Exhibit 10.1
EMPLOYMENT AGREEMENT
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AGREEMENT made as of January 18, 2005 by and between THE INTERPUBLIC
GROUP OF COMPANIES, INC., a Delaware corporation ("Interpublic") and XXXXX X.
XXXX ("Executive").
In consideration of the mutual promises set forth herein the parties
hereto agree as follows:
ARTICLE I
Term of Employment
1.01 Subject to the provisions of Article VII and Article VIII, and
upon the terms and subject to the conditions set forth herein, Interpublic will
employ Executive beginning January 19, 2005 ("Commencement Date") and continuing
thereafter, subject to termination in accordance with the provisions of Article
VII hereof. (The period during which Executive is employed hereunder is referred
to herein as the "term of employment"). Executive will serve Interpublic during
the term of employment.
ARTICLE II
Duties
2.01 During the term of employment, Executive will:
(i) Serve as Co-Chairman of Interpublic;
(ii) Use his best efforts to promote the interests of
Interpublic and devote his full time and efforts to their business and
affairs;
(iii) Perform such duties as Interpublic may from time to time
assign to him; and
(iv) Serve in such other offices of Interpublic as he may be
elected or appointed to.
ARTICLE III
Regular Compensation
3.01 Interpublic will compensate Executive for the duties performed by
him hereunder, by payment of a base salary at the rate of One Million Dollars
($1,000,000) per annum, payable in equal installments, which Interpublic shall
pay at semi-monthly intervals, subject to customary withholding for federal,
state and local taxes.
3.02 Interpublic will continue to make deferrals pursuant to
Executive's ESBA agreement with the Company. Such deferrals will continue during
the term of employment and the Severance Period (as hereinafter defined in
Section 7.01). ESBA amounts will be paid to Executive in accordance with the
provisions of the ESBA.
ARTICLE IV
Bonuses
4.01 Executive will be eligible during the term of employment to
participate in Interpublic's Annual Management Incentive Plan, or any successor
plan, in accordance with the terms and conditions of the Plan established from
time to time. Executive shall be eligible for a target award equal to one
hundred thirty-three percent (133%) of his base salary. The actual award, if
any, may vary from zero percent (0%) to two hundred percent (200%) of target,
and shall be determined by Interpublic based on Company performance, Executive's
individual performance, and management discretion.
ARTICLE V
Interpublic Stock; LTPIP
5.01 Executive currently owns certain shares of Interpublic Restricted
Stock and holds certain options to acquire shares of Interpublic Common Stock. A
list of such shares and options and the vesting thereof is attached hereto, as
Exhibit A. Such shares and options will continue to vest during the term of
employment and will, in the event of a termination pursuant to Section 7.01,
fully vest at the end of the Severance Period (as hereinafter defined in Section
7.01).
5.02 Executive is currently a participant in Interpublic's 2003-2005
Long-Term Performance Incentive Program ("LTPIP"), for which the per-unit payout
has already been determined. Amounts to which Executive is entitled under the
LTPIP will be paid out one-third in 2005 and two-thirds in 2006.
ARTICLE VI
Other Employment Benefits
6.01 Employee will be entitled to annual paid time off, in accordance
with Interpublic's policies and procedures, to be taken in such amounts and at
such times as shall be mutually convenient for Executive and Interpublic.
6.02 Executive shall be reimbursed for all reasonable out-of-pocket
expenses actually incurred by him in the conduct of the business of Interpublic
provided that Executive submits all substantiation of such expenses to
Interpublic on a timely basis in accordance with standard policies of
Interpublic.
6.03 During the term of employment, Executive shall be entitled to
continuation of his annual allowances (club/car/ etc.). In addition, Executive
will be provided with a car and driver and with garage space in New York City.
6.04 Executive shall be eligible to participate in the Executive
Medical Plus Plan.
6.05 Executive shall remain a participant in certain True North and
Interpublic deferred compensation and profit-sharing plans, as set forth on
Exhibit B attached hereto, and will receive all payments to which he is entitled
subject to the terms and conditions of those plans.
