EXHIBIT 10.3
ConAgra Foods, Inc.
Xxx XxxXxxx Xxxxx
Xxxxx, XX 00000-0000
TEL: 000-000-0000
September 22, 2005
Xx. Xxxxx Xxxxx
ConAgra Foods, Inc.
Xxx XxxXxxx Xxxxx
Xxxxx, XX 00000
Dear Xxxxx:
This letter summarizes and confirms the agreements regarding your
transition from the role of Chairman, Chief Executive Officer, and President,
and your employment status and arrangements thereafter with ConAgra Foods, Inc.
(the "Company").
Recognizing the Company has now recruited and elected a CEO and President,
and elected a non-executive Chairman both to commence their respective duties on
October 1, 2005, your official resignation date as Chairman, CEO and President
and, except as provided herein, all other executive positions and directorships
with the Company and any of the Company's subsidiaries will be September 30,
2005 (the "Resignation Date"). On that date, you will deliver your resignation
of the positions of Chairman, CEO and President of the Company and the Company
will accept your resignation letter to the Company per the Good Reason
provisions of your Employment Agreement dated August 26, 1996, the Amendments to
the Employment Agreement dated December 23, 1996 and February 16, 1998 (the
"Employment Agreement").
1. Salary and Incentives:
Through September 30, 2005, you will continue in your role as Chairman,
CEO, and President, and you will receive your regular base salary, paid in
accordance with the customary payroll practice in the monthly amount equal to
$100,000, subject to applicable FICA and income tax withholding obligations.
In addition to the monthly salary described above, for fiscal year 2006 you
will also receive Long Term Incentive Awards of stock and cash under the Long
Term Senior Management Incentive Plan ("LTSMIP") based on an award pool of 8% of
the Company's excess after-tax earnings over and above 5% compound annual growth
rate from a fixed five-year average earnings base and both of which will be
prorated to reflect the number of days from the beginning of the fiscal year
through your Resignation Date. Such payments will be calculated and paid in the
same manner as LTSMIP Awards have been calculated and paid in the past for the
Company's other senior executive officers participating in such plans, except
that the stock and the cash awards payable to you will be immediately fully
vested and no longer be subject to any risk of forfeiture.
For fiscal year 2006 you will also receive an award under the Annual
Management Incentive Plan ("MIP"), prorated for the fiscal year through your
Resignation Date. The MIP Award will be based on the PBT performance scale
approved by the Human Resources Committee of the Board on July 25, 2005. This
award will not be restricted in any way and will not be subject to risk of
forfeiture.
The LTSMIP Awards and the Annual MIP Award described above will be subject
to applicable FICA and income tax withholding obligations.
From your Resignation Date through September 30, 2009 (the "Separation
Date"), you will be employed in a non-officer capacity, with the title of
Chairman and CEO Emeritus of the Company (the "Employment Period"), and during
the Employment Period you will be paid half your regular base salary, paid in
accordance with the customary payroll practice in a monthly amount equal to
$50,000, subject to applicable FICA and income tax withholding obligations (the
"Base Salary"); provided, however, that you shall not be entitled to the Base
Salary so long as you, without good and sufficient reason (i.e., being directed
to perform services inconsistent with the Requested Services (as defined below))
or in the absence of a material breach of this Agreement by the Company,
willfully refuse to perform your duties and obligations contemplated hereunder.
If you are terminated for "Cause" (as defined in the Employment Agreement) the
Employment Period will end. It is understood that after your participation in
the fiscal year 2006 plans you will not continue to participate in the Long Term
Senior Management Incentive Plans or the Annual Management Incentive Plan.
During the Employment Period, you will make yourself reasonably available to
furnish such information and background as may be reasonably necessary in
connection with any inquiry, investigation, dispute, litigation, regulatory
proceeding or other action in which the Company is or may become involved
insofar as it relates to matters arising out of your employment. In that regard,
you will report to the Chairman of the Board of Directors of the Company (the
"Chairman") and provide such services as reasonably, ethically and lawfully
requested by the Chairman, which services shall be consistent with the duties
and responsibilities of a senior officer of the Company and which you shall
provide in accordance with the Company's corporate governance and ethics
guidelines (the "Requested Services"). If you are called upon to serve as a
witness or provide assistance in or with respect to any such proceeding, you
agree to cooperate with the Company to the full extent permitted by law, and the
Company agrees that any such call shall be with reasonable notice and shall
provide for payment for your costs incurred in such matters. Furthermore, you
will promptly give written notice to the Company of any inquiry, approach or
other notice you receive or are informed of by or from any governmental entity
regarding any inquiry, investigation, dispute, litigation, regulatory proceeding
or other action involving the Company. Provided that you advise the Company
prior to engaging in any such action, the provisions of this letter and the
agreements herein shall not apply to or restrict in any way the communication of
information by you to any state or federal law enforcement agency or require
notice to the Company thereof. If during the Employment Period or thereafter you
are requested to perform significant additional services, any additional
compensation would be agreed to between the parties hereunder.
