Exhibit 10.33
AMENDED
AND RESTATED EMPLOYMENT AGREEMENT made December 18 ,
200 7 effective as of 12/18 , 200 7 (the
“Effective Date”), between TIME WARNER INC., a Delaware
corporation (the “Company”), and RICHARD D. PARSONS
(“You”).
You are
currently employed by the Company pursuant to an Employment
Agreement made December 18, 2003, effective as of December 17,
2003 (the “Prior Agreement”). The Company wishes to
amend and restate the terms of your employment with the Company and
to secure your services for the period to and including
December 31, 2008 on and subject to the terms and conditions
set forth in this Agreement, and you are willing to provides such
services on and subject to the terms and conditions set forth in
this Agreement. You and the Company therefore agree as
follows:
1.
Term of Employment . Your “term of employment”
as this phrase is used throughout this Agreement shall be for the
period beginning on the Effective Date and ending on
December 31, 2008 (the “Term Date”), subject,
however, to earlier termination as set forth in this
Agreement.
2.
Employment . During the term of employment through
December 31, 2007, you shall serve as Chairman and Chief
Executive Officer of the Company of the Company. Beginning
January 1, 2008, you shall serve as Chairman of the Board. In
these positions you shall have the authority, functions, duties,
powers and responsibilities normally associated with such positions
and such additional authority, functions, duties, powers and
responsibilities as the Board of Directors may from time to time
delegate to you in addition thereto. You shall, subject to your
election as such from time to time and without additional
compensation, serve during the term of employment and as a director
and as a member of any committee of the Board of Directors of the
Company and its subsidiaries, to which you may be elected from time
to time. During your employment, (i) your services shall be
rendered using all of your skill and experience to the performance
of your duties, (ii) you shall report only to the Board of
Directors of the Company, (iii) you shall have no other
employment and, without the prior written consent of a majority of
the Company’s Board of Directors, no outside business
activities which require the devotion of substantial amounts of
your time, and (iv) the place for the performance of your
services shall be the principal executive offices of the Company in
the New York City metropolitan area, subject to such reasonable
travel as may be required in the performance of your duties. The
foregoing shall be subject to the Company’s written policies,
as in effect from time to time, regarding vacations, holidays,
illness and the like and shall not prevent you from devoting such
time to your personal affairs as shall not interfere with the
performance
of your
duties hereunder, provided that you comply with the provisions of
the Confidentiality Agreement and any generally applicable written
policies of the Company on conflicts of interest and service as a
director of another corporation, partnership, trust or other entity
(“Entity”).
3.
Compensation .
3.1
Base Salary . The Company shall pay you a base salary at the
rate of not less than $ 1,500,000 per annum during the term of
employment (“Base Salary”). Base Salary shall be paid
in accordance with the Company’s then current practices and
policies with respect to senior executives. For the purposes of
this Agreement “senior executives” shall mean the
executive officers of the Company.
3.2
Bonus . In addition to Base Salary, you may be entitled to
receive during the term of employment an annual cash bonus
(“Bonus”) subject to and pursuant to the
Company’s Annual Bonus Plan for Executive Officers (such
plan, together with any successor plan of Company intended to
comply with Section 162(m) of the Internal Revenue Code of 1986, as
amended (the “Code”), being hereinafter referred to as
the “Annual Bonus Plan”). Although your Bonus is fully
discretionary, your target annual Bonus is $5,500,000 through 2007;
in 2008, your target annual Bonus is $2,900,000 but the parties
acknowledge that your actual Bonus for 2008 will vary depending on
the actual performance of you and the Company from a minimum of $0
and up to a maximum Bonus of $4,350,000 as determined by the
Compensation and Human Development Committee of the Board of
Directors of the Company (the “Compensation
Committee”). Payments of any bonus compensation under this
Section 3.2 will be paid to you between January 1 and
March 15 of the calendar year immediately following the
performance year in respect of which such Bonus is earned.
