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EXHIBIT 10.14
July 9, 1996
Xx. Xxxx X. Xxxxxx
0000 Xxxxxxx Xxxx
Xxxxxxxx Xxxxxxx, XX 00000
Dear Xxxx:
SUBJECT: AMENDMENT AND RESTATEMENT OF EMPLOYMENT AGREEMENT
DATED JULY 11, 1994
We wish you to remain in the employ of Household International, Inc.
("Household" or the "Corporation") and to provide you with fair and equitable
treatment along with a competitive compensation package. Also, we wish to
assure your continued attention to your duties without any possible distraction
arising out of uncertain personal circumstances in a change in control
environment. We recognize that in the event of a Change in Control of
Household (as such term is defined herein) it is likely that your duties and
responsibilities would be substantially altered.
1. At present you are employed by Household as Managing
Director-Chief Executive Officer, HFC Bank plc. In that capacity
you are entitled to the following:
a. A minimum annual salary of $275,000;
b. An annual bonus having a targeted value equal to 60% of
your annualized salary as of the end of the period in
which the bonus is earned. The amount of bonus for any
year that you actually receive, if any, will depend on the
achievement of the corporate goals and your individual
goals established for that year and the terms of the
Household International Corporate Executive Bonus Plan,
and any successor or substitute plan or plans (the "Bonus
Plan"). Your bonus will be prorated based on the number
of elapsed months in the performance period in the case of
death, permanent and total disability, or retirement under
the Household Retirement Income Plan or any successor tax
qualified defined benefit plan;
c. An annual grant of stock options under the Household
International 1996 Long-Term Executive Incentive
Compensation Plan, and any successor or substitute plan or
plans (the "Long-Term Plan"), having a targeted value of
25% of your then annual salary at the time of the grant.
The performance unit awards
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granted in prior years will continue to be earned over a three
year cycle, which will be prorated on the number of elapsed
months in the performance period in the case of death, permanent
and total disability or retirement under the Household Retirement
Income Plan or any successor tax qualified defined benefit plan.
Stock options will be valued at their economic value at the date
of grant; and
d. Other compensation, benefits and perquisites as described
in, and in accordance with, Household's compensation,
benefit and perquisite plans (the "Plans").
2. Subject to termination as provided herein, the term of this
Agreement shall be for 18 whole calendar months, shall commence
on the date hereof, and shall be "evergreen"; that is shall
continue monthly as an 18 month term, unless the Corporation
gives to you not less than 17 whole calendar months notice that
the term as monthly continued shall not be so continued; provided
further, that in no event shall the term be continued beyond your
sixty-fifth birthday.
3. During your employment with Household you will devote your
reasonably full time and energies to the faithful and diligent
performance of the duties inherent in, and implied by, your
executive position.
4. In consideration of your employment with Household, it is mutually
agreed that:
a. In the event your employment with Household is terminated
during the term of this Agreement by Household for any
reason other than:
i. willful and deliberate misconduct which is
detrimental in a significant way to the
interests of the Corporation;
ii. death;
iii. inability, for reasons of disability, reasonably to
perform your duties for 6 consecutive calendar
months; or,
b. In the event that during the term of this Agreement
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you resign your position with Household because within 6 whole
calendar months of your resignation one or more of the following
events occurred to you:
i. your annual salary was reduced;
ii. your annual target bonus or the targeted value
of stock options calculated as provided in
paragraph 1c was reduced and compensation
equivalent in aggregate value was not
substituted;
iii. your benefits under the Household Retirement
Income Plan or any successor tax qualified
defined benefit plan were reduced for reasons
other than to maintain its tax qualified
status and such reductions were not
supplemented in the Household Supplemental
Retirement Income Plan ("HSRIP"); or your
benefits under HSRIP were reduced;
iv. your other benefits or perquisites were
reduced and such reductions were not
uniformally applied with respect to all
similarly situated employees;
v. you were reassigned to a geographical area
outside of the United Kingdom or Chicago,
Illinois metropolitan area;
vi. any successor to the Corporation by
acquisition of stock or substantially all of
the assets, by merger or otherwise, failed to
expressly adopt or otherwise repudiated this
Employment Agreement; or
vii. you received written notice that your employment
contract was not renewed;
Household shall be required, and hereby agrees, to make promptly
a lump sum cash payment to you in an amount equal to 200% of your
then annual salary (prior to any of the aforesaid reductions)
plus 200% of the average of the last two years' bonuses; provided,
however, if the term of this Agreement is less than 18 months because
you are within 18 months of becoming age 65, the amount shall be
multiplied by a fraction the numerator of which is the number of months
left in the term, and the
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denominator of which is 18. This payment shall be in addition to
all other compensation and benefits accrued to the date of
termination of employment. Also, the Compensation Committee of
Household's Board of Directors has determined that you will be
entitled to receive a portion of your performance unit awards for
the performance period in which your employment terminates. Such
portion will be determined on the basis of the portion of the
performance period elapsed as of your date of termination over
the total performance period, and it will be assumed that
individual and corporate target levels have been met.