2. Health Benefits Continuation:
During the Employment Period, you and your qualifying dependents will
receive the health benefits the Company maintains for its executive officers at
no cost to you. You will be responsible for any taxes associated with the
premiums, co-payments and deductibles paid on behalf of you and your qualifying
dependents during the Employment Period. Upon the expiration of the Employment
Period, you will be permitted to continue your Company medical and dental
benefits coverage for the maximum period permitted under the Consolidated
Omnibus Reconciliation Act of 1986, as amended ("COBRA"), and to participate in
the Company's post-retirement medical programs, if any, pursuant to the terms of
such programs. If you should elect such continuation of Company medical and
dental benefits coverage, you will be required to pay for such coverage in an
amount not to exceed the then normal amounts which may be charged for such
coverage under COBRA, provided that if you are considered a retiree for purposes
of the Company's health plans, you shall pay applicable retiree rates.
3. AD/D and LTD Coverage:
During the Employment Period, you will continue to receive the same AD/D
and LTD coverage you had immediately prior to your Resignation Date at no cost
to you.
4. Stock Options:
On your Resignation Date, to the extent previously unvested, all of your
employee stock options shall vest and no longer be subject to any risk of
forfeiture. You are entitled to exercise these options until the end of their
respective terms subject to any adjustment provisions on corporate transactions.
The Company shall be entitled to withhold from the stock (or stock proceeds in
the event of a cashless exercise) applicable FICA and income taxes with respect
to the exercises of any such stock options granted to you by the Company.
5. Restricted Stock Awards and Restricted Share Equivalent Units:
On your Resignation Date, to the extent previously unvested, all of your
restricted stock awards and restricted share equivalent units shall vest, no
longer be subject to any risk of forfeiture, and be promptly delivered to you,
subject to the provisions of Section 17 hereof. The Company shall be entitled to
withhold applicable FICA and income taxes with respect to the vesting of any of
your restricted stock awards and share equivalent units granted to you by the
Company.
6. Restricted Cash Awards:
On your Resignation Date, to the extent previously unvested, all of your
restricted cash awards shall vest, no longer be subject to any risk of
forfeiture, and be promptly paid to you, subject to the provisions of Section 17
hereof. The Company shall be entitled to withhold applicable FICA and income
taxes with respect to the vesting of any of your restricted cash awards granted
to you by the Company.
7. Other Benefits Programs:
During the Employment Period, you will continue to participate in all other
benefit programs maintained by the Company for its executive officers, which as
of the date hereof include the ConAgra Foods Retirement Income Savings Plan, the
Non-Qualified ConAgra Foods Retirement Income Savings Plan, the ConAgra Foods
Inc. Voluntary Deferred Compensation Plan, the ConAgra Pension Plan for Salaried
Employees and the ConAgra Nonqualified Pension Plan.
a. Non-Qualified Pension Plan:
During the Employment Period, you will continue to participate in the
Company's Non-Qualified Pension Plan. Your benefits under the plan are
fully vested and non-forfeitable. You are entitled to receive a lump-sum
distribution of your benefits under the Plan on October 1, 2009. That lump
sum payment and an example of the calculation that produces the payment has
been reviewed and verified by you and the Company as correct. The actual
lump sum payment will be calculated in accordance with the methodology in
the example and using the same actuarial assumptions unless different
assumptions are required by the terms of the plan, in which event such
required assumptions shall be used.
b. Pension Plan for Salaried Employees:
During the Employment Period, you will continue to participate in the
Company's Pension Plan for Salaried Employees. Your benefits under the plan
are fully vested and non-forfeitable and your projected benefit has been
verified by you and the Company as correct. It will be distributed under
the terms of the plan. You may elect any form of benefit permitted under
the plan.
c. Retirement Income Savings Plan:
During the Employment Period, you will continue to participate in the
Company's Retirement Income Savings Plan. Your account under the plan is
fully vested and non-forfeitable and will be distributed under the terms of
the plan. A schedule reflecting the current balance in your account under
that plan has been reviewed and verified by you and the Company as correct.
d. Non-Qualified Retirement Income Savings Plan:
During the Employment Period, you will continue to participate in the
Company's Non-Qualified Retirement Income Savings Plan. Your account under
the plan is fully vested and non-forfeitable and will be distributed under
the terms of that plan. A schedule reflecting the current balance in your
account under that plan has been reviewed and verified by you and the
Company as correct.
