Nordstrom's skewed incentive plan.

What kind of long term incentive plan involves accelerated vesting of stock units?

This is precisely the kind of incentive that is outlined in Nordstrom's revised 2004 Equity Incentive Plan (EIP) that I found in its recent 8-K filing (11/24/08). It outlines a plan to accelerate vesting of restricted stock units from 3 years to 6 months. This has some really strong implications considering that the stock is trading at its lowest levels in the past year! Ironically, the company states the purpose of the EIP is "to promote the long-term success of the Company and its subsidiaries and the creation of shareholder value by (a) encouraging Employees and Non-Employee Directors to focus on critical long-range objectives,......"

With restricted stock units vesting as fast as 6 months, there is almost, a myopic focus on the short term rather than long term. The awards of such restricted stock units is completely at the discretion of the 4 directors on the Compensation Committee as stated by the 8-K filing, "The (Compensation) committee shall select employees and non employee directors who will receive benefits under this plan."

What will be interesting to see is who will be awarded such restricted stock units in the months to come. As per Nordstrom's latest proxy filed in April of 2008, none of the named executive officers had any outstanding restricted stock awards. It almost appears as if the company is laying the groundwork to start issuing some lucrative restricted stock units to certain executive officers and directors.