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Change in Control and Severance Policy
Effective January 1, 2009
1. PHILOSOPHY AND PURPOSE
The Andersons, Inc., (the "Company") wishes to
recognize the value of past and future services contributed by
members of Company Staff and other key employees (the
"Participant"), and recognizes that if a Change In Control
occurred, the resulting uncertainty regarding the consequences of
such event could adversely affect the Company’s ability to
attract, retain and motivate its key talent. In addition to change
in control situations, the Company recognizes the difficulty its
key employees would have in obtaining comparable employment if
their employment were involuntarily terminated. The Company
believes that the existence of this Policy will serve as an
incentive to its key talent to remain in the employ of the Company
and would assure the key talent’s objectivity in evaluating a
potential Change In Control and advising as to whether it is in the
best interests of the Company and its shareholders. In
consideration of the protection and other benefits that the Company
is providing under this Policy, the Company further requires the
Participant to make certain important commitments to the
Company.
2. DEFINITIONS
Capitalized terms used in this Policy shall have
the meanings set forth in this Section 2 below, unless the
context clearly requires a different meaning.
" Base Salary " means, with respect to any
Participant, his or her annual base salary as in effect at the time
of his or her Separation from Service; provided, however, that if a
Participant terminates his or her service for Good Reason following
a reduction in the Participant’s base salary, then for
purposes of Sections 4 and 5, Base Salary shall mean his or
her base salary as in effect immediately prior to any such
reduction.
" Board " means the Board of Directors of
the Company.
" Cause " shall mean (a) a willful,
material and substantive breach of written Company policy, which
breach is not cured by the Participant within a reasonable time
after receipt of written notice from the Company specifying the
breach; (b) a willful, intentional and substantive breach of
fiduciary duty to the Company or any of its affiliates involving
personal gain or profit to the Participant; (c) other
employment engaged in by the Participant that substantially impairs
the Participant’s ability to perform his/her obligations, for
which consent of the Company was not previously obtained;
(d) death of the Participant; (e) substantial disability
of the Participant, which materially impairs Participant’s
ability to perform his/her duties; (f) conviction of the
Participant of any felony or crime of moral turpitude, or any
intentional crime in the conduct of his/her office with the Company
or any affiliate, which is materially adverse to the welfare of the
Company or any affiliate, but excluding any conviction which is not
the result of any action or inaction by the Participant for his or
her personal gain, or in willful violation of law or Company
policy.
For purposes of this definition, no act, or failure
to act shall be deemed "willful" if done or omitted to be done by
the Participant in good faith and in the reasonable belief that
such act or omission was in the best interest of the Company.
" Change in Control " means a change:
(i) in the ownership of the Company; or in the effective
control of the Company such that a single entity or commonly
controlled group of entities shall have the ability to elect a
majority of the Board of Directors of the Company; or (ii) in
the ownership of all or substantially all the assets associated
with the business group in which the Participant works, or of the
Company as a whole. The Board shall have final authority to
determine if a Change in Control has occurred.
" Code " means the Internal Revenue Code
of 1986, as amended from time to time.
" Company " means The Andersons, Inc. and
includes all persons with whom the Company would be considered a
single employer under Code Section 414(b) or (c).
" Committee " means the Compensation
Committee of the Board.
" Eligible Participant " shall mean
(a) the President and Chief Executive Officer, (b) Business
Group Presidents, (c) Corporate Vice Presidents and Officers,
and (d) any individual designated by the Chief Executive
Officer and approved by the Committee for participation in the
Policy.
" ERISA " shall mean the Employee Retirement
Income Security Act of 1974, as now in effect and as amended from
time to time.
" Good Reason " shall mean (a) a
material diminution in the Participant’s annual base salary
or annual incentive plan; (b) a material diminution in the
Participant’s authority, duties, or responsibilities;
(c) a material diminution in the budget over which the
Participant retains authority; (d) a material change in the
geographic location at which the Participant must perform services;
or (e) any other action or inaction that constitutes a
material breach by the Company of the Participant’s
employment arrangement. The Company shall have 30 days from
the date of any notice from a Participant alleging that a Good
Reason condition exists, to remedy the Good Reason condition. If
the Company fails to remedy the Good Reason condition within
30 days, the Participant may Separate from Service for Good
Reason, unless the Company disagrees that a Good Reason condition
exists.
" Health Benefits " shall mean the medical,
prescription drug, dental, and any other related benefit plans
sponsored by the Company that may be in effect upon the Qualifying
Termination.
" Involuntary Separation from Service "
means Separation From Service due to the independent decision of
the Company to terminate the Participant’s services, other
than due to the Participant’s explicit request, when the
Participant was willing and able to continue performing
services.
" Maximum Installment Value " for purposes
of Sections 4 and 5 means two (2) times the lesser of
(a) the maximum amount of compensation that may be taken into
account under a qualified plan pursuant to Code
Section 401(a)(17) for the year in which the Participant has
terminated; or (b) the sum of the Participant’s
annualized compensation based upon the annual rate of pay for
services provided to the Company for the taxable year of the
Participant preceding the taxable year of the Participant in which
the Participant has Separated From Service with the Company
(adjusted for any increase during that year that was expected to
continue indefinitely if the Participant had not Separated From
Service).
