EXECUTIVE EMPLOYMENT AGREEMENT
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EXHIBIT 10.6 |
THIS EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is effective July 12, 2005, by and between Xxxxxx
X. Xxxxxxxxxx (“Executive”) and ABM Industries Incorporated (“ABM”) for itself and on behalf of its
subsidiary corporations as applicable herein.
WHEREAS, the subsidiaries of ABM are engaged in the building maintenance and related service
businesses, and
WHEREAS, Executive is experienced in the administration, finance, marketing, and/or operation of
such services, and
WHEREAS, ABM and its subsidiaries have invested significant time and money to develop proprietary
trade secrets and other confidential business information, as well as invaluable goodwill among its
customers, sales prospects and employees, and
WHEREAS, ABM and its subsidiaries have disclosed or will disclose to Executive such proprietary
trade secrets and other confidential business information which Executive will utilize in the
performance of his duties and responsibilities as Senior Vice President of ABM and President of ABM
Facility Services and under this Agreement; and
WHEREAS, Executive wishes to, or has been and desires to remain employed by ABM, and to utilize
such proprietary trade secrets, other confidential business information and goodwill in connection
with his employment;
NOW THEREFORE, Executive and ABM agree as follows:
1. | EMPLOYMENT. ABM hereby agrees to employ Executive, and Executive hereby accepts such employment, on the terms and conditions set forth in this Agreement. | |
2. | TITLE. Executive’s title shall be Senior Vice President of ABM and President of ABM Facility Services, subject to modification as determined by ABM’s Board of Directors. | |
3. | DEFINITIONS. The capitalized terms used in this agreement shall have the following definitions: |
A. | “AAA” means the American Arbitration Association. | ||
B. | “ABM” means ABM Industries Incorporated and its successors and assigns. | ||
C. | “Base Salary” means the salary paid under Paragraph 7A for the applicable Fiscal Year. | ||
D. | “Board” means the Board of Directors of ABM. |
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E. | “Bonus” means a performance-based bonus payable under Paragraph 7B of this Agreement. | ||
F. | “Chief Executive Officer” means the Chief Executive Officer of ABM. | ||
G. | “Company” means ABM, its subsidiaries, successors, and assigns. | ||
H. | “Compensation Committee” means the Compensation Committee of the Board. | ||
I. | “EPS” means earnings per share for the applicable Fiscal Year as reported by ABM in its Annual Report on Form 10-K. | ||
J. | “Executive” means Xxxxxx X. Xxxxxxxxxx. | ||
K. | “Extended Term” means the period for which this agreement is extended under Paragraph 15 of this Agreement. | ||
L. | “Fiscal Year” means the period beginning on November 1 of a calendar year and ending on October 31 of the following calendar year or such other period as shall be designated by the Board as ABM’s fiscal year. | ||
M. | “Initial Term” is the period beginning on July 12, 2005 and ending October 31, 2007, unless sooner terminated under Paragraph 16 of this Agreement. | ||
N. | “Insurance Contribution” means ABM’s contribution to provide group health and life insurance for Executive and excludes any payment by Executive for such coverage. | ||
O. | “Just Cause” means (i) theft or dishonesty, (ii) more than one instance of neglect or failure to perform employment duties, (iii) more than one instance of inability or unwillingness to perform employment duties, (iv) insubordination, (v) abuse of alcohol or other drugs or substances affecting Executive’s performance of his employment duties, (vi) material and willful breach of this Agreement, (vii) other misconduct, unethical or unlawful activity, (viii) a conviction of or plea of “guilty” or “no contest” to a felony under the laws of the United States or any state thereof, or (ix) a conviction of or plea of “guilty” or “no contest” to a misdemeanor involving a crime of moral turpitude under the laws of the United States or any state thereof. | ||
P. | “Modification Period” means the remainder of the Initial or the then current Extended Term, as applicable, of this Agreement, following the change in Executive’s employment status from that of a full-time employee to that of a part-time employee under Paragraph 14 of this Agreement. |
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Q. | “Performance Assessment” means the Chief Executive Officer’s annual assessment of Executive’s performance against the Performance Criteria. | ||
R. | “Performance Criteria” means the performance criteria for Executive established annually by the Chief Executive Officer in accordance with Paragraph 7B of this Agreement. | ||
