EXHIBIT 10.9
[LOGO OF TRUE NORTH COMMUNICATIONS INC. APPEARS HERE]
TRUE NORTH COMMUNICATIONS INC.
EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT effective as of October 15, 1996 between True North
Communications Inc., a Delaware corporation (the "Company"), and Xxxxxxxx X.
Xxxxxxxxxx (the "Executive").
WHEREAS, the Company is a global communications holding company with
ownership interests in subsidiaries, affiliates and joint ventures that are
engaged in the advertising agency business, the multimedia production business,
the business of planning and buying of media time and space and related
businesses (the Company and the subsidiaries, affiliates and joint ventures in
which it from time to time has equity interests are hereinafter referred to
collectively as the "True North Group");
WHEREAS, the Company and the Executive desire to enter into this Agreement to
provide for the employment of the Executive by the Company upon the terms and
subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, the parties hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs the Executive and the
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Executive hereby agrees to be employed by the Company upon the terms and subject
to the conditions contained in this Agreement.
2. POSITION AND DUTIES. The Company shall employ the Executive with the
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title of Executive Vice President & General Counsel of True North Communications
Inc. The Executive will be a member of the Management Board of True North
Communications Inc. The Executive will report directly to the Chairman of the
Board of Directors and CEO of True North Communications Inc. The Executive shall
be responsible for the global legal matters pertaining to True North
Communications Inc., its Board of Directors, all committees of the Board of
Directors, all subsidiaries and all affiliates of the Company. In accordance
with the general practices of a general counsel of a publicly traded company,
Executive will be responsible for all matters pertaining to the Company's
compliance with Securities and Exchange Commission, New York Stock Exchange and
other governmental laws and regulations. Executive will have responsibility for
the hiring, retention
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and supervision for the in-house legal staff of the True North Group. Executive
will be responsible for and make relevant determinations concerning the
retention, hiring and supervision of outside counsel for True North
Communications Inc., its Board of Directors, all committees of the Board of
Directors and the True North Group. In accordance with corporate policy
Executive will approve all payments for legal fees and charges at limits
prescribed by the Company's management. The Executive shall perform faithfully
and loyally and to the best of the Executive's abilities his duties hereunder,
shall devote full business time, attention and effort to the affairs of the True
North Group and shall use reasonable best efforts to promote the interests of
the True North Group. Notwithstanding the foregoing, the Executive may engage in
charitable, civic or community activities provided that they do not interfere
with the performance of the Executive's duties hereunder and, with the prior
approval of the Board of Directors of the Company (the "Board"), may serve as a
director of any business corporation provided that such service does not violate
the terms of any of the covenants contained herein.
3. COMPENSATION.
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A) Base Salary: $300,000 per year.
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B) Incentive Compensation: As a senior executive of True North
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Communications Inc., Executive will participate in the Company's Performance
Program. Executive's participation will begin with the first full year, 1997.
This program provides for three variable incentive compensation components with
payouts based on the overall performance of the Company and attainment of
individual goals and objectives. The three components are:
(1) Variable Incentive Compensation (VIC) is based on a sliding scale as
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determined by the yearly increase in Company net income. This component
can provide up to 105% of base salary.
(2) Deferred Variable Incentive Compensation (DVIC) is based on the yearly
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net income increase as well and can provide up to 50% of base salary.
(3) Variable Incentive Stock Options (VISO) are determined as equivalent
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in grant value up to 100% of the base salary on a sliding scale.
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Two examples of the award levels based on net earnings' increases of 7% or 14%
are.
7%* 14%
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VIC
(Annual Bonus) $108M $315M
DVIC
(Deferred) 0 $150M
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$108M $465M
Stock Option Shares
(@ $23/share) 3,300 13,000
*These amounts guaranteed as minimum for 1997.
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C) Stock Options: Upon arrival, the Executive will receive an option on 5,000
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shares of True North common stock. These shares will be issued at the
prevailing market rate.
D) Directors Part-Time Employment Agreement: As a member of the Management
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Board, Executive will participate in this Program. The Plan provides an annual
benefit of up to 45% of final five-year average compensation (base plus bonus)
payable for five years. The benefit is prorated for years of service less than
30 years, however, the Executive receives an additional year of credited service
for each year served as a Board member. The benefit can begin at age 55 or later
and attainment of 10 or more years of service.