3.3
Deferred Compensation Account . Pursuant to the terms of
employment agreements with the Company that preceded the Prior
Agreement, you have been paid deferred compensation which has been
deposited in a special account (the “Trust Account”
maintained on the books of a Time Warner Inc. grantor trust (the
“Rabbi Trust) for your benefit. The Trust Account shall be
maintained by the trustee (the “Trustee”) thereof in
accordance with the terms of Annex A attached hereto and the trust
agreement (the Trust Agreement”) establishing the Rabbi Trust
(which Trust Agreement shall in all respects be consistent with the
terms of Annex A), until the full amount which you are
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entitled
to receive therefrom has been paid in full. The Company shall pay
all fees and expenses of the Trustee and shall enforce the
provisions of the Trust Agreement for your benefit. The Company and
you acknowledge that no amounts have been paid by the Company or
deferred by you in to the Trust Account and the terms and
conditions governing the Trust Account have not been modified
subsequent to October 1, 2004.
3.4
Long Term Incentive Compensation . So long as the term of
employment has not terminated, you will be eligible to receive long
term incentive compensation in 2008 with a target value of
$3,200,000 (based on the valuation method used by the Company with
respect to awards made to of its senior executives) through a
combination of stock option grants and restricted stock units, as
determined by the Compensation Committee in its sole
discretion.
3.5
Intentionally Deleted.
3.6
Indemnification . You shall be entitled throughout the term
of employment (and after the end of the term of employment, to the
extent relating to service during the term of employment) to the
benefit of the indemnification provisions contained on the date
hereof in the Restated Certificate of Incorporation and By-laws of
the Company (not including any amendments or additions after the
date hereof that limit or narrow, but including any that add to or
broaden, the protection afforded to you by those provisions).
4.
Termination .
4.1
Termination for Cause . The Company may terminate the term
of employment and all of the Company’s obligations under this
Agreement, other than its obligations set forth below in this
Section 4.1, for “cause”. Termination by the
Company for “cause” shall mean termination because of
your (a) conviction (treating a nolo contendere plea as a
conviction) of a felony (whether or not any right to appeal has
been or may be exercised), (b) willful failure or refusal
without proper cause to perform your duties with the Company,
including your obligations under this Agreement (other than any
such failure resulting from your incapacity due to physical or
mental impairment), (c) misappropriation, embezzlement or
reckless or willful destruction of Company property,
(d) breach of any statutory or common law duty of loyalty to
the Company; (e) intentional and improper conduct materially
prejudicial to the business of the Company or any of its
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affiliates, or (f) breach of any of the covenants provided for
in Section 8 hereof. Such termination shall be effected by
written notice thereof delivered by the Company to you and shall be
effective as of the date of such notice; provided, however, that if
(i) such termination is because of your willful failure or
refusal without proper cause to perform any one or more of your
obligations under this Agreement, (ii) such notice is the
first such notice of termination for any reason delivered by the
Company to you under this Section 4.1, and (iii) within
15 days following the date of such notice you shall cease your
refusal and shall use your best efforts to perform such
obligations, the termination shall not be effective.
In
the event of termination by the Company for cause, without
prejudice to any other rights or remedies that the Company may have
at law or in equity, the Company shall have no further obligation
to you other than (i) to pay Base Salary through the effective
date of termination, (ii) to pay any Bonus for any year prior to
the year in which such termination occurs that has been determined
but not yet paid as of the date of such termination, and
(iii) with respect to any rights you have with respect of
amounts credited to the Trust Account through the effective date of
termination or pursuant to any insurance or other benefit plans or
arrangements of the Company. You hereby disclaim any right to
receive a pro rata portion of any Bonus with respect to the year in
which such termination occurs.
4.2
Termination by You for Material Breach by the Company and
Termination by the Company Without Cause . Unless previously
terminated pursuant to any other provision of this Agreement and
unless a Disability Period shall be in effect, you shall have the
right, exercisable by written notice to the Company, to terminate
the term of employment effective 30 days after the giving of
such notice, if, at the time of the giving of such notice, the
Company is in material breach of its obligations under this
Agreement; provided, however, that, with the exception of clause
(i) below, this Agreement shall not so terminate if such
notice is the first such notice of termination delivered by you
pursuant to this Section 4.2 and within such 30-day period the
Company shall have cured all such material breaches; and provided
further, that such notice is provided to the Company within
90 days after the occurrence of such material breach. A
material breach by the Company shall include, but not be limited
to, (i) the Company violating Section 2 with respect to
authority, reporting lines, duties, or place of employment or
(ii) the Company failing to cause any successor to all or
substantially all of the business and assets of the Company
expressly to assume the obligations of the Company under this
Agreement.