S. | “Proprietary Information” means Company’s proprietary trade secrets and other confidential information not in the public domain, including but not limited to specific customer data such as: (i) the identity of Company’s customers and sales prospects, (ii) the nature, extent, frequency, methodology, cost, price and profit associated with services and products purchased from Company, (iii) any particular needs or preferences regarding its service or supply requirements, (iv) the names, office hours, telephone numbers and street addresses of its purchasing agents or other buyers, (v) its billing procedures, (vi) its credit limits and payment practices, and (vii) its organization structure. | ||
T. | “Section 162(m)” means Section 162(m) of the Internal Revenue Code of 1986, as amended, or any successor statute. | ||
U. | “Significant Transaction” means Company’s acquisition or disposition of a business or assets which ABM is required to report under Item 2.01 of Form 8-K under the rules and regulations issued by the Securities and Exchange Commission. | ||
V. | “State of Employment” means California. | ||
W. | “Target Bonus” means 33.3% of Executive’s Base Salary. | ||
X. | “Total Disability” means Executive’s inability to perform his duties under this Agreement and shall be deemed to occur on the 91st consecutive or non-consecutive calendar day within any 12 month period that Executive is unable to perform his duties under this Agreement because of any physical or mental illness or disability. | ||
Y. | “WTC Related Gain” means the total amount of all items of income included in ABM’s audited consolidated financial statements for any Fiscal Year that result from ABM’s receipt of insurance proceeds or other compensation or damages due to ABM’s loss of property, business or profits as a result of the destruction of the World Trade Center on September 11, 2001. |
4. | DUTIES & RESPONSIBILITIES. Executive shall assume and perform such executive or managerial duties and responsibilities as are assigned from time-to-time by the Chief Executive Officer or such other officer designated by the Chief Executive Officer, to whom Executive shall report and be accountable. |
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5. | TERM OF AGREEMENT. This agreement shall end on October 31, 2007, unless sooner terminated pursuant to Paragraph 16 or later extended to an Extended Term under Paragraph 15 of this Agreement. | |
6. | PRINCIPAL OFFICE. During the Initial Term and any Extended Term, as applicable, of this Agreement, Executive shall be based at an ABM office located in the State of Employment or such other location as shall be mutually agreed upon by ABM and Executive. | |
7. | COMPENSATION. ABM agrees to compensate Executive, and Executive agrees to accept as compensation in full, for Executive’s assumption and performance of duties and responsibilities pursuant to this Agreement: |
A. | SALARY. A salary paid in equal installments no less frequently than semi-monthly at the annual rate of $319,815. Executive shall be eligible, at the sole discretion of the Compensation Committee, to receive a merit increase based on Executive’s job performance or for any other reason deemed appropriate by the Compensation Committee. | ||
B. | BONUS. Subject to subparagraphs (iii), (iv) and (v) below, Executive shall be entitled to a Bonus for each Fiscal Year, as follows: |
i. | Executive’s Bonus may range from 0% to 150% of the Target Bonus and shall be based on the Performance Assessment of Executive for the applicable Fiscal Year evaluated on the basis of the Performance Criteria. Performance Criteria may include both ABM and individual objectives, may be both qualitative and quantitative in nature and shall be established by the Chief Executive Officer, reviewed by the Compensation Committee, and communicated to Executive within 90 days after the beginning of the Fiscal Year for which they apply. The 2005 Performance Criteria are attached as Exhibit A to this Agreement. The Performance Assessment for each Fiscal Year shall be the responsibility of the Chief Executive Officer, who shall submit the Performance Assessment to the Compensation Committee on the Calculation Worksheet attached as Exhibit B to this Agreement. The determination of the Bonus amount for each Fiscal Year shall be determined by the Compensation Committee based upon the Performance Assessment and the recommendation of the Chief Executive Officer. | ||
