Full-time Executives Long Term Disability Benefits Highlights July 2008-June 2009

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1 Full-time Executives Long Term Disability Benefits Highlights July 2008-June 2009 Long-term disability insurance gives you income during the time you need to receive treatment to recover from a serious illness or manage the challenges of an extended disability that prevents you from returning to work.

2 Flexible Benefit Design Since unexpected events like a difficult pregnancy, a serious illness or an auto accident cannot be avoided, you need to be prepared. Whether you are single, or if you have a family who depends on you, long-term disability insurance provides you with an income source even if you re unable to work so you can concentrate on recovery. The Macy s, Inc. Group Long Term Disability Plan provides flexibility by offering two levels of coverage for executives. For those who earn up to $150,000, the options are: the Foundation option, or the Foundation Plus option, the higher coverage level. For those who earn who earn more than $150,000, the options are: the Pinnacle option, or the Pinnacle Plus option, the higher coverage level. Making Your LTD Election Evaluate your long-term disability coverage on an annual basis to determine if you are enrolled in the option that best meets your financial needs. You can switch from one option to the other each year during an annual enrollment period for coverage effective July 1, or at anytime during the year when you experience a qualified change in family status. If you initially enroll in the Foundation option and decide to switch to the Foundation Plus option at a later date, there is an 8-month waiting period before benefits will be payable under the Foundation Plus benefit level. If you become disabled during this 8- month waiting period, disability benefits will be paid at the lower level. Similarly, if you initially enroll in the Pinnacle option and decide to switch to the Pinnacle Plus option at a later date, there is an 8-month waiting period before benefits will be payable under the Pinnacle Plus benefit level. If you become disabled during this 8-month waiting period, disability benefits will be paid at the lower level. Finally, if you decide to waive coverage in this Plan during your initial eligibility, you may enroll during a future annual enrollment period or upon a qualified change in family status with no evidence of insurability required. (The pre-existing condition limitation applies, however.) When changes in your family status occur, you must call Macy s HR Services as soon as possible but no later than 31 days after the date of the event. Family status changes that could result in changes to your coverage include marriage, divorce or birth of a child.

3 Benefits of the Foundation and Foundation Plus Options Benefit Design Foundation Option Foundation Plus Option Covered Compensation Up to $150,000 basic earnings Basic earnings means your rate of pay not reduced by any deferred salary Benefit 40% of annual basic earnings up to $150,000 60% of annual basic earnings up to $150,000*** Benefit Waiting Period 26 weeks from first day of disability Maximum Monthly Benefit $5,000 $7,500 Minimum Monthly Benefit $100 Evidence of Insurability Not Required Duration of Benefits Age at Disability Less than or equal to greater than or equal to 69 Maximum Duration of Benefits To age months 48 months 42 months 36 months 30 months 24 months 18 months 15 months 12 months Benefit Calculation Example Benefit Calculation Example Annual Basic Earnings: Age: Foundation $80, Annual Basic Earnings: Age: Foundation Plus $30, Estimated Monthly Benefit Calculation* Monthly Basic Earnings: $80,000/12 = $6, Potential LTD Benefit: $6, x.40 = $2, Your Estimated Social Security Benefit: $1,754.00** LTD Benefit: $ Total Estimated Monthly Income: $2, Estimated Monthly Benefit Calculation* Monthly Basic Earnings: $30,000/12 = $2, Potential LTD Benefit: $2,500 x.60 = $1, Your Estimated Social Security Benefit: $1,055.00** LTD Benefit: $ Total Estimated Monthly Income: $1, * Your potential LTD benefit may be offset by other benefits, i.e., Social Security, for which you may be eligible during a period of disability. ** If you qualify for a Family benefit through Social Security, your Social Security offset may be higher. *** The 60% benefit rate will be reduced to a 50% benefit rate after five years of disability payments have been made.

4 Benefits of the Pinnacle and Pinnacle Plus Options Benefit Design Pinnacle Option Pinnacle Plus Option Covered Compensation Up to $600,000 basic earnings Basic earnings means your rate of pay not reduced by any deferred salary Benefit 40% of annual basic earnings up to $600,000 60% of annual basic earnings up to $300,000*** plus 40% of basic earnings in excess of $300,000 up to $600,000 Benefit Waiting Period 26 weeks from first day of disability Maximum Monthly Benefit $20,000 $25,000 Minimum Monthly Benefit $100 Evidence of Insurability Duration of Benefits Age at Disability Less than or equal to greater than or equal to 69 Not Required Maximum Duration of Benefits To age months 48 months 42 months 36 months 30 months 24 months 18 months 15 months 12 months Benefit Calculation Example Benefit Calculation Example Annual Basic Earnings: Age: Pinnacle $180, Annual Basic Earnings: Age: Pinnacle Plus $180, Estimated Monthly Benefit Calculation* Monthly Basic Earnings: $180,000/12 = $15,000 Potential LTD Benefit: $15,000 x.40 = $6,000 Your Estimated Social Security Benefit: $2,134** LTD Benefit: $3,866 Total Estimated Monthly Income: $6,000 Estimated Monthly Benefit Calculation* Monthly Basic Earnings: $180,000/12 = $15,000 Potential LTD Benefit: $15,000 x.60 = $9,000 Your Estimated Social Security Benefit: $2,134** LTD Benefit: $6,866 Total Estimated Monthly Income: $9,000 * Your potential LTD benefit may be offset by other benefits, i.e., Social Security, for which you may be eligible during a period of disability. ** If you qualify for a Family benefit through Social Security, your Social Security offset may be higher. *** The 60% benefit rate will be reduced to a 50% benefit rate after five years of disability payments have been made.