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The
Company shall have the right, exercisable by written notice to you
delivered before the date which is 60 days prior to the Term
Date, to terminate your employment under this Agreement without
cause, which notice shall specify the effective date of such
termination.
4.2.1
After the effective date of a termination pursuant to this
Section 4.2 (a “termination without cause”), you
shall receive Base Salary and a pro rata portion of your Average
Annual Bonus (as defined below) through the effective date of
termination. Your Average Annual Bonus shall be equal to the
average of the regular annual bonus amounts (excluding the amount
of any special or spot bonuses) in respect of the two calendar
years during the most recent five calendar years for which the
annual bonus received by you during your employment as Chief
Executive Officer and Chairman or during your employment as
Chairman was the greatest. Your pro rata Average Annual Bonus
pursuant to this Section 4.2.1 shall be paid to you at the
times set forth in Section 4.7.
4.2.2
After the effective date of a termination without cause, you shall
continue to be treated as an employee of the Company for a period
ending on the Term Date (the “Severance Term Date”) and
during such period you shall be entitled to receive, whether or not
you become disabled during such period but subject to
Section 6, (a) Base Salary (on the Company’s normal
payroll payment dates as in effect immediately prior to the
effective date of your termination without cause) at an annual rate
equal to your Base Salary in effect immediately prior to the notice
of termination, and (b) an annual Bonus in respect of each
calendar year or portion thereof (in which case a pro rata portion
of such Bonus will be payable) during such period equal to your
Average Annual Bonus. Except as provided in the succeeding
sentence, if you accept other full-time employment during such
period or notify the Company in writing of your intention to
terminate your status as an employee during such period, you shall
cease to be treated as an employee of the Company for purposes of
your rights to receive certain post-termination benefits under
Section 8.2 effective upon the commencement of such other
employment or the effective date of such termination as specified
by you in such notice, whichever is applicable (the “Benefit
Cessation Date”), and you shall receive the remaining
payments of Base Salary and Bonus pursuant to this
Section 4.2.2 at the times specified in Section 4.7 of
the Agreement. Notwithstanding the foregoing, if you accept
employment with any not-for-profit entity or governmental entity,
then you continue to be treated as an employee of
5
the
Company for purposes of your rights to receive certain
post-termination benefits pursuant to Section 8.2 and you will
continue to receive the payments as provided in the first sentence
of this Section 4.2.2; and if you accept full-time employment
with any affiliate of the Company, then the payments provided for
in this Section 4.2.2 shall immediately cease and you shall
not be entitled to any further payments. For purposes of this
Agreement, the term “affiliate” shall mean any entity
which, directly or indirectly, controls, is controlled by, or is
under common control with, the Company.
4.3
Office Facilities . The parties agree that from
January 1, 2009 through December 31, 2009, the Company shall,
without charge to you, make available to you office space at your
principal job location immediately prior to your termination of
employment, or other location reasonably close to such location,
together with secretarial services, office facilities, services and
furnishings, in each case reasonably appropriate to an employee of
your position and responsibilities prior to such termination of
employment but taking into account your reduced need for such
office space, secretarial services and office facilities, services
and furnishings as a result of your no longer being a full-time
employee.
4.4
Release . A condition precedent to the Company’s
obligation to make or continue the payments associated with a
termination without cause shall be your execution and delivery of a
release in the form attached hereto as Annex B. If you shall fail
to execute and deliver such release, or if you revoke such release
as provided therein, then in lieu of the payments provided for
herein, you shall receive a severance payment determined in
accordance with the Company’s policies relating to notice and
severance reduced by the aggregate amount of severance payments
paid pursuant to this Agreement, if any, prior to the date of your
refusal to deliver, or revocation of, such release.
