CLAIBORNE LIZ INC
EX 10.1 CASH BONUS PLAN
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>cashbonusplan.txt
<DESCRIPTION>EX 10.1 CASH BONUS PLAN
<TEXT>
                                                                    EXHIBIT 10.1


                  LIZ CLAIBORNE SECTION 162(M) CASH BONUS PLAN
                   (AS AMENDED AND RESTATED, MARCH 12, 2003)

1. Definitions

     The following terms have the meanings indicated unless a different meaning
is clearly required by the context:

          1.1 "Board of Directors" means the Board of Directors of the Company.

          1.2 "Code" means the Internal Revenue Code of 1986, as amended.

          1.3 "Committee" means the Compensation Committee of the Board of
     Directors or a subcommittee thereof. The Committee at all times shall be
     composed of at least two directors of Liz Claiborne, Inc., each of whom
     shall be "outside directors" within the meaning of section 162(m) of the
     Code.

          1.4 "Company" means Liz Claiborne, Inc. and its consolidated
     subsidiaries and affiliates.

          1.5 "Executive Officer" has the meaning set forth in Rule 3b-7
     promulgated under the Securities Exchange Act of 1934, as amended.

          1.6 "Participant" means an individual who participates in the Plan
     pursuant to Section 3.1.

2. Purpose

     The purpose of the Plan is to provide annual incentives to certain senior
executive officers in a manner designed to reinforce the Company's performance
goals; to strengthen the Company's "pay for performance" ethic by linking a
significant portion of participants' compensation to the achievement of such
goals; and to continue to attract, motivate and retain high performing
executives on a competitive basis, while seeking to preserve for the benefit, to
the extent practicable, a tax deduction by the Company for payments of incentive
compensation to such executives through payment of qualified "performance-based"
compensation within the meaning of Section 162(m)(4)(C) of the Code.

3. Participation

          3.1 An individual shall be a Participant in the Plan for a fiscal year
     of the Company if he or she (a) is an Executive Officer of Liz Claiborne,
     Inc. on the first day of such year or becomes an Executive Officer of Liz
     Claiborne, Inc. during such year by virtue of being hired or promoted and
     (b) has a base salary in excess of $500,000 per year or is reasonably
     expected by the Committee to have compensation for such year in excess of
     $1.0 million; provided, however, that if the Committee determines, in its
     discretion, prior to the ninety-first (91st) day of such fiscal year, that
     it would be in the best interests of the Company and its stockholders for
     one or more otherwise eligible Executive Officers not to be a participant
     for such year, such person shall not be a Participant for such year and the
     Committee may in its discretion establish alternative incentive
     compensation arrangements for such person; provided, however, no individual
     who is so excluded as a Participant for a fiscal year shall have any
     entitlement to participate in any such alternative incentive compensation
     arrangement.

          3.2 An individual who is a Participant in the Plan for a fiscal year
     shall not participate for such fiscal year in the Company's regular annual
     bonus program.

4. Performance Goals

          4.1 Prior to the ninety-first (91st) day of each fiscal year of the
     Company, the Committee shall set one or more objective performance goals
     for each Participant for such year. Such goals shall be expressed in terms
     of (a) one or more corporate or divisional earnings-based measures (which
     may be based on the following: net income, operating income, cash flow,
     residual income, or any combination thereof) and/or (b) one or more
     corporate or divisional sales-based measures. Each such goal may be
     expressed on an absolute and/or relative basis, may employ comparisons with
     past performance of the Company (including one or more divisions) and/or
     the current or past performance of other companies, and in the

                                       1
<PAGE>



     case of earnings-based measures, may employ comparisons to capital,
     stockholders' equity and shares outstanding.

          4.2 Except as otherwise provided herein, the measures used in
     performance goals set under the Plan shall be determined in accordance with
     generally accepted accounting principles ("GAAP") and in a manner
     consistent with the methods used in the Company's regular reports on Forms
     10-K and 10-Q, without regard to any of the following unless otherwise
     determined by the Committee consistent with the requirements of Section
     162(m)(4)(C) and the regulations thereunder:

             (a) all items of gain, loss or expense for the fiscal year that are
        related to special, unusual or non-recurring items, events or
        circumstances affecting the Company or the financial statements of the
        Company;

             (b) all items of gain, loss or expense for the fiscal year that are
        related to (i) the disposal of a business or discontinued operations or
        (ii) the operations of any business acquired by Company during the
        fiscal year; and

             (c) all items of gain, loss or expense for the fiscal year that are
        related to changes in accounting principles or to changes in applicable
        law or regulations.

          4.3 To the extent any objective performance goals are expressed using
     any earnings or sales-based measures that require deviations from GAAP,
     such deviations shall be at the discretion of the Committee.

5. Bonus Awards

          5.1 At the time that annual performance goals are set for
     Participants, the Committee shall establish a maximum award opportunity for
     each Participant for the year. The maximum award opportunity shall be
     related to the Participant's base salary at the start of the year by a
     formula that takes account of the degree of achievement of the goals set
     for the Participant; provided, however, that the Committee shall have
     absolute discretion to reduce the actual bonus payment that would otherwise
     be payable to any Participant on the basis of achievement of performance
     goals.

          5.2 The maximum award paid to a Participant in respect of a particular
     fiscal year shall in no event exceed $5.0 million.

          5.3 Bonuses determined under the Plan shall be paid to Participants in
     cash at such time as bonuses are generally paid to other Executive
     Officers; provided, however, that no such payment shall be made until the
     Committee has certified (in the manner prescribed under applicable
     regulations under Section 162(m) of the Code) that the performance goals
     and any other material terms related to the award were in fact satisfied;
     and provided further that the timing of any such payment may be deferred
     pursuant to an agreement between the Company and a Participant or under
     Section 7.6 hereof.