ii. | The Compensation Committee reserves the right at any time to adjust the Performance Criteria in the event of a Significant Transaction and/or for any unanticipated and material events that are beyond the control of ABM, including but not limited to acts of god, nature, war or terrorism, or changes in the rules for financial reporting set forth by the Financial Accounting Standards Board, the Securities and Exchange Commission, |
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rules of the New York Stock Exchange and/or for any other reason which the Compensation Committee determines, in good faith, to be appropriate. | |||
iii. | ABM shall pay Executive the Bonus for each Fiscal Year following completion of the audit of ABM’s financial statements for such Fiscal Year and within 10 days after determination of the Bonus by the Compensation Committee. In the event of modification of employment under Paragraph 14 or termination of employment hereunder other than (a) a termination under Paragraph 16B, (b) a termination under Paragraph 16C for reasons other than Executive’s health, or (c) Executive’s retiring at age 65 or more with no less than 10 years of employment at Company, ABM shall pay Executive, within 75 days thereafter, a prorated portion of the Target Bonus based on the fraction of the Fiscal Year that has been completed prior to the date of modification or termination. | ||
iv. | Absent bad faith or material error, any conclusions of the Chief Executive Officer with respect to the Performance Assessment or the Compensation Committee with respect to the Performance Criteria or the Bonus shall be final and binding upon Executive and ABM. | ||
v. | No Bonus for any Fiscal Year of ABM (other than the payment of a prorated portion of the Target Bonus under Paragraph 7B(iii) following a modification or termination of employment) shall be payable unless ABM’s EPS for the Fiscal Year then ending is equal to or greater than 80% of ABM’s EPS for the previous Fiscal Year of ABM, in each case excluding any gains and losses from sales of discontinued operations and any WTC Related Gain. | ||
vi. | Notwithstanding any other provision of this Agreement, the Compensation Committee may, prior to the beginning of any Fiscal Year, approve and notify the Executive of a modification to the Target Bonus or the bonus range set forth in subparagraph (i) above. The Compensation Committee’s decision in this regard shall be deemed final and binding on Executive. In addition, the Compensation Committee may grant a discretionary incentive bonus to Executive at any time in its sole discretion. |
C. | FRINGE BENEFITS. Executive shall receive the then current fringe benefits generally provided by ABM to its executives. Such benefits may include but not be limited to the use of an ABM-leased car or a car allowance, group health benefits, long-term disability benefits, group life insurance, sick leave and vacation. Each of these fringe benefits is subject to the applicable ABM policy at all times. Executive expressly agrees that should he terminate employment with ABM for the purpose of being re-employed by an ABM subsidiary or affiliate, he shall “carry-over” any previously accrued but unused vacation balance to the books of the affiliate. ABM reserves the right to add, increase, reduce or eliminate any fringe benefit at any time, but no such benefit or benefits shall be |
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8. | PAYMENT OR REIMBURSEMENT OF BUSINESS EXPENSES. ABM shall pay directly or reimburse Executive for reasonable business expenses of ABM incurred by Executive in connection with ABM business in accordance with the ABM Travel & Entertainment Policy. | |
9. | BUSINESS CONDUCT. Executive shall comply with all applicable laws pertaining to the performance of this Agreement, and with all lawful and ethical rules, regulations, policies, codes of conduct, procedures and instructions of Company, including but not limited to the following: |
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10. | NO CONFLICT. Executive represents to ABM that Executive is not bound by any contract with a previous employer or with any other business that might prevent Executive from entering into this Agreement. Executive further represents that he is not bound by any other contracts or covenants that in any way restrict or limit Executive’s activities in relation to his or her employment with ABM that have not been fully disclosed to ABM prior to the signing of this Agreement. | |