E) Profit Sharing: True North's primary retirement program is a qualified plan
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and noncontributory on employee's part. Company contribution up to 15% of total
compensation each year depending on overall financial performance. (Recent
history, 6-10%.) Executive will enter plan in January or July following 2-year
Anniversary. Contributions begin after 2-year eligibility period. All
contributions are 100% vested. During the two-year eligibility waiting period,
Executive will be provided with a phantom profit sharing contribution equivalent
to that which Executive would have earned as a participant in this Plan. The
amount determined will be credited annually to an account established on the
Executive's behalf in the Stock Purchase Integration Plan (see below).
F) Profit Sharing Integration Plan: If the Profit Sharing Plan's contribution
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is limited by IRS salary or contribution caps, this Plan will provide for the
additional contribution to which Executive is entitled. These funds are 100%
vested immediately and accrue interest at the 5-Year T-Note rate. All
contributions and investment earnings are tax deferred.
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G) Stock Purchase Plan : The plan is a qualified 401(k) savings plan. The
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Executive is immediate eligibility. The Executive's Participation begins
coincident with, or on next calendar quarter after date of hire. Contributions
are made up to 6-2/3% of total compensation through payroll deduction up to IRS
limit ($9,500 in 1996); All contributions are on a pretax basis. Immediate
company matching contribution are made equal to 50% of employee's contribution.
All contributions are used to purchase True North stock and are immediately 100%
vested. All shares earn quarterly dividends which are used to purchase
additional shares. In-service loans and withdrawals are available under certain
circumstances.
H) Stock Purchase Integration Plan: Once the Stock Purchase Plan IRS
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contribution limit is achieved ($9,500 in 1996), The Executive is eligible for
the Stock Purchase Integration Plan. This Plan allows continued contributions
above the $9,500 limit with the company contributing 50c on each $1.00 invested.
These funds are 100% vested immediately and accrue interest at the 5-Year T-Note
rate. All contributions and investment earnings are tax deferred.
I) Employee Stock Incentive Plan: An annual award of eight shares of True
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North common stock is made to the Executive if the company meets financial
goals. The award is credited to the Executive's Stock Purchase Plan account.
J) Supplemental Pension Plan : The Executive will receive a guaranteed benefit
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if profit sharing and social security do not meet minimum goal of 45% of final
average pay. (Benefit is prorated for retirement with less than 30 years'
service and retirement prior to age 65.)
K) Retirement Account Rollover: Funds from any qualified retirement plan may
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be rolled over to True North's Profit Sharing Trust and will earn accrued
interest based on financial performance. Three investment options are
available: a Balanced Fund, a Fixed Fund and a Money Market Fund.
L) Select Executive Plan: This Plan is provided exclusively to our most senior
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management, this Plan combines $1 million of company paid term Life Insurance
and an 13-option investment plan which can accept employee contributions of
after-tax dollars which earn tax-deferred interest. The $1 million coverage is
guaranteed with no physical required. Additional amounts above $1 million can
be purchased by the Executive. Upon arrival, a session will be scheduled between
the Executive and the Plan Consultant to describe this unique Program.
4. NON-FINANCIAL BENEFITS.
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A) Medical Coverage: The coverage is provided to our most senior management,
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this comprehensive plan provides reimbursement of 100% of all eligible medical
expenses including prescription drugs. The Executive will share in
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the cost of the Plan on a pretax basis. All benefits paid by the Plan are tax
free to the Executive. Coverage is available first day.
B) Dental Coverage: The coverage provided to our most senior management, this
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comprehensive plan provides reimbursement of 100% of all eligible dental
expenses. The Executive shares in the cost of the Plan on a pretax basis. All
benefits paid by the Plan are tax free to the Executive. Coverage is available
first day.
C) Disability Plans: Short-term disability coverage initially provides 100% of
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pay for first four weeks, and 50% of pay for 22 weeks. Number of weeks paid at
100% increase as years of service increase. This Coverage is completely Company
paid. Long-term disability coverage provides 40% of pay up to $4,000 of
coverage per month, payable to age 65, paid for by the Company. The Executive
can purchase an additional 20% up to a total of $10,000 of coverage per month.
Coverage is effective the first of the month following date of hire.
D) Benefit Reimbursement : Allows up to $12,000 per year to be set aside on a
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pretax basis to meet eligible expenses for medical and dependent care ($5,000
cap on dependent care). Participation can start as of the first day of
employment.
E) Voluntary Life Insurance: In addition to the Select Exec Plan, an
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additional $300,000 of life insurance may be purchased by the Executive .
F) Company Car: True North will furnish the Executive, through purchase or
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lease, an automobile at a value of up to $40,000, or an annual allowance of
approximately $9,000. True North will cover the cost of insurance, maintenance
and fuel for the car. In addition, the Company will provide in-building
parking.