6.06 Immediately following full execution of this Agreement,
Interpublic will purchase an annuity on Executive's behalf in the amount of Two
Million Dollars ($2,000,000). Actual terms and conditions of payment will be
subject to the mutual agreement of Executive and Interpublic.
ARTICLE VII
Termination
7.01 Interpublic may terminate the employment of Executive hereunder:
(i) By giving Executive notice in writing at any time
specifying a termination date. In such event Executive's employment
hereunder shall terminate on the date specified in such notice, and
Interpublic shall thereafter pay him his base salary for a period of
twelve (12) months following the date of termination ("Severance
Period").
(ii) During the Severance Period, Executive will be entitled
to receive all employee benefits accorded to him prior to termination
(including Executive Medical Plus); provided that such benefits shall
cease upon such date that Executive accepts employment with another
employer offering similar benefits. During the Severance Period,
Executive will also be provided with suitable office space, the
services of an assistant and a car and driver. Upon expiration of the
Severance Period, Executive shall be entitled to participate in all
other applicable benefit plans or programs available to him as a
retired employee of True North and Interpublic.
7.02 Following termination of Executive's employment pursuant to
Section 7.01 (or in the event Executive terminates his employment pursuant to
Section 7.04), Executive will be retained as a Consultant to the Corporation,
for a period of five (5) years from the termination date ("Consulting Period").
During the Consulting Period, Executive will be entitled to an annual consulting
fee of Seven Hundred Fifty Thousand Dollars ($750,000). Executive shall make
himself available, for no more than the equivalent of ten (10) full business
days per quarter, to provide services as the Chief Executive Officer of
Interpublic may request, commensurate with his years of experience and level of
skill. In addition, during the Consulting Period, Executive will be reimbursed
for all expenses incurred on Interpublic's behalf.
7.03 Notwithstanding the provisions of Section 7.01, Interpublic may
terminate the employment of Executive hereunder, or may terminate Executive's
consulting arrangement, at any time, for Cause. For purposes of this Agreement,
"Cause" means the following:
(i) Any material breach by Executive of any provision of this
Agreement upon notice of same by Interpublic which breach, if capable
of being cured, has not been cured within fifteen (15) days after such
notice (it being understood and agreed that a breach of Section 8.01 or
8.02 hereof, among others, shall be deemed not capable of being cured);
(ii) During the term of employment, Executive's absence from
duty for a period of time exceeding fifteen (15) consecutive business
days or twenty (20) out of any thirty (30) consecutive business days
(other than on account of permitted vacation or as permitted for
illness, disability or authorized leave in accordance with
Interpublic's policies and procedures) without the consent of the
Interpublic Board of Directors;
(iii) Misappropriation by Executive of funds or property of
Interpublic or any attempt by Executive to secure any personal profit
related to the business of Interpublic (other than as permitted by this
Agreement) and not fairly disclosed to and approved by the Interpublic
Board of Directors;
(iv) Fraud, dishonesty, disloyalty, gross negligence, or
willful misconduct on the part of Executive in the performance of his
duties as an employee or consultant of Interpublic;
(vi) A felony conviction of Executive; or
(vii) Executive's engaging, in connection with his employment,
in activities which are prohibited by federal, state, or local laws, or
Interpublic or Interpublic's policy, prohibiting discrimination or
harassment based on age, sex, race, religion, disability, national
origin or any other protected category.
Upon a termination for Cause, Interpublic shall pay Executive his
salary (or consulting fee, as the case may be) through the date of termination,
and Executive shall not be entitled to any bonus with respect to the year of
termination, or to any other payments hereunder.
7.04 After the first anniversary of the Commencement Date, Executive
may terminate his employment hereunder by giving (i) prior to age sixty-five
(65), three (3) months notice and (ii) after age sixty-five (65), twelve (12)
months notice ("Notice Period") to Interpublic. In such event, Executive's
employment shall terminate on the date specified, provided, however that
Interpublic may, in its discretion, request that Executive not provide active
services to the Corporation during the Notice Period. At the end of the Notice
Period, Executive will be retained as a Consultant (pursuant to the provisions
of Section 7.02) the equity set forth on Exhibit A will fully vest and Executive
will be entitled to applicable retirement benefits.