11. | COMPANY PROPERTY. ABM shall, from time to time, entrust to the care, custody and control of Executive certain of Company’s property, such as motor vehicles, equipment, supplies, passwords and electronic and paper documents. Such documents may include, but shall not be limited to, customer lists, financial statements, cost data, price lists, invoices, forms, electronic files and media, mailing lists, contracts, reports, manuals, personnel files or directories, correspondence, business cards, copies or notes made from Company documents and documents compiled or prepared by Executive for Executive’s use in connection with Company business. Executive specifically acknowledges that all such items, including passwords and documents, are the property of Company, notwithstanding their preparation, care, custody, control or possession by Executive at any time(s) whatsoever. | |
12. | GOODWILL & PROPRIETARY INFORMATION. In connection with Executive’s employment hereunder: |
A. | PROPRIETARY INFORMATION. Executive agrees to utilize and further Company’s goodwill among its customers, sales prospects and employees, and acknowledges that Company may disclose to Executive and Executive may disclose to Company Proprietary Information. | ||
B. | DUTY OF LOYALTY. Executive agrees that the Proprietary Information and Company’s goodwill have unique value to Company, are not generally known or readily available to Company’s competitors, and could only be developed by others after investing significant time and money. ABM makes the Proprietary Information and Company’s goodwill available to Executive in reliance on Executive’s agreement to hold the Proprietary Information and Company’s goodwill in trust and confidence. Executive hereby acknowledges that to use this Proprietary Information and Company’s goodwill other than for the benefit of Company would be a breach of such trust and confidence and a violation of Executive’s duty of loyalty to Company. |
13. | RESTRICTIVE COVENANTS. In recognition of Paragraph 12 above, Executive hereby agrees that during the term of this Agreement and thereafter as specifically agreed herein: |
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14. | MODIFICATION OF EMPLOYMENT. At any time during the then current Initial or Extended Term, as applicable, of this Agreement, upon approval of a majority of the non-management directors of the Board, the Board shall have the absolute right, with or without cause and without terminating this Agreement or Executive’s employment hereunder, to remove Executive as Senior Vice President of ABM and President of ABM Facility Services or from any other position in which Executive is then serving and to modify the nature of Executive’s employment for the remainder of the then current Initial or Extended Term, as applicable, from that of a full-time employee to that of a part-time employee. The Modification Period shall commence immediately upon ABM giving Executive written notice of such change. |
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A. | TERMINATION UPON EXPIRATION OF TERM. Subject to at least 90 days prior written notice of termination of employment, Executive’s employment shall terminate, with or without cause, at the expiration of the then current Initial or Extended Term. ABM has the option, without terminating this Agreement, of placing Executive on a leave of absence at the full compensation set forth in Paragraph 7 of this Agreement, for any or all of such notice period. | ||
B. | TERMINATION FOR CAUSE. ABM may terminate Executive’s employment hereunder at any time during the then current Initial or Extended Term, as applicable, of this Agreement, without notice subject only to a good faith determination by a majority of the Board of Just Cause. | ||
C. | VOLUNTARY TERMINATION BY EXECUTIVE. At any time during the then current Initial or Extended Term, as applicable, of this Agreement and with or without cause, Executive may terminate employment hereunder by giving ABM 90 days prior written notice. |
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17. | GOVERNING LAW. This Agreement shall be interpreted and enforced in accordance with the laws of the State of Employment. | |
18. | DISPUTE RESOLUTION. |
i. | The arbitration shall be administered by AAA. | ||
ii. | Except as modified herein, the arbitration proceeding shall be administered pursuant to AAA’s Commercial Rules. | ||
iii. | The parties will mutually agree upon two neutral arbitrators who shall be respectively designated the “Pre-hearing Arbitrator” and the “Hearing Arbitrator.” The Pre-hearing Arbitrator shall preside over all issues or disputes arising prior to the hearing on the merits, including discovery issues and pre-hearing motions. The Hearing Arbitrator shall preside over the formal hearing on the merits and shall have the sole authority to issue a final and binding award in the matter. |