G) Vacation/Holidays: The Executive will be entitled to unlimited vacation,
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(however, for accounting purposes, the entitlement will be for four weeks). True
North typically honors 10 to 11 holidays per year, including one personal
holiday to be used at the Executive's discretion for a civic or religious
obligation.
H) Physical Examination: Company will pay for Executive's comprehensive
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physical exam bi-annually to age 45, then annually thereafter.
I) Air Travel: The Executive's First-class air travel will be reimbursed,
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beginning as of January 1, 1997.
J) Financial Planning: An annual allowance of $4,000 for financial planning is
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provided to the Executive. Arrangements have been made with Xxxxxx Xxxxxxxx to
provide this service, but the Executive can utilize other individuals at their
discretion.
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K) Foundation Contributions: An annual allowance of $2,000 is made available
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for charitable contributions of the Executive's choice from the Company's
Foundation budget.
5. TERMINATION.
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A) If the Company terminates the Executive's employment prior to December 31,
1997, base salary and benefits will continue for the balance of the year. In
addition, the Executive is entitled to an amount equal to 1-1/2 times annual
base salary, payable as a lump sum.
B) The Executive will participate in the Company's Asset Protection Plan which
provides benefits equal to three times compensation if termination occurs as a
result of a change-in-control.
C) If contemporaneous with or after a change in the Chief Executive Officer of
the Company, the Executive is terminated (or, without Executive's express
written consent, Executive's responsibilities, title, lines of reporting or
compensation are diminished or reduced or the location of Executive's place of
business is materially changed), then Executive's base salary and benefits will
continue for the balance of the year of the termination. In addition, the
Executive will receive a lump sum payment equal to two times the Executive's
annual aggregate compensation (defined as base salary plus variable incentive
compensation) for 1997 or the last preceding full year of Executive's
employment.
6. NOTICE. All notices and other communications required or
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permitted hereunder shall be in writing and shall be deemed to have been duly
given when personally delivered or five days after deposit in the United States
mail, certified and return receipt requested, postage prepaid, addressed (1) if
to the Executive, to the most recent address then shown on the employment
records of the Company, and if to the Company, to True North Communications
Inc., 000 Xxxx Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000-0000, Attention: Secretary,
or (2) to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
7. SEVERABILITY. Whenever possible, each provision of this
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Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is determined to be
invalid, illegal or unenforceable in any respect under applicable law or rule in
any jurisdiction, such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of any other provision of this
Agreement or the validity, legality or enforceability of such provision in any
other jurisdiction, but
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this Agreement shall be reformed, construed and enforced in such jurisdiction as
if such invalid, illegal or unenforceable provision had never been contained
herein.
8. ENTIRE AGREEMENT. This Agreement constitutes the entire
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agreement and understanding between the parties with respect to the subject
matter hereof and supersedes and preempts any prior understanding, agreements or
representations by or between the parties, written or oral, which may have
related in any manner to the subject matter hereof.
9. SUCCESSORS AND ASSIGNS. This Agreement shall be enforceable by
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the Executive and the Executive's heirs, executors, administrators and legal
representatives, and by the Company and its successors and permitted assigns.
Any successor or permitted assign of the Company shall assume by instrument
delivered to the Executive the liabilities of the Company hereunder. This
Agreement shall not be assigned by the Company other than to a successor
pursuant to a merger, consolidation or transfer of all or substantially all of
the capital stock or assets of the Company.
10. GOVERNING LAW. This Agreement shall be governed by and construed
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and enforced in accordance with the internal laws of the State of Illinois
without regard to principles of conflict of laws.
11. AMENDMENT AND WAIVER. The provisions of this Agreement may be
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amended or waived only by the written agreement of the Company and the
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.
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12. COUNTERPARTS. This Agreement may be executed in two
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counterparts, each of which shall be deemed to be an original and both of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
/s/ Xxxxxxxx X. Xxxxxxxxxx
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Xxxxxxxx X. Xxxxxxxxxx
TRUE NORTH COMMUNICATIONS INC.
By: /s/ Xxxxx Xxxxx
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Xxxxx Xxxxx
Chief Executive Officer and Chairman
of the Board of Directors
TRUE NORTH COMMUNICATIONS INC.
By:
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Xxxx Xxxxxx
Executive Vice President
TRUE NORTH COMMUNICATIONS INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
Chairman of the Compensation
Committee of the Board of Directors
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