4.5
Retirement . Notwithstanding the provisions of
Sections 4.2 or 5, if the term of employment is in effect and
you are still employed by the Company pursuant to this Agreement on
the date you first become eligible for normal retirement as defined
in any applicable retirement plan of the Company or any subsidiary
of the Company (the “Retirement Date”), then this
Agreement shall terminate automatically on such date and your
employment with the Company shall thereafter be governed by the
policies generally applicable to employees of the Company, and you
shall not thereafter be entitled to the payments provided in such
Sections to the extent not received by you on or prior to the
Retirement Date. In addition, no benefits or payments provided in
Sections 4.2
6
or 5
shall include any period after the Retirement Date and if the
provision of benefits or calculation of payments provided in any
such Section would include any period subsequent to the Retirement
Date, such provision of benefits shall end on the Retirement date
and the calculation of payments shall cover only the period ending
on the Retirement Date. Notwithstanding the foregoing, the
provisions of Annex A and the Trust Agreement shall apply to the
investment and payment of deferred compensation after such
termination, the provisions of Section 7 of this Agreement
shall survive any such termination and the provisions of
Sections 5 and 6 of the Confidentiality Agreement shall apply
to any dispute with respect to this Agreement that arises after any
such termination.
4.6
Mitigation . In the event of a termination without cause
under this Agreement, you shall not be required to seek other
employment or take other actions in order to mitigate your damages
hereunder, unless Section 280G of the Internal Revenue Code
would apply to any payments to you by the Company and your failure
to mitigate would result in the Company losing tax deductions to
which it would otherwise have been entitled. In such an event, you
will engage in whatever mitigation is necessary to preserve the
Company’s tax deductions. With respect to the preceding
sentences, any payments or rights to which you are entitled by
reason of the termination of employment without cause shall be
considered as damages hereunder. In addition, whether or not you
are required to mitigate your damages hereunder, if following a
termination without cause you obtain other employment with any
entity, other than a not-for-profit entity or government
institution, then you shall pay over to the Company the total cash
salary and bonus (of any kind) payable to you in connection with
such other employment for services during the period prior to the
Severance Term Date (whether paid or deferred), at the time
received by you, to the extent of the amounts previously paid to
you by the Company following your termination with respect to such
period, as damages or severance, in excess of the Company’s
standard policy. (The provisions of the foregoing sentence shall
not apply to any equity interest, stock option, phantom or
restricted stock or similar benefit received in connection with
such other employment). Any obligation to mitigate your damages
pursuant to this Section 4.6 shall not be a defense or offset
to the Company’s obligation to pay you in full the amounts
provided in this Agreement upon the occurrence of a termination
without cause, at the time provided herein, or the timely and full
performance of any of the Company’s other obligations under
this Agreement.
4.7
Payments . Payments of Base Salary and Bonus required to be
made to you after any termination shall be made at the same times
as such payments
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otherwise would have been paid to you pursuant to Sections 3.1
and 3.2 if you had not been terminated, subject to
Section 12.17.
5. Disability .
5.1
Disability Payments . If during the term of employment and
prior to the delivery of any notice of termination without cause,
you become physically or mentally disabled, whether totally or
partially, so that you are prevented from performing your usual
duties for a period of six consecutive months, or for shorter
periods aggregating six months in any twelve-month period, the
Company shall, nevertheless, continue to pay your full compensation
through the last day of the sixth consecutive month of disability
or the date on which the shorter periods of disability shall have
equaled a total of six months in any twelve-month period (such last
day or date being referred to herein as the “Disability
Date”), subject to Section 12.17. If you have not
resumed your usual duties on or prior to the Disability Date, the
Company shall pay you a pro rata Bonus (based on your Average
Annual Bonus) for the year in which the Disability Date occurs and
thereafter shall pay you disability benefits for the period ending
on the later of (i) the Term Date or (ii) the date which
is twelve months after the Disability Date (in the case of either
(i) or (ii), the “Disability Period”), in an annual
amount equal to 75% of (a) your Base Salary at the time you
become disabled and (b) the Average Annual Bonus, in each
case, subject to Section 12.17.
