SUPPLEMENTAL RETIREMENT AGREEMENT
Exhibit
10.1
This
Supplemental Retirement Agreement (the “Agreement”) is entered into this 8th day
of July, 2009 (the “Grant Date”) by and between Thermo Xxxxxx Scientific Inc.
(the “Company”) and Xxxxxx Xxxxxxx (the “Grantee”).
WHEREAS,
the Grantee has served the Company as its Chief Executive Officer pursuant to
the Employment Agreement;
WHEREAS,
the Company desires to reward the Grantee for his past service to the Company
and encourage and incentivize the Grantee to contribute to the long-term success
of the Company;
NOW,
THEREFORE, in consideration of the promises and mutual covenants contained
herein and for other good and valuable consideration, the receipt of
which is mutually acknowledged, the Company and the
Grantee:
1. Definitions.
“Benchmark
Index” means, with respect to any date, the average value of the S&P
Industrials Composite Index for the 90 consecutive calendar days immediately
preceding such date. The value of the Benchmark Index on January 1,
2008 is $1,774.295.
“Cause”
shall have the meaning set forth in the Employment Agreement.
“Change
in Ownership or Control of the Company” is deemed to occur upon the consummation
of a merger, consolidation, reorganization, recapitalization or statutory share
exchange involving the Company or a sale or other disposition of all or
substantially all of the assets of the Company in one or a series of
transactions, provided that immediately following such event, the Stock is no
longer publicly traded on an established securities market.
“Code”
means the Internal Revenue Code of 1986, as amended.
“Committee”
means the Compensation Committee of the Board of Directors of the Company or, in
the absence of a Compensation Committee, the full Board of
Directors.
“Disability”
shall have the meaning set forth in the Employment Agreement.
“Employment
Agreement” means the Amended and Restated Employment Agreement, effective as of
April 7, 2008, by and between the Company and the Grantee.
“Final
Performance-Based Phantom Shares” shall have the meaning set forth in Section
3(b)(ii).
“401(k)
Excess Plan” means the non-qualified deferred compensation plan sponsored by the
Company to provide a benefit that would have been provided in the Company’s
Section 401(k) plan but for limitations imposed by Sections 402(g) and
401(a)(17) of the Code.
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“Good
Reason” shall have the meaning set forth in the Employment
Agreement.
“Interest
Rate” means the trailing 12-month average rate of return (interest only) of a
ten-year Treasury Note.
“Mortality
Table” means Table V under Treasury Regulations Section 1.72-9 (or such other
table promulgated by the Internal Revenue Service that replaces this
table).
“Payment
Commencement Date” shall have the meaning set forth in Section 4.
“Performance-Based
Phantom Shares” shall have the meaning set forth in Section 3.
“Phantom
Share” means the right to receive the value of one share of Stock in accordance
with the terms of this Agreement.
“Phantom
Share Value” means (a) (i) the Stock Price as of the Separation from Service
Date, (ii) multiplied by the number of vested Phantom Shares determined in
accordance with Section 3, hereof, less (b) the value of
the account balance of the Grantee under the 401(k) Excess Plan that is
attributable to (x) Company contributions plus (y) an amount
equal to investment gains (or losses) attributable to such Company
contributions, calculated as if such contributions had been invested in the X.
Xxxx Price Retirement 2015 Fund (or such other balanced index fund that replaces
this fund) offered by the Company as a measurement fund under the 401(k) Excess
Plan. For the avoidance of doubt, this offset does not take into
account any amount attributable to elective deferred compensation by the Grantee
under the 401(k) Excess Plan and any investment gains (or losses)
thereon.
“Separation
from Service” means the Grantee’s “separation from service” from the Company
within the meaning set forth in Section 409A of the Code, determined in
accordance with the presumptions set forth in Treasury Regulation Section
1.409A-1(h).
“Separation
from Service Date” means the date the Grantee incurs a Separation from
Service.