8. Deferred Compensation Plan:
During the Employment Period, you may continue to participate in the
Company's Deferred Compensation Plan. Your account under this plan is fully
vested and non-forfeitable. You will be entitled to receive a lump sum
distribution of your account on December 31, 2005, in accordance with the
provisions of Section 409A of the Internal Revenue Code of 1986, as amended, and
the Department of Treasury guidance thereunder (collectively, "Section 409A"). A
schedule reflecting the current balance in your account under that plan has been
reviewed and verified by you and the Company as correct.
9. Office and Administrative Support Matters:
Commencing October 1, 2005 and continuing through December 31, 2009, your
office and administrative support will be relocated. A schedule reflecting the
location and staffing has been reviewed and verified by you and the Company as
acceptable to both parties. In the event your administrative assistant is
unavailable for service during this time period, the Company and you will select
a substitute of equivalent capabilities mutually acceptable to both parties. In
the event the office location is unavailable during this time period, the
Company and you will select a substitute of similar size and quality mutually
acceptable to both parties. The lease for the agreed office space terminates
December 31, 2009. To the extent the lease provides assignable rights to extend
or renew, the Company agrees to assign those rights to you upon your request for
same.
During your Employment Period, the Company will provide and maintain normal
administrative service, supplies, furnishings, equipment and technical support
consistent with your current level of support, and no less than that provided to
executive officers of the Company, for such things as phones, computers,
internet connections, e-mail service, printers, photocopying, office supplies,
mail services, express services, and security. In the event you are requested or
required to travel on business related to the Company, your travel will be
provided by Company aircraft or equivalent utilized by executive officers of the
Company. In the event you incur reasonable business expense on business related
to the company, you will be timely reimbursed for same.
10. Payments to Estate:
In the event of your death, to the extent that any of the
Company's obligations to you under this letter and the agreements herein, remain
outstanding to you at the time of your death, the Company will continue to make
such payments to your estate in the time and manner set forth in the appropriate
provisions of this letter and the agreements herein (taking into account the
provisions of any benefit plans or programs in which you participated).
11. Non-Competition:
The provisions of Section 7 of the Employment Agreement shall continue in
full force and effect during the Employment Period and terminate at the
Separation Date.
12. Confidentiality:
The provisions of Section 6 of the Employment Agreement shall continue in
full force and effect.
13. Directors and Officers Liability Coverage:
You will continue to be covered under the Company's directors and officers
liability policy until the Separation Date to the same extent as senior officers
and members of the Board of Directors of the Company and thereafter you shall
continue be covered for events occurring prior to your Separation Date.
If at any time, you are made a party to, or are threatened to be made a
party in any civil, criminal or administrative action, suit, proceeding, or
claim, which is in any way connected with your employment, by reason of the fact
that you are or were a director, officer, employee or agent of the Company, or
of any other corporation or any partnership, joint venture, trust or other
enterprise for which you served as such at the request of or on behalf of the
Company or for the benefit of the Company, then you shall be indemnified by the
Company, to the fullest extent permitted under applicable law, against expenses
actually and reasonably incurred by you or imposed on you in connection with, or
resulting from, the defense of such action, suit or proceeding, or in connection
with, or resulting from, any appeal therein if you acted in good faith and in a
manner you reasonably believed to be in or not opposed to the best interest of
the Company at the time of such acts. The Company shall advance to you fees and
expenses incurred or reasonably expected to be incurred including retainers on
the same basis as applicable to then current executive officers and directors of
the Company. As used herein, the term "expenses" shall include any and all
obligations and expenditures actually and reasonably incurred by you, as and
when incurred, for the payment of money, including, without limitation,
attorney's fees and costs, advances on attorney fees and costs, judgments,
awards, fines, bonds, penalties and amounts paid in satisfaction of a judgment
or in settlement of any such action, suit or proceeding. The foregoing
indemnification provisions shall be in addition to any other rights to
indemnification to which you may be entitled and shall be in no way construed to
limit any indemnification rights you may have under the Company's Certificates
of Incorporation or Bylaws or any provision of applicable State law and your
Employment Agreement which for this purpose shall survive and continue in force
and effect.
14. Arbitration; Legal Matters and Fees:
Except as provided for in Section 7 of the Employment Agreement and
hereunder, any dispute, controversy or claim arising out of or relating to the
obligations under this letter and the agreements herein, shall be settled by
final and binding arbitration in accordance with the American Arbitration
Association Commercial Dispute Resolution Rules. The arbitrator shall be
selected by mutual agreement of the parties, if possible. If the parties fail to
reach agreement upon appointment of an arbitrator within 30 days following
receipt by one party of the other party's notice of desire to arbitrate, the
arbitrator shall be selected from a panel or panels submitted by the American
Arbitration Association (the "AAA"). The selection process shall be that which
is set forth in the AAA Commercial Dispute Resolution Rules, except that, if the
parties fail to select an arbitrator from one or more panels, AAA shall not have
the power to make an appointment but shall continue to submit additional panels
until an arbitrator has been selected. All fees and expenses of the arbitration,
including a transcript if requested, will be borne by the Company, unless the
arbitrator finds your claim to have been frivolous. In addition, the Company
shall pay to you as incurred all legal and accounting fees and expenses incurred
by you in seeking to obtain, enforce or defend any right or benefit provided by
this Agreement or any other compensation-related plan, agreement or arrangement
of the Company, unless your claim is found by a court of competent jurisdiction
or an arbitrator to have been frivolous.