5.2
Recovery from Disability . If during the Disability Period
you shall fully recover from your disability, the Company shall
have the right (exercisable within 60 days after notice from
you of such recovery), but not the obligation, to restore you to
full-time service at full compensation. If the Company elects to
restore you to full-time service, then this Agreement shall
continue in full force and effect in all respects and the Term Date
shall not be extended by virtue of the occurrence of the Disability
Period. If the Company elects not to restore you to full-time
service, you shall be entitled to obtain other employment, subject,
however, to the following: (i) you shall perform advisory
services during any balance of the Disability Period; and
(ii) you shall comply with the provisions of Sections 9
and 10 during the Disability Period. The advisory services referred
to in clause (i) of the immediately preceding sentence shall
consist of rendering advice concerning the business, affairs and
management of the Company as requested by the Board of Directors of
the Company but you shall not be required to devote more than five
days (up to eight hours per day) each month to such services, which
shall be
8
performed at a time and place mutually convenient to both parties.
Any income from such other employment shall not be applied to
reduce the Company’s obligations under this Agreement.
5.3
Other Disability Provisions . The Company shall be entitled
to deduct from all payments to be made to you during the Disability
Period pursuant to this Section 5 an amount equal to all
disability payments received by you during the Disability Period
from Worker’s Compensation, Social Security and disability
insurance policies maintained by the Company; provided, however,
that for so long as, and to the extent that, proceeds paid to you
from such disability insurance policies are not includible in your
income for federal income tax purposes, the Company’s
deduction with respect to such payments shall be equal to the
product of (i) such payments and (ii) a fraction, the
numerator of which is one and the denominator of which is one less
the maximum marginal rate of federal income taxes applicable to
individuals at the time of receipt of such payments. All payments
made under this Section 5 after the Disability Date are
intended to be disability payments, regardless of the manner in
which they are computed. Except as otherwise provided in this
Section 5, the term of employment shall continue during the
Disability Period and you shall be entitled to all of the rights
and benefits provided for in this Agreement, except that
Sections 4.2 shall not apply during the Disability Period, and
unless the Company has restored you to full-time service at full
compensation prior to the end of the Disability Period, the term of
employment shall end and you shall cease to be an employee of the
Company at the end of the Disability Period and shall not be
entitled to notice and severance or to receive or be paid for any
accrued vacation time or unused sabbatical.
6. Death . If you die
during the term of employment, this Agreement and all obligations
of the Company to make any payments hereunder shall terminate
except that your estate (or a designated beneficiary) shall be
entitled to receive Base Salary to the last day of the month in
which your death occurs and Bonus compensation (at the time bonuses
are normally paid) based on the Average Annual Bonus, but prorated
according to the number of whole or partial months you were
employed by the Company in such calendar year.
7. Life Insurance . The
parties confirm that pursuant to the terms of the Prior Agreement
and your previous employment agreements with the Company, the
Company maintained $5,000,000 face amount of split ownership life
insurance on your
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life.
The Company shall continue to maintain such life insurance, which
will be structured to comply with Section 409A of the Code,
and IRS Notice 2007-34, and shall maintain such policy (without
reduction in the face amount of the coverage) until your death and
irrespective of any termination of this Agreement, except pursuant
to Section 4.1. You shall be entitled to designate the
beneficiary or beneficiaries of such policy, which may include a
trust. At your death, or on the earlier surrender of such policy by
the owner, your estate (or the owner of the policy) shall promptly
pay to the Company an amount equal to the premiums on such policy
paid by the Company and its subsidiaries (net of (i) tax
benefits, if any, to the Company and its subsidiaries in respect of
payments of such premiums, (ii) any amounts payable by the
Company which have been paid by you or on your behalf with respect
to such insurance, (iii) dividends received by the Company and
its subsidiaries in respect of such premiums, but only to the
extent such dividends are not used to purchase additional insurance
on your life, and (iv) any unpaid borrowings by the Company
and its subsidiaries under the policy). If other than the Company,
the owner of the policy from time to time shall execute, deliver
and maintain a customary split dollar insurance agreement and
collateral assignment form, assigning to the Company the proceeds
of the policy but only to the extent necessary to secure the
reimbursement of the obligation contained in the preceding
sentence. The Company agrees that it will not borrow against the
policy an amount in excess of the premiums on such policy paid by
the Company and its subsidiaries (net of the amounts referred to in
clauses (i), (ii) and (iii) above). The life insurance
provided for in this Section 7 shall be in addition to any
other insurance hereafter provided by the Company or any of its
subsidiaries on your life under any group or individual
policy.