“Stock”
means the common stock of the Company.
“Stock
Price” means, with respect to a given date, the average closing price of the
Stock for the 90 consecutive calendar days immediately preceding such date;
provided, however, that, in the event of a Change in Ownership or Control of the
Company, the Stock Price shall be the last reported closing price of the Stock
on the immediately preceding full trading day immediately prior to the Change in
Ownership or Control of the Company.
“Target
Performance-Based Phantom Shares” shall have the meaning set forth in Section
3(b)(ii).
“Time-Based
Phantom Shares” shall have the meaning set forth in Section 3.
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“Total
Shareholder Return” means the total return to a shareholder per share of Stock,
from Stock Price appreciation, determined by comparing the Stock Price as of
January 1, 2008 with the Stock Price on the last day of the applicable
period, plus cumulative dividends (compounded) during such
period. The Stock Price on January 1, 2008 is $57.72.
2. Grant of Phantom
Shares. The Company hereby grants to the Grantee an award of
124,000 Phantom Shares, subject to the restrictions and conditions set forth in
this Agreement.
3. Vesting of Phantom
Shares. The Phantom Shares shall vest on the date or dates
specified in this Section 3, so long as the Grantee remains an employee of the
Company on such dates, subject to Section 6, below. The Phantom
Shares shall vest with respect to 50% of the Phantom Shares based on the
Grantee’s continued employment (the “Time-Based Phantom Shares”) and with
respect to 50% of the Phantom Shares based on the performance of the Company
(the “Performance-Based Phantom Shares”).
(a)
Time-Based Phantom
Shares. A percentage of the Time-Based Phantom Shares shall
vest on the Vesting Dates set forth below if the Grantee remains employed with
the Company through each Vesting Date:
Percentage of
Phantom Shares Vested
|
Vesting Date
|
|||
70%
|
December
31, 2014
|
|||
100%
|
December
31, 2017
|
The
Grantee shall forfeit all Time-Based Phantom Shares that have not vested as of
the Grantee’s Separation from Service Date.
(b)
Performance-Based Phantom
Shares.
(i)
The
number of Performance-Based Phantom Shares to be earned shall be based on the
Company’s Total Shareholder Return from January 1, 2008 through December 31,
2017, relative to the performance of the Benchmark Index for the same
period. If the Grantee’s Separation from Service Date is before
December 31, 2017, the performance period shall be shortened and the Company’s
Total Shareholder Return from January 1, 2008 through the calendar month end
immediately preceding or coincident with the Separation from Service Date shall
be compared to the performance of the Benchmark Index for the same
period.
(ii)
On either
December 31, 2017 or the Separation from Service Date, whichever occurs first,
the Committee shall determine the actual number of Performance-Based Phantom
Shares that may be earned based on the Company’s Total Shareholder Return (the
“Final Performance-Based Phantom Shares”) in accordance with Schedule A,
hereto.
(iii) Subject
to the Grantee’s continued employment with the Company through the Vesting Dates
set forth in the table in Section 3(a), either 0 percent, 70 percent or 100
percent of the Final Performance-Based Phantom Shares shall vest.
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The
Grantee shall forfeit all Performance-Based Phantom Shares that have not vested
as of the date of Grantee’s Separation from Service Date.