ARTICLE VIII
Covenants
8.01 While Executive is employed (as employee or consultant) hereunder
by Interpublic he shall not, without the prior written consent of Interpublic,
which will not be unreasonably withheld, engage, directly or indirectly, in any
other trade, business or employment, or have any interest, direct or indirect,
in any other business, firm or corporation; provided, however, that he may
continue to own or may hereafter acquire any securities of any class of any
publicly-owned company.
8.02 Executive shall treat as confidential and keep secret the affairs
of Interpublic and shall not at any time, without the prior written consent of
Interpublic, divulge, furnish or make known or accessible to, or use for the
benefit of, anyone other than Interpublic and its subsidiaries and affiliates
any information of a confidential nature relating in any way to the business of
Interpublic or its subsidiaries or affiliates or their clients and obtained by
him in the course of his employment hereunder.
8.03 All records, papers and documents kept or made by Executive
relating to the business of Interpublic or its subsidiaries or affiliates or
their clients shall be and remain the property of Interpublic.
8.04 All articles invented by Executive, processes discovered by him,
trademarks, designs, advertising copy and art work, display and promotion
materials and, in general, everything of value conceived or created by him
pertaining to the business of Interpublic or any of its subsidiaries or
affiliates during the term of employment, and any and all rights of every nature
whatever thereto, shall immediately become the property of Interpublic, and
Executive will assign, transfer and deliver all patents, copyrights, royalties,
designs and copy, and any and all interests and rights whatever thereto and
thereunder to Interpublic.
8.05 During any period in which payments are being made to Executive
pursuant to Section 7.01 above (the Severance Period ) or pursuant to Section
7.02 above (the Consulting Period), Executive shall not: (a) directly or
indirectly solicit any employee of Interpublic to leave such employ to enter the
employ of Executive or of any person, firm or corporation with which Executive
is then associated, or induce or encourage any such employee to leave the
employment of Interpublic or to join any other company, or hire any such
employee, or otherwise interfere with the relationship between Interpublic and
any of its employees or (b) directly or indirectly solicit or handle on
Executive's own behalf or on behalf of any other person, firm or corporation,
the event marketing, public relations, advertising, sales promotion or market
research business of any person or entity which is a client of Interpublic, or
to induce any such client to cease to engage the services of Interpublic or to
use the services of any entity or person that competes directly with a material
business of Interpublic, where the identity of such client, or the client's
need, desire or receptiveness to services offered by Interpublic is known by
Executive as a part of his employment with Interpublic. In addition, during the
Severance Period and the Consulting Period, Executive shall not accept any form
of employment (including as an advisor, consultant or otherwise) with an
employer that is in competition with the business of Interpublic. Executive
acknowledges that these provisions are reasonable and necessary to protect
Interpublic's legitimate business interests, and that these provisions do not
prevent Executive from earning a living.
8.06 If at the time of enforcement of any provision of this Agreement,
a court shall hold that the duration, scope or area restriction of any provision
hereof is unreasonable under circumstances now or then existing, the parties
hereto agree that the maximum duration, scope or area reasonable under the
circumstances shall be substituted by the court for the stated duration, scope
or area.
8.07 Executive acknowledges that a remedy at law for any breach or
attempted breach of Article VIII of this Agreement will be inadequate, and
agrees that Interpublic shall be entitled to specific performance and injunctive
and other equitable relief in the case of any such breach or attempted breach.
8.08 Executive represents and warrants that neither the execution and
delivery of this Employment Agreement nor the performance of Executive's
services hereunder will conflict with, or result in a breach of, any agreement
to which Executive is a party or by which he may be bound or affected, in
particular the terms of any employment agreement to which Executive may be a
party. Executive further represents and warrants that he has full right, power
and authority to enter into and carry out the provisions of this Employment
Agreement.
ARTICLE IX
Arbitration
9.01 Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, including claims involving alleged legally
protected rights, such as claims for age discrimination in violation of the Age
Discrimination in Employment Act of 1967, as amended, Title VII of the Civil
Rights Act, as amended, and all other federal and state law claims for
defamation, breach of contract, wrongful termination and any other claim arising
because of Executive's employment, termination of employment or otherwise, shall
be settled by arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association and Section 12.01 hereof, and judgement
upon the award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof. The arbitration shall take place in the city where
Executive customarily renders services to Interpublic. The prevailing party in
any such arbitration shall be entitled to receive attorney's fees and costs.