15. Governing Law:
This letter and the agreements herein shall be governed by, construed and
enforced in accordance with the laws of the state of Delaware, excluding any
conflicts of law, rule or principle that might otherwise refer to the
substantive law of another jurisdiction.
16. Notice:
Any notice or other communication required or permitted pursuant to the
terms of this letter and the agreements herein shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States mail,
first class, postage prepaid and registered with return receipt requested,
addressed to the intended recipient at his or its address set forth below and,
in the case of a notice or other communication to the Company, directed to the
attention of the Board of Directors of the Company with a copy to the Secretary
of the Company, or to such other address as the intended recipient may have
theretofore furnished to the sender in writing in accordance herewith, except
that until any notice of change of address is received, notices shall be sent to
the following addresses:
If to you: If to the Company:
Xxxxx Xxxxx ConAgra Foods
000 Xxxxx 00xx Xxxxxx Xxx XxxXxxx Xxxxx
Xxxxx, Xxxxxxxx 00000 Xxxxx, Xxxxxxxx 00000
Attn: Chairman of the Board
With a copy to: With a copy to:
Xxxxx X. Xxxxxx Xxxxxx Xxxxxxxxxx
Xxxxx Xxxxx, L.L.P. Wachtell Lipton
One Shell Plaza 00 Xxxx 00 Xxxxxx
000 Xxxxxxxxx Xxx Xxxx, XX 00000
Xxxxxxx, Xxxxx 00000
17. Section 409A:
This letter and the agreements herein will interpreted to avoid any penalty
sanctions under Section 409A and to deliver the full economic value of all the
benefits provided herein. If any payment or benefit cannot be provided or made
at the time specified herein without incurring sanctions under Section 409A,
then such benefit or payment shall be provided in full at the earliest time
thereafter when such sanctions will not be imposed. Upon your request, the
Company agrees to make any changes to this letter and the agreements herein that
will assure that no Section 409A sanctions will be imposed.
18. Withholding:
The Company may withhold from any amounts payable under this Agreement such
Federal, state, local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
19. Settlement:
You agree and acknowledge that the entitlements provided to you under this
Agreement through the Separation Date (including any benefits
which you are entitled to receive after the Separation Date) are in settlement
of any and all severance-type liabilities and obligations of the Company to you,
monetarily or with respect to employee benefits.
20. Amendment:
Except as provided herein, this letter and the agreements herein supersedes
all previous employment agreements, written or oral, between the Company and
you. This letter and the agreements herein may be amended only by written
amendment duly executed by both parties hereto or their legal representatives
and authorized by action of the Board of Directors of the Company. Except as
otherwise specifically provided in this letter and the agreements herein, no
waiver by either party hereto of any breach by the other party hereto of any
condition or provision of this letter and the agreements herein to be performed
by such other party shall be deemed a waiver of a subsequent breach of such
condition or provision or waiver of a similar or dissimilar provision or
condition at the same or at any prior or subsequent time.
21. Severability, Assignment:
If any one or more of the provisions or parts of a provision contained in
this letter and the agreements herein shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity or
unenforceability shall not affect any other provision or part of a provision of
this letter and the agreements herein, but this letter and the agreements herein
shall be reformed and construed as if such invalid, illegal or unenforceable
provision or part of a provision had never been contained herein and such
provisions or part thereof shall be reformed so that it would be valid, legal
and enforceable to the maximum extent permitted by law. This letter and the
agreements herein is not assignable without the written authorization of both
parties.
The undersigned has all requisite corporate power and authority to execute
and deliver this letter and the agreements herein on behalf of the Company. The
execution and delivery by the undersigned of this letter and the agreements
herein and the consummation of the transaction contemplated hereby have been
duly and validly authorized by the Board of Directors of the Company and no
other corporate proceedings on the part of the Company are necessary to
authorize this letter and the agreements herein or to consummate the transaction
contemplated hereby. This letter and the agreements herein has been validly
executed and delivered by the Company and constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms.
If the forgoing summary is acceptable to you, please sign and date below
and return a signed copy to me.
Company
By: /s/ Xxxx X. Xxxxxxxxx
___________________________________
Xxxx X. Xxxxxxxxx
Title: Lead Director
Accepted and agreed to this
22nd day of September 2005.
/s/ Xxxxx Xxxxx
_________________________________
Xxxxx Xxxxx