4. Payment of
Benefit. If the Grantee becomes vested in some or all of his
Phantom Shares, as soon as practicable following the Separation from Service
Date, the Company shall determine the Phantom Share Value. Such
amount shall be paid to Grantee in quarterly installments over an installment
period equal to the Grantee’s life expectancy, as determined in accordance with
the Mortality Table, based on the Grantee’s age on the Payment Commencement
Date, rounded down to the nearest whole number. The Payment
Commencement Date shall be (i) the first day of the first month that is six
months and one day after the Separation from Service Date, or (ii) the Grantee’s
60th
birthday, whichever is later. Until the Phantom Share Value is fully
paid out, it shall be adjusted with interest annually in arrears as of the end
of each calendar year based on the Interest Rate. The amount of each
quarterly payment shall be equal to the amount determined by dividing the
remaining balance of the Phantom Share Value, as adjusted, by the remaining
number of installment payments. In the event the Grantee dies after
Separation from Service but prior to full payment of the Phantom Share Value, as
adjusted, the Company shall pay the remaining balance of the Phantom Share
Value, as adjusted, in a lump sum to the Grantee’s designated beneficiary within
60 days of the date of death. If the Grantee has not designated a
beneficiary, the Grantee’s surviving spouse shall be deemed to be the designated
beneficiary. If the Grantee has no surviving spouse, the Grantee’s
estate shall be deemed to be the designated beneficiary.
5. Change in Ownership or
Control. Upon a Change in Ownership or Control of the Company
prior to December 31, 2017, (a) the Committee shall determine the Stock Price,
(b) based on such determination of the Stock Price, the Committee shall
calculate the number of Final Performance-Based Phantom Shares to be earned in
accordance with Schedule A, (c) all
Time-Based Phantom Shares and Final Performance-Based Phantom Shares shall be
converted to the Phantom Share Value and such amount shall continue to vest in
accordance with Section 3(a) based on the service of the Grantee and (d) all
other terms and conditions of this Agreement shall remain in full force in
effect.
6. Separation From
Service. Except as otherwise provided below, upon termination
of the Grantee’s employment with the Company for any reason, the Grantee shall
forfeit Phantom Shares and Phantom Share Value that have not vested upon the
Grantee’s Separation from Service pursuant to Section 3. Upon the
termination of the Grantee’s employment by the Company for Cause, the Grantee
shall forfeit all Phantom Shares and Phantom Share Value, whether or not
vested.
(a)
Separation from Service by
the Company without Cause or by the Grantee for Good
Reason. In connection with the Grantee’s Separation from
Service prior to December 31, 2017, either (i) by the Company without Cause
or (ii) by the Grantee for Good Reason, for purposes of determining the
percentage of the Time-Based Phantom Shares and Performance-Based Phantom Shares
that will vest upon the Grantee’s Separation from Service (if any), the Grantee
shall be deemed to be employed by the Company for 36 additional calendar
months.
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(b) Separation from Service Due
to Disability. In connection with the Grantee’s Separation
from Service prior to December 31, 2017 due to Disability, on the Separation
from Service Date, the Grantee shall vest with respect to a number of Time-Based
Phantom Shares and Final Performance-Based Phantom Shares (the number of which
shall be determined pursuant to Section 3(b)) equal to (x) 10% of the Phantom
Shares multiplied by (y) the number of years (up to ten) the Grantee has
performed services for the Company from January 1, 2008 through the date of
the Grantee’s Disability.
7. Transferability. This
Agreement is personal to the Grantee, is non-assignable and is not transferable
in any manner, by operation of law or otherwise, other than by will or the laws
of descent and distribution.
8. Waiver of Benefits Under
Other Plans. Except (x) with respect to any amounts consisting
solely of compensation deferred by the Grantee (and any interest or other
appreciation thereon), and (y) benefits provided by the Company under the 401(k)
Excess Plan, the Grantee hereby waives the right to receive any benefit under
any nonqualified pension, profit sharing, supplemental retirement plans
maintained or sponsored by the Company to which he may otherwise be entitled,
either now in existence or may be established by the Company in the
future.
9. Acknowledgement of
Obligations, Restrictions and Covenants. The Grantee hereby
acknowledges that he is bound by certain confidentiality, noncompetition and
nonsolicitation covenants set forth in the Employment Agreement. The
Company shall have the right to suspend any benefit payment under this Agreement
if the Committee in good faith determines that the Grantee is in material breach
of such covenants.
10.