5. It is further mutually agreed that:
a. should your employment be terminated pursuant to the
provisions of paragraph 4a, or
b. should you resign your position pursuant to the provisions
of paragraph 4b, or
c. should you resign your position because you are assigned
to a position of lesser rank or status than you had
immediately prior to the Change in Control
at any time within sixty (60) whole calendar months following a
Change in Control of Household, Household or its successor shall
pay to you the amounts (including the lump sum payment) described
in paragraph 4 regardless of whether you are otherwise entitled
to them under paragraph 4. In addition, Household or its
successor shall promptly make a lump sum cash payment to you in
an amount equal to 200% of your then annual salary (prior to any
reduction) plus 200% of the average of the last two years'
bonuses; provided, however, if the term of this Agreement is less
than 18 months because you are within 18 months of becoming age
65, the amount shall be multiplied by a fraction the numerator of
which is the number of months left in the term, and the
denominator of which is 18.
Because of the performance history of Household and your
performance with us, we hereby agree to an irrebuttable
presumption that a reduction in compensation shall be deemed to
have occurred in any year (within five years following a Change
in Control) in which you do not receive at least:
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i. a bonus payment under the Bonus Plan, and
ii. an award of stock options under the Long-Term Plan for
years in which awards were payable under the Long-Term
Plan as it existed prior to the Change in Control,
both at corporate and individual target levels as those plans
existed prior to the Change in Control (or compensation, benefits
and perquisites equivalent in aggregate value) and should you
choose to resign, payments shall be made to you as outlined
earlier in this paragraph 5.
For purposes of this Agreement, a Change in Control of Household
shall be deemed to occur when and if:
A. any "person" (as the term is used in Section 13(d) and
Section 14(d)(2) of the Securities Exchange Act of 1934)
other than a trustee or other fiduciary of securities held
under an employee benefit plan of Household becomes the
beneficial owner, directly or indirectly, of securities of
Household representing 20% or more of the combined voting
power of Household's then outstanding securities; or
B. persons who were directors of Household as of the
effective date hereof, or successor directors nominated by
those directors or by such successor directors cease to
constitute a majority of the Board of Directors of
Household or its successor by merger, consolidation or
sale of assets.
6. You are not required to mitigate the amount of any payments to be
made by Household pursuant to this Agreement by seeking other
employment, or otherwise, nor shall the amount of any payments
provided for in this Agreement be reduced by any compensation
earned by you as the result of self-employment or your employment
by another employer after the date of termination of your
employment with Household.
7. This Agreement was entered into prior to March 29, 1995, which
was the date that regulations were proposed by the Federal
Deposit Insurance Corporation (the "FDIC") limiting golden
parachute and indemnification payments by insured depository
institutions and their holding companies. At that March date the
Agreement provided
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for a lump sum payment equal to 488% of your annual salary. In
view of the foregoing, if the lump sum payments under paragraphs
4 and 5 are otherwise limited by the FDIC regulations, any limits
on "golden parachute" payments resulting from regulations issued
by the FDIC should not reduce the lump sum payments under this
Agreement below the lesser of 488% of your then annual salary
(prior to any reduction) or the lump sum amounts calculated under
paragraphs 4 and 5.
