Key Employee Recognition And Commitment Plan

EXHIBIT 10.23


KEY EMPLOYEE RECOGNITION AND COMMITMENT PLAN


OF


LEVI STRAUSS & CO.


CONFIDENTIAL
------------


ABOUT THIS MATERIAL - --------------------------------------------------------------------------------


This document describes how the Key Employee Recognition and Commitment Plan of Levi Strauss & Co. works. It explains:


. The purpose of the Plan;


. Who administers the Plan;


. Who is eligible to receive an award under the Plan;


. How individual awards are determined;


. What a Unit is and how it works;


. When awards are paid; and


. What happens in the event of termination of employment.


This is the official Plan document, which contains the exclusive and complete description of the terms this Plan. This Plan may be amended from time to time, at the discretion of the Administrator.


CONTENTS - --------------------------------------------------------------------------------
Page
----


Key Employee Recognition and Commitment Plan of Levi Strauss & Co. 1


Appendix One: Glossary of Terms 17


Appendix Two: Time Line of Actions Under This Plan 20


KEY EMPLOYEE RECOGNITION AND COMMITMENT PLAN OF LEVI STRAUSS & CO. - -------------------------------------------------------------------------------


The Key Employee Recognition and Commitment Plan of Levi Strauss & Co. ("Plan") recognizes and rewards key employees for making contributions, over time, to the Company's success. Awards are based on achievement of long-term financial and corporate values objectives of the Company.


PURPOSE OF THE PLAN - -------------------


. To recognize selected key employees who have made, continue to make,
have the potential to make, or are expected to make substantial
contributions to the Company.


. To engender a commitment to the continued success of the Company.


. To engender a commitment to enhance pride of association with the
Company.


. To provide a financial award for meeting long-term financial objectives
measured by cash flow and for modeling and promoting Company values and
integrating such values into all business decisions.


. To encourage and reward team performance.


EFFECTIVE DATE - --------------


. The Plan starts on the first day of fiscal year 1997, and ends on the
last day of fiscal year 2003.


PLAN ADMINISTRATION - -------------------


. The Plan is administered under the direction of the Administrator. The
Administrator's determinations and interpretations (including, without
limitation, those relating to determination of Financial Unit Value,
Settlement Unit Value, Corporate Values Score, and those relating to
payment upon employment termination) shall be binding on all


1


Participants. In administering the Plan, the Administrator will consult
with the Chief Executive Officer. The Administrator may delegate any of its
duties to others.


. The Administrator's responsibilities include, but are not limited to,
approving:


-- An employee's participation in the Plan, as nominated by the Chief
Executive Officer;


-- Financial and corporate values measures and objectives;


-- Participants' individual target awards;


-- Corporate Values Scores;


-- Settlement Unit Values;


-- Award Payments;


-- Interpretation of the Plan; and


-- Plan amendments.


ELIGIBILITY - -----------


. Participants are employees of the Company and Subsidiaries who are
nominated by the Chief Executive Officer and approved by the Administrator.


WRITTEN AWARD AGREEMENT - -----------------------


. A written Award Agreement will be created for each Participant that
documents the number of Units granted and other terms, conditions, and
rights as determined by the Administrator.


TARGET AWARDS FOR PARTICIPANTS - ------------------------------


2


. Participants' individual target awards are determined by the
Administrator.


GRANTS - ------


. A Participant will receive a one-time grant of Units as of the first day
of fiscal year 1997. Subsequently, the Administrator may, at its
discretion, grant additional Units to Participants, including new
Participants.


. The number of Units granted is determined by dividing the Participant's
individual target award by $1,000.


FINANCIAL MEASURES AND OBJECTIVES - ---------------------------------


. The Company's EBITDA is the measure used to set the Company's financial
objectives and to assess performance against those objectives.