Tax
Withholding. All payments to the Grantee hereunder shall be
net of any required Federal, state, and local tax withholding.
11.
Section
409A. The parties intend that this Agreement will be
administered in accordance with Section 409A of the Code. To the
extent that any provision of this Agreement is ambiguous as to its compliance
with Section 409A of the Code, the provision shall be read in such a manner so
that all payments hereunder comply with Section 409A of the Code. The
parties agree that this Agreement may be amended, as reasonably requested by
either party, and as may be necessary to fully comply with Section 409A of the
Code and all related rules and regulations in order to preserve the payments and
benefits provided hereunder without additional cost to either
party. The Company makes no representation or warranty and shall have
no liability to the Grantee or any other person if any provisions of this
Agreement are determined to constitute deferred compensation subject to Section
409A of the Code but do not satisfy an exemption from, or the conditions of,
such Section.
12.
Source of Payments/Unfunded
Status. The Agreement is intended to constitute an unfunded
plan. Any amount due and payable to the Grantee or in respect of the
Phantom Shares pursuant to the terms of this Agreement shall be paid solely from
the general assets of the Company. The Grantee (and his beneficiary,
if applicable) shall not have any interest in any specific asset as a result of
this Agreement or any right to payment under the Agreement. The
Company shall not have any obligation to set aside any funds for the purpose of
making any
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benefit
payments under this Agreement. Nothing contained herein shall give
the Grantee (or his beneficiary, if applicable) any rights that are greater than
those of a general unsecured creditor of the Company. No action taken
pursuant to the terms of this Agreement shall be construed to create a funded
arrangement, a plan asset, or fiduciary relationship between the Company and the
Grantee (or his beneficiary, if applicable).
13.
No Obligation to Continue
Employment. The Company is not obligated by or as a result of
this Agreement to continue the Grantee in employment and this Agreement shall
not interfere in any way with the right of the Company to terminate the
employment of the Grantee at any time.
14.
Notices. Notices
hereunder shall be mailed or delivered to the Company at its principal place of
business and shall be mailed or delivered to the Grantee at the address on file
with the Company or, in either case, at such other address as one party may
subsequently furnish to the other party in writing.
15.
Changes in
Stock. If, as a result of any reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split, stock offering or stock repurchase, or other change in the Company’s
capital stock, there is a material change in the number of outstanding shares of
Stock, the Committee shall make appropriate or proportionate adjustments to the
starting Stock Price, Total Shareholder Return and/or the number of Phantom
Shares in such manner as the Committee determines to be equitable to preserve
the intent of this Agreement.
IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first written above.
THERMO XXXXXX
SCIENTIFIC INC.
By: /s/
Xxxx X.
Xxxxxxxxx
Xxxx X. Xxxxxxxxx
Senior Vice President, Secretary and General Counsel
/s/ Xxxxxx
Xxxxxxx
Xxxxxx Xxxxxxx
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Exhibit
A
Performance
Goals
The chart
below sets forth the percentage of the Performance-Based Phantom Shares that may
be earned by the Grantee at various levels of Total Shareholder
Return:
Total Shareholder Return Targets
|
Final Performance-Based Phantom
Shares
|
|||
Performance
of the Benchmark Index equals or exceeds Total Shareholder
Return
|
0%
of Performance-Based Phantom Shares
|
|||
Total
Shareholder Return exceeds performance of the Benchmark Index by 150 basis
points
|
100%
of Performance-Based Phantom Shares
|
|||
Total
Shareholder Return exceeds performance of the Benchmark Index by 300 or
more basis points
|
200%
of Performance-Based Performance Shares
|
If Total
Shareholder Return falls between the Total Shareholder Return Targets set forth
above, the number of Final Performance-Based Phantom Shares shall be determined
using linear interpolation. For purposes of clarity, if the
performance of the Benchmark Index for the applicable period equals or exceeds
Total Shareholder Return, no Performance-Based Phantom Shares shall
vest.