ARTICLE X
Assignment
10.01 This Agreement shall be binding upon and enure to the benefit of
the successors and assigns of Interpublic. Neither this Agreement nor any rights
hereunder shall be assignable by Executive and any such purported assignment by
him shall be void.
ARTICLE XI
Agreement Entire
11.01 This Agreement constitutes the entire understanding between
Interpublic and Executive concerning his employment by Interpublic or any of its
parents, affiliates or subsidiaries and supersedes any and all previous
agreements between Executive and Interpublic or any of its parents, affiliates
or subsidiaries concerning such employment, and/or any compensation or bonuses
except for the arrangements contemplated by Exhibits A and B. Each party hereto
shall pay its own costs and expenses (including legal fees) incurred in
connection with the preparation, negotiation and execution of this Agreement.
This Agreement may not be changed orally.
ARTICLE XII
Applicable Law
12.01 The Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By: /s/ Xxxxxxx Xxxx
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Xxxxxxx Xxxx
Chairman
/s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
SUMMARY OF UNEARNED INCENTIVE & EQUITY COMPENSATION: Exhibit A
Executive: Xxxxx X. Xxxx
Company: Interpublic Group of Co's, Inc
Title: Chief Executive Officer
Date of Original Hire: 03/10/1967
Date of Birth: 05/29/1943
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LTPIP: 2003-2005: Component Units $/Unit Value
------ ---------- --------- ----- ------ -----
Performance Units: Interpublic Worldwide 20,000 $38.33 $766,600
2003-2005 Total Value:
RESTRICTED STOCK: Grant Date LTI Val/Sh Shares LTI Value Vest Date
----------------- ---------- ---------- ------ --------- ---------
08/23/2001 75,000 08/23/2006
01/02/2002 10,000 01/02/2007
2004-LTI 05/18/2004 $14.0600 124,466 $1,750,000 05/18/2007
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209,466
STOCK OPTIONS: Grant Date Shares LTI Value Ex. Price
-------------- ---------- ------ --------- ---------
03/03/1998 114,000 $23.7400
03/02/1999 45,828 $21.0500
08/23/2001 125,000 $27.5250
01/02/2002 30,000 $29.4750
12/17/2002 25,000 $13.5700
03/26/2003 200,000 $9.6400
2004-LTI 05/18/2004 248,933 $1,750,000 $14.0600
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788,761
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Vesting Schedule
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STOCK OPTIONS: Grant Date First Sched Second Sched Third Sched.
-------------- ---------- ----------- ------------ ------------
03/03/1998 Fully Vested
03/02/1999 Fully Vested
08/23/2001 8/23/2004 50,000 8/23/2005 37,500 8/23/2006 37,500
01/02/2002 1/2/2005 12,000 1/2/2006 9,000 1/2/2007 9,000
12/17/2002 12/17/2004 8,250 12/17/2005 8,250 12/17/2006 8,500
03/26/2003 3/26/2005 66,000 3/26/2006 66,000 3/26/2007 68,000
2004-LTI 05/18/2004 5/18/2006 82,147 5/18/2007 82,147 5/18/2008 84,639
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131,100 shares granted 2/27/2001 and 79,800
shares granted 3/1/2000 at a price of $33.6000
and $32.4600, respectively,were
forfeited to the Chairman's Fund.
Exhibit B
1. Executive Medical Plus
2. IPG Broad-based Employee Plans
3. IPG Savings Plan (including old True North Profit Sharing Plan)
4. IPG Long-term Disability Plan
5. IPG Health Care Reimbursement Account Plan
6. IPG Legal Services Plan
7. Executive Special Benefit Arrangement (ESBA)
8. Executive Wealth Accumulation Plan (EWAP)
9. True North Deferred Compensation Plan (TN DCP)
10. True North Retiree Medical Plan
11. True North Retiree Life Insurance Plan