          5.4 In the event of the death of a Participant after the end of a
     fiscal year and prior to any payment otherwise required pursuant to Section
     5.3, such payment shall be made to the representative of the Participant's
     estate.

          5.5 In the event of the death, disability, retirement or other
     termination of employment of a Participant during a fiscal year, the
     Committee shall, in its discretion, have the power to award to such
     Participant (or the representative of the Participant's estate) an
     equitably prorated portion of the bonus which otherwise would have been
     earned by such Participant.

          5.6 The right of a Participant or of any other person to any payment
     under the Plan shall not be assigned, transferred, pledged or encumbered in
     any manner and any attempted assignment, transfer, pledge or encumbrance
     shall be null and void and of no force or effect.

6. Administrative Provisions

          6.1 The Plan shall be administered by the Committee. The Committee
     shall have full, exclusive and final authority in all determinations and
     decisions affecting the Plan and Participants, including sole

                                       2
<PAGE>



     authority to interpret and construe any provision of the Plan, to adopt
     such rules and regulations for administering the Plan as it may deem
     necessary or appropriate under the circumstances, and to make any other
     determination it deems necessary or appropriate for the administration of
     the Plan. Decisions of the Committee shall be final and binding on all
     parties. All expenses of the Plan shall be borne by the Company.

          6.2 No member of the Committee shall be liable for any action,
     omission, or determination relating to the Plan, and the Company shall
     indemnify and hold harmless each member of the Committee and each other
     director or employee of the Company or its affiliates to whom any duty or
     power relating to the administration or interpretation of the Plan has been
     delegated against any cost or expense (including counsel fees, which fees
     shall be paid as incurred) or liability (including any sum paid in
     settlement of a claim with the approval of the Committee) arising out of or
     in connection with any action, omission or determination relating to the
     Plan, unless, in each case, such action, omission or determination was
     taken or made by such member, director or employee in bad faith and without
     reasonable belief that it was in the best interests of the Company.

7. Miscellaneous

          7.1 The Plan was initially adopted by the Board of Directors on March
     9, 1994, subject to stockholder approval (which was obtained on May 12,
     1994), and took effect beginning with the fiscal year of the Company
     starting January 1, 1995. The Plan was amended and restated as of March 3,
     1999, subject to stockholder approval (which was obtained on May 20, 1999).
     The Plan was further amended and restated as of March 12, 2003, and,
     pursuant to the requirements necessary for awards under the Plan to
     constitute qualified performance-based compensation under Section 162(m) of
     the Code, the Plan, as so amended and restated, is being resubmitted for
     stockholder approval in 2003, with effect for payments otherwise payable in
     respect of fiscal years of the Company beginning with the Company's 2003
     fiscal year. If the Plan, as amended and restated, is approved by the
     Company's stockholders at their 2003 annual meeting, no bonus will be
     payable hereunder in respect of any fiscal year beginning after January 3,
     2009.

          7.2 The Board of Directors may at any time amend the Plan in any
     fashion or terminate or suspend the Plan; provided that no amendment shall
     be made which would cause bonuses payable under the Plan to fail to qualify
     for the exemption from the limitations of Section 162(m) of the Code
     provided in Section 162(m)(4)(C) of the Code. Upon any such termination,
     all rights of a Participant with respect to any fiscal year that has not
     ended on or prior to the effective date of such termination shall become
     null and void.

          7.3 The Plan shall be governed by and construed in accordance with the
     internal laws of the State of New York applicable to contracts made, and to
     be wholly performed, within such State, without regard to principles of
     choice of laws.

          7.4 All amounts required to be paid under the Plan shall be subject to
     any required Federal, state, local and other applicable withholdings or
     deductions.

          7.5 Nothing contained in the Plan shall confer upon any Participant or
     any other person any right with respect to the continuation of employment
     by the Company or interfere in any way with the right of the Company at any
     time to terminate such employment or to increase or decrease the
     compensation payable to the Participant from the rate in effect at the
     commencement of a fiscal year or to otherwise modify the terms of such
     Participant's employment. No person shall have any claim or right to
     participate in or receive any award under the Plan for any particular
     fiscal year.

          7.6 Notwithstanding any other provision hereunder, if and to the
     extent that the Committee determines the Company's Federal tax deduction in
     respect of an award hereunder may be limited as a result of Section 162(m)
     of the Code, the Committee may delay such payment as provided below. In the
     event the Committee determines to delay the payment of a bonus or any
     portion thereof hereunder, the Committee shall credit the amount of the
     award so delayed to a book account. The amount so credited to the book
     account shall be adjusted to reflect gains and losses that would have
     resulted from the

                                       3
<PAGE>



     investment of such amount in any investment vehicle or vehicles selected by
     the Committee. Part or all of the amount credited to the Participant's
     account hereunder shall be paid to the Participant at such time or times as
     shall be determined by the Committee, if and to the extent the Committee
     determines that the Company's deduction for any such payment will not be
     reduced by Section 162(m) of the Code. Notwithstanding the foregoing, the
     entire balance credited to the Participant's book account shall be paid to
     the Participant within 90 days after the Participant ceases to be a
     "covered employee" within the meaning of Section 162(m) of the Code. The
     Participant shall have no rights in respect of such book account and the
     amount credited thereto shall not be transferable by the Participant other
     than by will or laws of descent and distribution; any book account created
     hereunder shall represent only an unfunded unsecured promise by the Company
     to pay the amount credited thereto to the Participant in the future.

                                        4



</TEXT>
</DOCUMENT>