5 Pre-existing Conditions A pre-existing condition limitation applies when you enroll in the Long Term Disability Plan for the first time, either at your initial eligibility or during an annual enrollment period. This means that if you have a) incurred expenses, or b) received medical treatment, or c) taken prescribed medications, or d) consulted a licensed physician for a medical condition you must be treatment-free for 12 consecutive months or you must be in the Plan for 24 months before benefits will be paid for that condition. See the Summary Plan Description for details. Qualifying Disabilities Some disability programs pay benefits only if you are considered disabled from performing the duties of any occupation. When covered under the Pinnacle or Pinnacle Plus option of the Long Term Disability Plan, the Plan benefits are payable if you are determined to be disabled from your own occupation. Offset for Other Benefits Any benefits for which you may be eligible under the Long Term Disability Plan may be offset by other benefits for which you may be eligible. These could include social security, workers compensation, any other salary continuation program or any other program as described in the Summary Plan Description. Conversion Option Available If you have been a participant in the Long Term Disability Plan for 12 months or more, you may be eligible to convert your coverage to an individual policy if you discontinue participation due to a leave of absence, termination of employment (other than retirement) or other qualifying event outlined in the Plan. Coverage available through the conversion option is different than the benefits provided in the Long Term Disability Plan. If you want to convert coverage, you must notify Macy s HR Services within 31 days of your loss of coverage.

6 Contributions for the Foundation options Whether you choose the Foundation or the Foundation Plus option, age-based rates will determine your contribution. The age-based rates listed are per $100 of monthly basic earnings. Contributions for the Pinnacle options When choosing the Pinnacle or the Pinnacle Plus option, your contribution will be determined by the following monthly rate schedule: Age Band Under Foundation Monthly Rate per $100 of Monthly Covered Earnings Foundation Plus Monthly Rate per $100 of Monthly Covered Earnings Option Rate Pinnacle $0.313 per $100 of monthly covered earnings Pinnacle Plus $0.595 per $100 of monthly covered earnings Macy s HR Services advises you of your contribution per pay period at your initial eligibility and at annual enrollment each July 1. Contribution Calculation Example Pinnacle Annual Basic Earnings: $180,000 Macy s HR Services advises you of your contribution per pay period at your initial eligibility and at annual enrollment each July 1. Your contribution rate will change when you move to a new age band. Calculation Estimate Semi-monthly Pay: $180,000/24 = $7,500 Rate (from chart) per $100: $0.313 Semi-monthly Contribution: $23.48 Contribution Calculation Example Foundation Annual Basic Earnings: $80,000 Age: 49 Calculation Estimate Semi-monthly Pay: $80,000/24 = $3, Rate (from chart) per $100: $0.279 Semi-monthly Contribution: $9.29 Contribution Calculation Example Pinnacle Plus Annual Basic Earnings: $180,000 Calculation Estimate Semi-monthly Pay: $180,000/24 = $7,500 Rate (from chart) per $100: $0.595 Semi-monthly Contribution: $44.63 Contribution Calculation Example Foundation Plus Annual Basic Earnings: $30,000 Age: 27 Calculation Estimate Semi-monthly Pay: $30,000/24 = $1,250 Rate (from chart) per $100: $0.068 Semi-monthly Contribution: $0.85

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8 Macy s HR Services This summary is an overview only. Different eligibility rules and benefits may apply with respect to certain other groups of employees and dependents under these plans. The terms and conditions of the benefits described are determined solely by the summary plan descriptions or plan documents and summaries of material modifications of the Macy s, Inc. Long Term Disability Plan. As in the past, the Company reserves to itself, pursuant to its sole and exclusive discretion, the right to change, amend or terminate this Plan without regard to satisfaction of prior eligibility conditions. Benefits described herein may not automatically apply to associates at all locations or associates covered under a labor agreement or employed by a leased or licensed department.