EMPLOYMENT AGREEMENT
Exhibit 10.1
THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into by and between Paychex, Inc., a
Delaware corporation (the “Company”), and Xxxxxxxx X. Judge (the “Executive”) as of the 30th day of
November, 2007.
WHEREAS, the Company desires to employ Executive as Company’s President and Chief Executive
Officer on the terms and conditions set forth herein, and Executive desires to be so employed by
Company;
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Employment Period. Company hereby agrees to employ Executive, and Executive hereby
agrees to be employed by Company, subject to the terms and conditions of this Agreement, for a term
commencing on November 30, 2007 (the “Effective Date”), and, unless sooner terminated as provided
herein, continuing for a period of three (3) years (the “Employment Period”).
2. Position and Duties. During the Employment Period, Executive shall serve as
President and Chief Executive Officer of Company, reporting directly to Company’s Board of
Directors (the “Board”), with such authority, duties and responsibilities as are commensurate with
such position. Executive shall serve as a member of the Board subject to annual shareholder
approval.
3. Compensation.
(a) Base Salary. During the Employment Period, Executive shall receive an annual base
salary of $915,000, paid bi-weekly on Fridays (the “Annual Base Salary”). The amount of the Annual
Base Salary shall be reviewed annually and increased by such amount, if any, as may be determined
by the Governance and Compensation Committee of the Board. In no event will the Annual Base Salary
be reduced below $915,000.
(b) Annual Bonus. During the Employment Period, Executive shall be eligible to receive
an annual cash incentive bonus (the “Annual Bonus”). For Company’s fiscal year 2008, Executive
will be entitled to an Annual Bonus pursuant to the 2007-2008 Officer Performance Incentive Award
Agreement, which is incorporated herein by reference. In addition, Executive will be eligible for a
qualitative bonus of up to 20% of Annual Base Salary as determined by the Governance and
Compensation Committee of the Board in its sole discretion. For subsequent periods during the
Employment Period, Annual Bonus plans and objectives will be subject to prior review and input by
Executive, but shall be determined at the sole discretion of the Governance and Compensation
Committee of the Board. It is anticipated that Annual Bonus plans and objectives for such
subsequent periods will generally follow the plans and objectives as applicable for Company’s
fiscal year 2008.
(c) Equity Compensation Grants. In conjunction with the annual review process for
Company’s executive officers, the Governance and Compensation Committee will review Executive’s
compensation plan and may, in its sole discretion, grant equity awards based upon (i) Executive’s
performance, and/or (ii) share or option pool availability.
(d) Expenses. During the Employment Period, Executive shall be entitled to
reimbursement for all reasonable expenses incurred by Executive associated with the conduct of
Company’s business in accordance with Company’s policies.
(e) Other Benefits. During the Employment Period, Executive shall be entitled to
participate in:
(i) Company’s medical and dental insurance, life / AD&D insurance, long term disability
insurance and 401k plan;
(ii) Company’s deferred compensation plan for senior executives;
(iii) Healthcare benefits for Executive and members of his family which are integral to
Company’s standard benefit schemes;
(iv) D&O insurance and indemnification consistent with the coverage provided to other
directors and officers; and
(v) All other standard benefits available to Company’s senior executive employees,
including vacation entitlements, sick leave, paid holidays and floating holidays, according
to Company’s standard benefit schemes.
4. Termination of Employment.
(a) Cause. Company may terminate Executive’s employment during the Employment Period
with or without Cause. For purposes of this Agreement, “Cause” shall mean (i) dereliction of duty
(after notice and a reasonable opportunity to cure, to the extent curable), (ii) conviction for a
felony, (iii) willful misconduct; or (iv) failure to follow a lawful directive from the Board of
Directors (after notice and a reasonable opportunity to cure, to the extent curable).
(b) Good Reason. Executive’s employment may be terminated by Executive for Good
Reason. For purposes of this Agreement, “Good Reason” shall mean (i) failure of Company to make any
payments or equity grants to Executive or any other material breach by Company of its obligations
to Executive within 30 days after the same shall be due, and (ii) any material reduction in
Executive’s duties, authority or responsibilities.