. The Company's EBITDA means the audited net income of the Company on a
consolidated basis before (1) interest, (2) taxes, (3) depreciation, (4)
amortization, (5) costs and expenses relating to the Company's acquisition
of Levi Strauss Associates Inc., including compensation-related expenses
resulting from such acquisition, such as with respect to stock options and
stock appreciation rights, (6) all accruals and expenses directly relating
to the operation of the Global Success Sharing Plan, and (7) all accruals
and expenses directly relating to the operation of this Plan, all as
determined by the Administrator.


. The financial objectives are shown below in Table I on page 5.


. The Company's achievement of financial objectives will be expressed as
Financial Unit Value, as shown in Table II on page 5.


CORPORATE VALUES OBJECTIVES - ---------------------------


3


. The use of Corporate Values Score is intended to align the financial
rewards under the Plan with the Company's strategic aim of promoting and
integrating Company values into business decisions and practices.


. The Chief Executive Officer may seek Participants' recommendations in
establishing or revising the corporate values objectives for purposes of
this Plan. The Chief Executive Officer will initially determine the
corporate values objectives during the fiscal year 1997 and may
subsequently revise them. The Administrator may review the initial or
revised corporate values objectives at the Administrator's initiation and
discretion.


. The Company's and the Participants' collective achievement of the
corporate values objectives will be reviewed by the Chief Executive
Officer, with the Participants' input, on a cumulative and on-going basis
at such times as the Chief Executive Officer may decide in his or her sole
discretion.


. The Company's and the Participants' collective achievement of corporate
values objectives, as of the end of fiscal years 2001, 2002, and 2003, will
be expressed as the Corporate Values Score. The range of the Corporate
Values Score will be determined by the Chief Executive Officer, with input
from the Participants', in fiscal year 1997. The Chief Executive Officer
will determine the Corporate Values Score, subject to review and
modification by the Administrator at the Administrator's initiative and
discretion.


. If Corporate Values Score is not measured for any particular fiscal
year, the last measured Corporate Values Score will be used in determining
Settlement Unit Value (as defined below under "Settlement Unit Value and
Award Payment").


SETTLEMENT UNIT VALUE AND AWARD PAYMENT - ---------------------------------------


. Award Payment is the cash payable to a Participant upon exercise of his
or her vested Units. The amount of Award Payment is determined by
multiplying the number of Units exercised by the applicable Settlement Unit
Value.


. Settlement Unit Value is determined by multiplying the Financial Unit
Value by the Corporate Values Score (each as applicable during the Exercise
Period in which the vested Units are exercised).


. The Financial Unit Value will be determined as of the last day of fiscal
years 2001, 2002, and 2003, based on the Company's achievement of financial
objectives.


4


. Table I shows the Company's financial objectives, i.e., threshold and
target EBITDA levels for fiscal years 2001, 2002, and 2003:


Table I


===================================================================================================================
CUMULATIVE EBITDA IN END OF FISCAL YEAR END OF FISCAL YEAR END OF FISCAL YEAR
U.S. $ (IN BILLIONS) 2001 2002 2003
-------------------------------------------------------------------------------------------------------------------

TARGET $6.2 $8.1 $10.2
-------------------------------------------------------------------------------------------------------------------
THRESHOLD $4.8 $6.0 $ 7.2
===================================================================================================================


. Table II shows the Financial Unit Value upon meeting threshold and target
EBITDA levels for fiscal years 2001, 2002, and 2003.


Table II


===================================================================================================================
FINANCIAL UNIT VALUE END OF FISCAL YEAR END OF FISCAL YEAR END OF FISCAL YEAR
2001 2002 2003
-------------------------------------------------------------------------------------------------------------------

TARGET $667 $833 $1,000
-------------------------------------------------------------------------------------------------------------------
THRESHOLD $ 0 $ 0 $ 0
===================================================================================================================


. As of end of each fiscal year 2001, 2002, and 2003,


-- The Financial Unit Value will be zero if the Company's EBITDA meets or
is less than the threshold level.