In addition to the foregoing, during
your employment with the Company, the Company shall (x) provide you
with $50,000 of group life insurance and (y) pay you annually
an amount equal to the premium you would have to pay to obtain life
insurance under the Group Universal Life (“GUL”)
insurance program made available by the Company in an amount equal
to (i) twice your Base Salary minus (ii) $50,000. The Company
shall pay you such amount no later than March 15 of the
calendar year following any calendar year in which you are entitled
to this amount. You shall be under no obligation to use the
payments made by the Company pursuant to the preceding sentence to
purchase GUL insurance or to purchase any other life
insurance.
If the Company discontinues its GUL
insurance program, the Company shall nevertheless make the payments
required by this Section 7 as if such program were
10
still in
effect. The payments made to you hereunder shall not be considered
as “salary” or “compensation” or
“bonus” in determining the amount of any payment under
any pension, retirement, profit-sharing or other benefit plan of
the Company or any subsidiary of the Company. The parties intend
that any life insurance provided under this Section 7 shall be
provided in a manner consistent with applicable laws.
8.
Other Benefits .
8.1
General Availability . To the extent that (a) you are
eligible under the general provisions thereof (including without
limitation, any plan provision providing for participation to be
limited to persons who were employees of the Company or certain of
its subsidiaries prior to a specific point in time) and
(b) the Company maintains such plan or program for the benefit
of its senior executives, during the term of employment and so long
as you are an employee of the Company, you shall be eligible to
participate in any savings plan, or similar plan or program and in
any group life insurance (to the extent set forth in
Section 7), hospitalization, medical, dental, accident,
disability or similar plan or program of the Company now existing
or established hereafter. In addition, you shall be entitled during
the term of employment and so long as you are an employee of the
Company, to receive other benefits generally available to all
senior executives of the Company to the extent you are eligible
under the general provisions thereof, including, without
limitation, to the extent maintained in effect by the Company for
its senior executives, and financial services.
Pursuant
to the terms of your previous employment agreements with the
Company, in addition to any retirement benefits to which you are
entitled under the Time Warner Employees’ Pension Plan, any
supplemental retirement or excess benefit plan maintained by the
Company or any of its affiliates or any successor plans thereto
(hereinafter collectively referred to as the “Pension
Plan”), the Company will, following your termination of
employment for any reason, except by the Company for cause pursuant
to Section 4.1 and except for a termination by you in breach
of this Agreement, pay or cause to be paid to you or your
beneficiary as the case may be, in accordance with the following
provisions, an amount which is equivalent to the excess of (the
“Excess Amount”) (i) the amount you or your
beneficiary would be entitled to receive under the Pension Plan
assuming you had five additional years of service (as such term is
defined in the Pension Plan) taking into account all the provisions
of the Pension Plan as are from time to time in effect and
applicable to you or your beneficiary over (ii) the amount you
or
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your
beneficiary would be entitled to receive under the Pension Plan
based on actual years of service taking into account all the
provisions of the Pension Plan as are from time to time in effect
and applicable to you or your beneficiary.
If you or your beneficiary is
entitled to an Excess Amount as described in the preceding
paragraph, the Company shall pay the Excess Amount to you or your
beneficiary either in (i) a single lump sum or (ii) 10
equal annual installments, as designated by you in a written
election made to the Company on or prior to December 31, 2008;
provided, however, that if you have a separation from service with
the company within the meaning of section 409A of the Code (a
“separation from service”) on or prior
to July 1, 2008, then the excess amount shall be payable
in a single lump sum and you shall not be entitled to elect to
receive payment in installments . In either case, the amount
or amounts will be actuarially equivalent to the amounts payable as
the Excess Amount as determined under the preceding paragraph,
based on such actuarial tables and interest rates as may be adopted
from time to time under the Pension Plan for the purpose of
computing such e
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