8. Except as provided below, it is the intent and desire of
Household that the salary, bonuses and other benefits provided
for herein shall be paid to you without any diminution by reason
of the assessment of any "golden parachute" excise tax pursuant
to the Internal Revenue Code of 1986, as from time to time
amended, (hereinafter the "Code"), or state law. Accordingly, in
the event that any excise tax is assessed against you pursuant to
the provisions of sections 280G and 4999 of the Code (or
successor provisions) or comparable provisions of state law,
whether with respect to any payments made to you pursuant to the
provisions of this Agreement or payments otherwise arising out of
your employment relationship, Household or any successor, upon
notification of such assessment, shall promptly pay to you such
amount as is necessary to provide you with the same after-tax
benefit that you would have received had there been no "golden
parachute" excise tax. For this purpose, Household or its
successor shall assume that you are taxed at the highest
individual federal and state income tax rates (without regard to
Section 1(g) of the Code or successor provisions thereto).
However, if any part or all of the amounts to be paid to you
constitute "parachute payments" within the meaning of section
280G(b)(2)(A) of the Code, and a reduction of the amount by 10%
or less would totally avoid the imposition of any excise tax,
such amounts shall be reduced so that the aggregate present value
of the amounts constituting such parachute payments will be equal
to 299% of your "annualized includible compensation for the base
period," as such term is defined in section 280G(d)(1) of the
Code. For the purpose of this subparagraph, present value shall
be determined in accordance with section 280G(d)(4) of the Code.
9. If a dispute arises regarding the termination of your
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employment or the interpretation or enforcement of this Agreement
and you obtain a final judgment in your favor from a court of
competent jurisdiction from which no appeal may be taken, whether
because the time to do so has expired or otherwise, or your claim
is settled by Household or its successor prior to the rendering
of such a judgment, all reasonable legal and other professional
fees and expenses incurred by you in contesting or disputing any
such termination or in seeking to obtain or enforce any right or
benefit provided for in this Agreement or in otherwise pursuing
your claim will be promptly paid by Household or its successor
with interest thereon at the highest statutory rate of your state
of domicile for interest on judgments against private parties
from the date of payment thereof by you to the date of
reimbursement to you by Household or its successor.
10. You agree that you will not, without prior written consent of the
Chief Executive Officer or the General Counsel of Household,
during the term of or after the termination of your employment
under this Agreement, directly or indirectly, disclose to any
individual, corporation, or other entity (other than Household,
or any subsidiary or affiliate thereof, or its officers,
directors, or employees entitled to such information, or any
other person or entity to whom such information is regularly
disclosed in the normal course of Household's business), or use
for your own benefit or for the benefit of such individual,
corporation or other entity, any information whether or not
reduced to written or other tangible form, which:
a. is not generally known to the public or in the industry;
b. has been treated by Household as confidential or
proprietary; and
c. is of competitive advantage to Household and in the
confidentiality of which Household has a legally
protectible interest,
(such information being referred to herein as "Confidential
Information"). Confidential Information which becomes generally
known to the public or in the industry, or in the confidentiality
of which Household ceases to have a legally protectible interest,
shall
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cease to be subject to the restrictions of this paragraph.
11. The provisions of this Agreement shall be construed, to the
extent possible, so as to guarantee their enforceability. In
case any one or more of the provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal,
or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this
Agreement, and this Agreement shall be construed as if such
invalid, illegal, or unenforceable provision had never been
contained in it.
12. This Agreement is an Amendment and Restatement of the Employment
Agreement dated July 11, 1994, between you and Xxxxxxxxx Xxxxxxxx
and supersedes said Agreement. This Agreement also supersedes
the Employment Agreement dated May 28, 1993, between you and
Xxxxxxxxx Xxxxxxxx, and the Employment Agreement dated March 9,
1992, between you and Household, all in furtherance of the
objectives authorized and deemed by the Board of Directors of
Household to serve the best interests of the Corporation.
13. Any successor to the Corporation, by acquisition of stock or
substantially all of the assets, by merger or otherwise, shall be
required to adopt and abide by the terms of this Agreement. This
Agreement, and any rights to receive payments hereunder, may not
be transferred, assigned or alienated by you.
14. All benefits under this Agreement shall be general obligations of
the Corporation which shall not require the segregation of any
funds or property. Notwithstanding the foregoing, in the
discretion of the Corporation, the Corporation may establish a
grantor trust or other vehicle to assist it in meeting its
obligations hereunder, but any such trust or other vehicle shall
not create a funded account or security interest for you.
15. This Agreement may only be amended or terminated by written
agreement, signed by both of the parties.
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Our signatures below indicate our mutual agreement and acceptance of the
foregoing terms and provisions, all as of the date first above set forth.
Sincerely,
HOUSEHOLD INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
Chief Executive Officer
/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