-- If the Company's EBITDA meets the target level, the Financial Unit
Value will be as shown above in Table II.


-- If the Company's EBITDA is between the threshold level and the target
level, the Financial Unit Value will be interpolated on a straight-
line basis.


-- If the Company's EBITDA exceeds the target level, the Financial Unit
Value will be extrapolated on a straight-line basis.


-- There is no maximum on the Financial Unit Value.


PERFORMANCE PERIOD - ------------------


5


. The Performance Period for the Units will be up to 7 years. The
Performance Period of the Units for an individual Participant also depends
on employment termination, as discussed further on pages 8-12 regarding
termination of employment.


VESTING AND EXERCISE SCHEDULE; DEFERRAL OF RECEIPT - --------------------------------------------------


. The Units granted effective as of the beginning of fiscal year 1997 will
vest in 25% increments on the last day of fiscal years 1997, 1998, 1999,
and 2000, respectively. All other grants will be subject to vesting terms
established by the Administrator.


. The vested Units will become exercisable in 33-1/3% increments on the
last day of fiscal years 2001, 2002, and 2003, respectively. Once vested
Units become exercisable, a Participant can exercise all or any portion of
his or her vested Units, by delivering to the Company, during any Exercise
Period, an exercise notice in a form to be prescribed by the Administrator.


. Vested Units that have not been exercised by the end of fiscal year 2003
will be automatically deemed exercised during the second quarter of fiscal
year 2004, and Award Payment will be paid as soon as practicable
thereafter.


. A Participant who is eligible to participate in the Company's Deferred
Compensation Plan For Executives may defer receipt of Award Payment payable
upon future exercise of his or her vested Units, to the extent permitted
under and in accordance with the terms of the Deferred Compensation Plan
for Executives. A Participant who elects to defer must elect irrevocably,
on a form to be prescribed by the Administrator, during the applicable
Deferral Election Period.


. For any Participant who is not eligible to participate in the Company's
Deferred Compensation Plan For Executives and whose Company-related income
is subject to taxation outside of the United States, deferral of receipt of
Award Payment will be subject to local law and at the discretion of the
Administrator, as of the beginning of the applicable Deferral Election
Period.


. Applicable Deferral Election Periods are as follows:


-- With respect to vested Units that become exercisable at the end of
fiscal year 2001, the Deferral Election Period is the second quarter
of fiscal year 2001.


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-- With respect to vested Units that become exercisable at the end of
fiscal year 2002, the Deferral Election Period is the second quarter
of fiscal year 2002.


-- With respect to vested Units that become exercisable at the end of
fiscal year 2003, the Deferral Election Period is the second quarter
of fiscal year 2003.


. Table III shows the vesting and exercise schedule, Exercise Periods, and
the Deferral Election Periods.


Table III


================================================================================================================================== FISCAL YEAR PERCENTAGE OF UNITS RIGHT TO EXERCISE VESTED PERCENTAGE OF VESTED EXERCISE PERIOD DEFERRAL ELECTION
VESTED (ON THE LAST UNITS (ON THE LAST DAY UNITS EXERCISABLE PERIODS (FOR ELIGIBLE
DAY OF THE FISCAL OF THE FISCAL YEAR) (ON THE LAST DAY OF PARTICIPANTS)
YEAR) THE FISCAL YEAR) - ------------------------------------------------------------------------------------------------------------------------------
1997 25% No 0 N/A N/A - ------------------------------------------------------------------------------------------------------------------------------
1998 25% No 0 N/A N/A - ------------------------------------------------------------------------------------------------------------------------------
1999 25% No 0 N/A N/A - ------------------------------------------------------------------------------------------------------------------------------
2000 25% No 0 N/A N/A - ------------------------------------------------------------------------------------------------------------------------------
2001 -- Yes first 33-1/3 2nd quarter of 2nd quarter of FY
FY 2002 2001 - ----------------------- ...