are considered earned, and no longer advanced, after the customer has kept merchandise for more than one year from the date of purchase or exchange. •If merchandise for which a salesperson was advanced commissions is returned by the customer for any reason within one year of the date of the purchase or exchange, those returns will be included in the salesperson’s net sales calculation. Net Sales •Net sales is the difference between a salesperson’s total sales and a salesperson’s total returns, at each commission percentage, that have been audited and received by Payroll by the close of the pay period. •A return is included in the net sales calculation when the merchandise is returned by the customer for any reason within one year of the date of the purchase or exchange. (There is an exception to this approach for Fine Jewelry diamond upgrades. See your Fine Jewelry department manager or Human Resources about how diamond upgrades are handled.) •Returns are included in the net sales calculation at the same commission percentage as the percentage in effect on the date of the sale or exchange transaction. Commission Calculation Once net sales have been determined, Nordstrom calculates and advances commissions as follows: •First, each of the salesperson’s net sales calculations is multiplied by the applicable commission percentage to calculate commissions. •Then, the commissions at each commission percentage are added together to determine the salesperson’s Commission Sub-Total. •If the Commission Sub-Total is negative due to returns exceeding sales for the pay period, the negative balance (referred to as Held Net Balance) is held and applied against future commission advances for up to four pay periods. (The Held Net Balance is held for eight pay periods in states where Nordstrom pays weekly.) •If the Commission Sub-Total is positive, the salesperson is advanced the difference between their Commission Sub-Total and Held Net Balance. Misdraw Some salespeople are on a draw commission pay plan. Under this plan, Nordstrom compares a salesperson’s advanced commissions to their guaranteed minimum selling rate (also called “draw”) each pay period. •If the salesperson’s advanced commissions do not meet or exceed the guaranteed minimum draw for the pay period, the salesperson will be advanced their commissions, plus an additional amount necessary to bring the total selling compensation up to their guaranteed minimum draw. • This additional amount is shown as Misdraw on the salesperson’s payslip. Page 1 of 3 Salespeople on an hourly plus commission or salary plus commission pay plan are not eligible for Misdraw. Nordstrom will pay these salespeople their fixed hourly pay rate or salary, plus advanced commissions based on their net sales each pay period. Overtime for Commissioned Sales Employees The overtime rate for salespeople is calculated in one of two ways: it is either calculated based on their Base rate or their Regular rate (which Nordstrom refers to as the CORE rate). •When hired as a non-exempt commissioned employee, a salesperson is paid overtime at the CORE rate for the first three pay periods. •In most states, after the first three pay periods, the salesperson is paid overtime using the Base rate if the salesperson’s wages meet specific criteria, including, but not limited to the following: 1. T he salesperson’s advanced commissions for the prior six months (or, if employed less than six months, their cumulative commissions since the date of hire) are more than half their total compensation, and 2. The salesperson’s total compensation is more than 1.5 times minimum wage for every hour worked. •During the first six months of employment, Nordstrom determines the appropriate rate for overtime each pay period. After this period of time, Nordstrom determines the appropriate rate for overtime on a quarterly basis. A salesperson is paid overtime based on the CORE rate if their pay does not meet the criteria described above during the representative period. Nordstrom determines whether the salesperson earned more than one-half of their compensation in commissions over a six-month period, because that period represents the salesperson’s sales pattern taking into account seasonal fluctuations and sale periods. Reporting of Commissions Each salesperson has access to “My Commissions Information” which accompanies the payslip and shows the salesperson’s: • Commission advances for the pay period. • Net sales calculation at each commission percentage. • Held Net Balance. Non-Commissionable Sales The following transactions are not eligible for commission advances: •Sales to other employees or eligible family members placed on-line through Nordstrom Direct where the merchandise discount is applied. • International sales sent through a Nordstrom third-party shipper. •Sales on non-commissionable merchandise departments such as Restaurant retail products, purchase with purchase promotions, Rack or NQC (Nordstrom Quality Center) merchandise and deposits on special orders. • Sales of gift cards or gift certificates When Your Employment with Nordstrom Ends •In most states, including New York, if a salesperson’s employment with Nordstrom ends prior to the last day of a pay period, Nordstrom will pay the salesperson’s pay period commission advances and any other amounts due on the next regularly scheduled pay day. •In states requiring wage payment prior to the next regularly scheduled payday, Nordstrom will pay the salesperson their guaranteed minimum draw, their hourly wage or their prorated salary for the hours worked through the last date of employment, in addition to any other calculable amounts due. For employees on a draw commission pay plan, Nordstrom will calculate the salesperson’s net sales commissions at the end of the pay period in which the salesperson’s employment ends. If the salesperson’s net sales commissions exceed the guaranteed minimum draw due the employee, Nordstrom will advance the difference. For Page 2 of 3 employees paid on an hourly or salary basis, Nordstrom will calculate and advance net sales commissions, if any, at the end of the pay period in which the salesperson’s employment ends. At the pay period following termination, Nordstrom will also pay appropriate adjustments to all salespeople for premium pay, including overtime, affected by commissions. •Nordstrom will continue to calculate a salesperson’s net sales each pay period for up to 90 days following the salesperson’s last day of employment. Nordstrom will advance additional commissions each pay period following termination where there is a positive net balance and the value of the salesperson’s sales exceeds the Held Net Balance or any returns since the salesperson’s termination. This may occur, for example, when an item is sold before the last day of the salesperson’s employment, but is on back order. I authorize Nordstrom to calculate, pay and report my commissions as described above. printed Name Employee Number Employee Signature Date If you have questions about how commissions will be paid during your employment or upon termination of employment from Nordstrom, please see your Human Resources Office. This agreement will remain in effect until the Company communicates a change to its terms. Page 3 of 3 13.CMP.3043_14171_0513