-2-
5. Obligations of the Company upon Termination.
(a) Good Reason; Other Than for Cause. If, during the Employment Period, Company shall
terminate Executive’s employment other than for Cause or Executive shall terminate employment for
Good Reason:
(i) Earned and unpaid compensation and expenses will be paid within 30 days of the Date of
Termination. Company shall pay to Executive, upon the expiration of six months after the Date of
Termination, or as soon thereafter as is administratively feasible, but no longer than ninety days
after such due date, the aggregate of one (1) year’s Annual Base Salary, plus an Annual Bonus
determined at the same percentage of Plan as was the case for the bonus determination for the
immediately preceding fiscal year (and without pro-ration).
(ii) Any options, restricted stock or other equity granted prior to July 1, 2007 that have not
previously vested shall vest and become exercisable immediately. Provided, however, that if such
termination occurs within one (1) year after a Change of Control, any options, restricted stock or
other equity shall vest and become exercisable immediately, regardless of when granted. For
purposes of this provision, Change of Control is defined as: the acquisition by any person or
entity of at least 50% of the voting shares of Paychex; a consolidation or merger involving Paychex
in which Paychex is not the surviving entity; the sale, lease or exchange of all or substantially
all of the company’s assets; or shareholder approval of a plan of liquidation or dissolution of
Paychex.
(iii) The Company will pay the full cost of COBRA premiums for medical insurance benefits
pursuant to the benefit plans in effect at the time of the termination for twelve months following
the Date of Termination.
(b) Cause; Other than for Good Reason. If Executive’s employment is terminated during
the Employment Period (i) by Company for Cause, or (ii) by Executive without Good Reason, this
Agreement shall terminate without further obligations of Company to Executive or his legal
representatives under this Agreement, other than Company’s obligations for accrued salary, vacation
and any earned and unpaid bonus.
6. Confidential Information.
(a) Executive shall hold in a fiduciary capacity for the benefit of Company all secret or
confidential information, knowledge or data relating to Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by Executive during Executive’s
employment by Company. After termination of Executive’s employment with Company, Executive shall
not, without the prior written consent of Company or as may otherwise be required by law or legal
process, communicate or divulge any such information, knowledge or data to anyone other than
Company and those designated by it.
-3-
(b) In the event of a breach or threatened breach of this Section 6, Executive agrees that
Company shall be entitled to injunctive relief to remedy any such breach or threatened breach.
Executive acknowledges that damages would be inadequate and insufficient. This Section 6 shall
survive any termination of Executive’s employment or of this Agreement.
7. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance with the laws of the State
of New York. The exclusive jurisdiction and venue of any action arising out this Agreement shall
be New York State Supreme Court, County of Monroe.
(b) The Company shall be entitled to withhold from any amounts payable hereunder such amount
or amounts, if any, as are required by law and to the extent permissible under Section 409A of the
Internal Revenue Code, including withholdings from cash payments at the time payment is made or
share withholding, as necessary, to satisfy tax obligations upon vesting of equity awards. It is
intended that the payments and benefits provided for by this Agreement (including all amendments
thereto) either comply with or are exempt from the requirements of Section 409A of the Code, and
this Agreement shall be administered and interpreted to the extent possible in a manner consistent
with that intention.
(c) This Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal representatives.
(d) All notices and other communications hereunder shall be in writing and shall be given by
hand delivery to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to Executive:
|
If to Company: | |
Xxxxxxxx X. Judge
|
Paychex, Inc. | |
**
|
000 Xxxxxxxx Xxxxx Xxxxx | |
**
|
Xxxxxxxxx, Xxx Xxxx 00000 | |
| Attention: Chief Financial Officer |
or to such other address as either party shall have furnished to the other in writing in accordance
herewith. Notice and communications shall be effective when actually received by the addressee.
(e) The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement. The Company represents and
warrants that the execution, delivery and performance of this Agreement have been duly authorized
and that it is legal, valid and binding upon the Company.
(f) This Agreement constitutes the entire agreement between Company and Executive and
supersedes any other agreements or understandings, whether written or oral, which relate to the
subject matter hereof.
-4-
IN WITNESS WHEREOF, Executive has hereunto set his hand and, pursuant to the authorization
from its Governance and Compensation Committee as authorized by the Board of Directors, Company has
caused this Agreement to be executed in its name on its behalf, all as of the day and year first
above written.
| Paychex, Inc. | ||||
| By: | /s/ Xxxx X. Xxxxxx | |||
| Xxxx Xxxxxx Senior Vice President, Chief Financial Officer, Secretary, and Treasurer |
||||
| /s/ Xxxxxxxx X. Judge | ||||
| Xxxxxxxx X. Judge | ||||
-5-