" MPP " means the Management Performance
Plan of the Company, any successor plans thereto, or any other
bonus plan of the Company in which a Participant is participating
in lieu of the MPP.
" Participant " has the meaning set forth in
Section 3.
" Participation Agreement " means the
written agreement executed by the Participant acknowledging the
Participant’s commitments to the Company and specifying the
terms and conditions set forth by the Committee for payments to
which the Participant is entitled pursuant to this Policy.
" Separation from Service " means the date
of the Participant’s termination of employment with the
Company, whether voluntary, or involuntary, including, without
limitation, by death, or retirement.
" Qualifying Termination " means
(a) Involuntary Separation From Service other than for Cause,
or (b) Separation From Service for Good Reason. Participant
will not be deemed to have incurred a Qualifying Termination unless
Participant executes a release of claims in a form substantially
similar to the form attached as Exhibit B hereto (the
"Release") following the Participant’s Separation From
Service.
" Target Annual Bonus " means, with respect
to any Participant, his or her total target annual bonus under the
MPP in effect at the time of his or her Separation From Service;
provided, however, that if a Participant terminates his or her
service for Good Reason following a reduction in the
Participant’s base salary or target annual bonus, then for
purposes of Section 4, Target Annual Bonus means his or her
target annual bonus under the MPP in effect immediately prior to
any such reduction. If a Participant participates in another bonus
plan in lieu of the MPP, then for purposes of Section 4 Target
Annual Bonus means the total target annual bonus under the MPP for
the Participant’s level of responsibility.
3. PARTICIPATION
Once selected and approved, the Eligible
Participant shall become a Participant upon completion of the
Participation Agreement which shall include the Covenants attached
as Exhibit A.
4. CASH SEVERANCE AND BENEFITS (CHANGE IN
CONTROL)
A Participant who experiences a Qualifying
Termination within two (2) years following or within
3 months prior to a Change in Control, shall be entitled to
cash severance (as defined below), plus the benefits provided in
Sections 6 and 7.
(a) Benefit Period . The President and
Chief Executive Officer, Business Group Presidents, Corporate Vice
Presidents, and Officers shall receive cash severance for a benefit
period of two (2) years. All other Eligible Participants shall
receive cash severance for a benefit period of one
(1) year.
(b) Computation of Cash Severance .
The Participant’s total cash severance shall be equal to the
sum of (i) Participant’s Base Salary for the applicable
benefit period (defined in Section 4(a) and the Participation
Agreement), plus (ii) Participant’s Target Annual Bonus
prorated for the applicable benefit period, plus
(iii) Participant’s Target Annual Bonus prorated for the
period beginning on the first day of the current bonus year and
ending on the date of the Qualifying Termination.
(c) Payment of Cash Severance . The
Company shall pay the total cash severance defined in Section 4(b)
to the Participant as elected by the Participant in the
Participation Agreement as follows:
(i) in continuous payroll period installments,
or
(ii) in a single lump sum.
Payment shall commence within 30 days of the
date of the Participant’s Qualifying Termination.
Notwithstanding the above, if the Participant has elected payment
as defined in Section 4(c)(i), Company shall pay the lesser of
(1) the total cash severance defined in Section 4(b) or
(2) the Maximum Installment Value to the Participant in
continuous payroll period installments for the applicable benefit
period, commencing within 30 days of the date of the
Participant’s Qualifying Termination. The excess, if any, of
the total cash severance over the Maximum Installment Value shall
be paid to the Participant in a single cash payment no later than
30 days following the Participant’s Qualifying
Termination.
(d) No MPP bonus in final year of
employment. A Participant who receives cash severance under
this Section 4 shall forfeit any right to an MPP bonus based
on actual results for the year in which the Qualifying Termination
occurred.
5. CASH SEVERANCE AND BENEFITS (OTHER THAN
CHANGE IN CONTROL)
A Participant who experiences a Qualifying
Termination, other than in connection with a Change in Control
pursuant to Section 4, shall be entitled to cash severance (as
defined below), his or her final MPP bonus for the current bonus
year prorated to the date of the Qualifying Termination, plus the
benefits provided in Sections 6 and 7.
(a) Benefit Period . The President and
Chief Executive Officer, Business Group Presidents, Corporate Vice
Presidents, and Officers shall receive cash severance for a benefit
period of one (1) year. All other Eligible Participants shall
receive cash severance as defined in the Participant’s
Participation Agreement not to exceed one (1) year.
(b) Computation of Cash Severance .
The Participant’s cash severance shall be equal to the
Participant’s Base Salary prorated for the applicable benefit
period (defined in Section 5(a) and the Participation
Agreement).
(c) Payment of Cash Severance . The
Company shall pay the cash severance defined in Section 5(b) to the
Participant as elected by the Participant in the Participation
Agreement as follows:
(i) in continuous payroll period installments
over the benefit period, or
(ii) in a single lump sum.
Payment shall commence within 30 days of the
Participant’s Qualifying Termination. Notwithstanding the
above, if the Participant has elected payment as defined in
Section 5(c)(i), Company shall pay the lesser of (1) the
total cash severance defined in Section 5(b) or (2) the
Maximum Installment Value to the Participant in continuous payroll
period installments for the applicable benefit period, commencing
within 30 days following the Participant’s Qualifying
Termination. The excess, if any, of the total cash severance over
the Maximum Installment Value shall be paid to the Participant in a
single cash payment no
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