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iv. | The parties may conduct the following discovery as a matter of right: (a) two depositions per side, (b) 35 non-compound interrogatories per side, which shall be answered under penalty of perjury by the responding party, (c) 35 non-compound document requests, which shall be answered under penalty of perjury by the responding party. Any additional discovery shall only take place as stipulated by the parties, as provided by the AAA’s Commercial Rules, or as ordered by the Pre-hearing Arbitrator. | ||
v. | The Pre-hearing Arbitrator shall hear and rule upon such motions for summary judgment or summary adjudication as might be made by either party. Upon receipt of such a motion, the Pre-hearing Arbitrator shall consult with the parties and establish both a hearing date and a briefing schedule which allows an opposition and reply submission prior to the hearing. | ||
vi. | The cost of such arbitration shall be borne by ABM. | ||
vii. | Any such arbitration must be requested in writing within one year from the date the party initiating the arbitration knew or should have known about the claim or dispute, or all claims arising from that dispute are forever waived. | ||
viii. | Any such arbitration shall be held in the city and/or county of employment hereunder. Judgment upon the award rendered through such arbitration may be entered and enforced in any court having proper jurisdiction. |
B. | LITIGATION / COURT ACTION. Disputes involving the threatened or actual breach of obligations set forth in Paragraphs 12 and 13 of this Agreement shall not be subject to arbitration. Rather, any such disputes shall be resolved through civil litigation, which may be filed in any court of competent jurisdiction. |
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withhold from any severance payments otherwise due to Executive and from any other funds held for Executive’s benefit by ABM, any damages or losses sustained by Company as a result of any material breach or other material violation of this Agreement by Executive, pending resolution of the underlying dispute as provided in Paragraph 18 above. |
20. | NO WAIVER. Failure by either party to enforce any term or condition of this Agreement at any time shall not preclude that party from enforcing that provision, or any other provision of this Agreement, at any later time. | |
21. | SEVERABILITY. The provisions of this Agreement are severable. If any arbitrator (or court as applicable hereunder) rules that any portion of this Agreement is invalid or unenforceable, the arbitrator’s or court’s ruling shall not affect the validity and enforceability of other provisions of this Agreement. It is the intent of the parties that if any provision of this Agreement is ruled to be overly broad, the arbitrator or court shall interpret such provision with as much permissible breadth as is allowable under law rather than consider such provision void. | |
22. | SURVIVAL. All terms and conditions of this Agreement which by reasonable implication are meant to survive the termination of this Agreement, including but not limited to the provisions of Paragraphs 13 and 18 of this Agreement, shall remain in full force and effect after the termination of this Agreement. | |
23. | REPRESENTATIONS. Executive represents and agrees that he has carefully read and fully understands all of the provisions of this Agreement, that he is voluntarily entering into this Agreement and has been given an opportunity to review all aspects of this Agreement with an attorney, if he chooses to do so. | |
24. | NOTICES. |
Executive: | Xxxxxx X. Xxxxxxxxxx | |||
00 Xxxxxxxx Xxxxxx | ||||
Xxxx Xxxxxx, XX 00000 | ||||
ABM: | ABM Industries Incorporated | |||
000 Xxxxxxx Xxxxxx, Xxxxx 000 | ||||
Xxx Xxxxxxxxx, XX 00000 | ||||
Attention: Chief Executive Officer |
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Copy: | ABM Industries Incorporated | |||
000 Xxxxxxx Xxxxxx, Xxxxx 000 | ||||
Xxx Xxxxxxxxx, XX 00000 | ||||
Attention: General Counsel |
23. | ENTIRE AGREEMENT. Unless otherwise specified herein, this Agreement sets forth every contract, understanding and arrangement as to the employment relationship between Executive and ABM, and may only be changed by a written amendment signed by both Executive and ABM. |
IN WITNESS WHEREOF, Executive and the Chief Executive Officer have executed this Agreement as of the date set forth above. |
Executive: | Xxxxxx X. Xxxxxxxxxx | |||||
Signature: | /s/ Xxxxxx X. Xxxxxxxxxx | |||||
Date: | July 12, 2005 | |||||
ABM: ABM Industries Incorporated | ||||||
Signature: | /s/ Xxxxxx X. Xxxxxxxxx | |||||
Xxxxxx X. Xxxxxxxxx | ||||||
Title: | Chief Executive Officer | |||||
Date: | July 12, 2005 |
EXHIBIT A
2005 EXECUTIVE PERFORMANCE PEFORMANCE CRITERIA
ABM CORPORATE EXECUTIVE OFFICERS
ABM CORPORATE EXECUTIVE OFFICERS
I. | FINANCIAL PERFORMANCE: Represents 50% of Target Bonus | |
(Actual earnings as published in Company’s Form 10-K as filed with the Securities and Exchange Commission must exceed 80% of the 2005 budget, as approved by the ABM Board of Directors and adjusted for acquisitions, for Executive to receive a Financial Performance Bonus.) | ||
Develops, obtains approval for, and effectively communicates realistic and GAAP compliant financial budgets and forecasts consistent with the approved Company and business unit strategy. Develops and ensures compliance with internal financial controls. Ensures that key financial goals are aggressively pursued. Contributes directly to the achievement of financial goals for Company and one’s area(s) of responsibility. Ensures, to the extent possible, that performance of Company and one’s area(s) of responsibility meets or exceeds budget in all key financial categories, including revenue, expense, and capital management. Effectively manages costs and, where appropriate, vendors and receivables. | ||
Indicators: Timely development and approval of realistic financial goals and plans; understanding and acceptance of financial goals throughout the organization and one’s direct span of control; existence of and compliance with effective internal financial controls. Company and business unit performance against budget. | ||
II. | OTHER CATEGORIES: Represents 50% of Target Bonus | |
STRATEGIC LEADERSHIP | ||
Contributes materially to the development, approval, implementation and ongoing evolution of a sound business strategy for Company and/or one’s area(s) of responsibility. Researches concepts and presents new ideas designed to optimize growth, profitability and shareholder value. Effectively communicates the approved strategy both internally and externally, as appropriate, and provides guidance to ensure that the approved strategy is carried out. | ||
Indicators: Agreement among management and approval by the Board of Directors of a defined business strategy; effective translation and communication of the approved strategy to one’s area of responsibility and other internal and external constituents, as appropriate; proactive revision of strategy to reflect changing situations; depth of knowledge of one’s market, competitors, and trends. |
EMPLOYEE LEADERSHIP
1. | Employee Relations | |
Maintains sound relationships with superiors, peers, subordinates and, as appropriate, the Board of Directors. Commands respect and trust while being considered fair and open in dealings with others. | ||
Indicators: Employee complaints; perception among supervisors, peers, subordinates and the Board of Directors. | ||
2. | Staff Development | |
Actively contributes to the development of staff under one’s span of control. Provides guidance to subordinates on key issues and makes time to help others. Establishes and communicates goals and expectations. Provides open and honest feedback. Identifies and develops potential successors to key roles. | ||
Indicators: Proactive individual goal-setting and ongoing review process; demonstrated development/improvement of subordinates; effective succession planning. | ||
3. | Recruitment, Retention and Motivation | |
Generates enthusiasm among superiors, subordinates and peers. Directly contributes to creating a performance oriented culture. Identifies and distinguishes top performers. Retains key employees and assists in identifying and recruiting top external talent as needed. | ||
Indicators: Employee retention; positive morale; success in recruiting new talent. | ||
4. | Teamwork | |
Practices open, effective and inclusive communication within one’s own span of control and across Company. Actively seeks ways to build links across Company with the objective of capitalizing on and sharing “best practices.” | ||
Indicators: Development and implementation of procedures and processes that promote the application of “best practices” across Company and within one’s span of control. Perception as a “team player.” |
COMPLIANCE AND ADMINISTRATION
Ensures compliance with all external regulations and internal guidelines and policies
associated with Safety, Employee/Labor Relations and other areas pertaining to Company’s
various businesses. Ensures management policies and reports effectively address key issues.
Provides for open channels of communication to ensure that appropriate individuals, both
internally and externally, are notified in a timely manner in the event of compliance or other
related issues. Achieves certification of Internal Controls for Xxxxxxxx-Xxxxx Section 404.
Indicators: Volume and severity of labor/employee relations or other compliance issues;
effective handling of such issues as they arise; timely and proper reporting of such issues.
