Exhibit 10.1
AMENDED AND RESTATED EMPLOYMENT
AGREEMENT
AGREEMENT by and between Unum Group,
a Delaware corporation having its principal executive offices in
Chattanooga, Tennessee (the “ Company ”), and
Thomas R. Watjen (the “ Executive ”) dated as of
December 16, 2005.
WHEREAS, the Executive currently
serves as a senior executive officer of the Company pursuant to
this Agreement as first entered into effective January 1,
2002;
WHEREAS, the Company recognizes the
Executive’s substantial contribution to the growth and
success of the Company, desires to provide for the continued
employment of the Executive and to make certain changes in the
Executive’s employment arrangements with the Company, which
the Board has determined will reinforce and encourage the continued
attention and dedication to the Company of the Executive as a
member of the Company’s senior management in the best
interests of the Company and its shareholders;
WHEREAS, the Executive is willing to
continue to serve the Company on the terms and conditions set forth
below;
NOW, THEREFORE, IT IS HEREBY AGREED
AS FOLLOWS:
1. Term of Agreement
. The Company hereby agrees to
continue to employ the Executive, and the Executive hereby agrees
to continue in the employ of the Company subject to the terms and
conditions of this Agreement, for the period commencing on the date
hereof (the “ Effective Date ”) and ending on
the second anniversary of the Effective Date (the “
Agreement Term ”). Beginning on the first anniversary
of the Effective Date and on each successive anniversary thereof,
the Agreement Term shall be automatically extended for successive
one-year terms unless either the Company or the Executive shall
give (in accordance with Section 11(b)) the other party
written notice (a “ Notice of Non-Renewal ”) at
least sixty (60) days prior to the extension date of intention
not to extend this Agreement. For the avoidance of doubt, a Notice
of Non-Renewal would need to be given at least one year and 60 days
prior to the expiration of the then-current Agreement Term.
Notwithstanding the foregoing, any Notice of Non-Renewal given
during the two-year period after a Change in Control (such two-year
period being hereafter referred to as the “ CIC Period
”) shall be effective only at the expiration of the CIC
Period; and further provided that if the Company enters into an
agreement for a transaction that would constitute a Change in
Control if consummated (the date of such agreement being a “
Potential Change in Control ”) then any Notice of
Non-Renewal provided after such Potential Change in Control or
within three (3) months prior to such Potential Change in
Control shall not be effective until the expiration of the CIC
Period or, if no Change in Control occurs within twelve
(12) months of a Potential Change in Control, the expiration
of such twelve (12) month period.
2. Terms of Employment
.
(a) Position and Duties
.
(i) The Executive shall serve as
President and Chief Executive Officer of the Company, with the
appropriate authority, duties and responsibilities attendant to
such positions.
(ii) Excluding any periods of
vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote substantially all of his business
attention and time to the business and affairs of the Company and,
to the extent necessary to discharge the responsibilities assigned
to the Executive hereunder, to use the Executive’s reasonable
best efforts to perform such responsibilities. It shall not be a
violation of this Agreement for the Executive to (A) serve,
with prior approval of the Board, on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions and
(C) manage personal investments, so long as such activities do
not significantly interfere with the performance of the
Executive’s responsibilities as an employee of the Company in
accordance with this Agreement. It is expressly understood and
agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the
continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the
performance of the Executive’s responsibilities to the
Company.
(b) Compensation .
(i) Annual Base Salary . The
Executive shall receive an annual base salary (“ Annual
Base Salary ”) of $1,100,000, effective March 1,
2008. Any increase in Annual Base Salary shall not serve to limit
or reduce any other obligation to the Executive under this
Agreement, and the term Annual Base Salary as utilized in this
Agreement shall refer to Annual Base Salary as so
increased.
(ii) Annual Bonus . The
Executive shall be eligible to receive an annual bonus (“
Annual Bonus ”) with a target level of not less than
150% of Annual Base Salary, or such greater amount as determined
from time to time by the Human Capital Committee of the
Company’s Board of Directors (the “ Human Capital
Committee ”) (the “ Target Bonus Amount
”). Each such Annual Bonus shall be paid no later than two
and a half months after the end of the fiscal year for which the
Annual Bonus is awarded, unless the Executive shall elect to defer
the receipt of such Annual Bonus pursuant to an arrangement
established by the Company, if any, that meets the requirements of
Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”). It is understood that “Annual
Bonus” does not include any special or supplemental bonuses
that may be awarded from time to time by the Company.
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(iii) Incentive Awards . The
Executive shall be eligible for annual equity grants and/or
cash-based awards, as determined by the Human Capital Committee
based upon competitive market analyses and such other factors it
may deem appropriate, including the Executive’s current
position in equity of the Company.
(iv) Other Employee Benefit
Plans . Except as otherwise expressly provided herein, the
Executive shall be entitled to participate in all employee benefit,
welfare and other plans, practices, policies and programs
(including relocation programs and policies intended to reimburse
the Executive in respect of state and local income taxes imposed by
jurisdictions where the Executive does not reside and attributable
to compensation paid by the Company) (collectively, “
Employee Benefit Plans ”) applicable to senior
executive officers of the Company.
(v) Retirement Benefit . The
Executive shall be entitled to a minimum annual retirement benefit
from the Company payable monthly (the “ Retirement
Benefit ”) determined as set forth in Attachment A. In
addition, the Executive shall be entitled to post-retirement
welfare benefit plan coverage pursuant to the terms of the
applicable Company plans to the extent such coverage is provided by
the Company. In determining the Executive’s eligibility for
and entitlements to post-retirement welfare benefits, the Executive
shall receive full credit for all of his years of service with the
Company for all purposes; provided, however, that for purposes of
the Company’s postretirement medical plans, the Executive
shall receive credit for his years of service with the Company
pursuant to the terms of such plans.
(vi) Expenses . During the
Agreement Term, the Executive shall be entitled to receive
reimbursement, as incurred, of all reasonable expenses incurred by
the Executive in the course of performing his duties and
responsibilities under this Agreement, in accordance with the
policies, practices and procedures of the Company to the extent
available to other senior executive officers with respect to
travel, entertainment and other business expenses. In no event
shall the payments by the Company under this Section 2(b)(vi)
be made later than the end of the calendar year next following the
calendar year in which such expenses were incurred. The amount of
such expenses that the Company is obligated to pay in any given
calendar year shall not affect the expenses that the Company is
obligated to pay in any other calendar year, and the
Executive’s right to have the Company pay such expenses may
not be liquidated or exchanged for any other benefit.
(vii) Fringe Benefits .
During the Employment Period, the Executive shall be entitled to
fringe benefits in accordance with the plans, practices, programs
and policies of the Company available to senior executive officers
of the Company and any additional benefits as may be granted to the
Executive by the Human Capital Committee. The Human Capital
Committee of the Board will periodically review and monitor the
fringe benefit program for senior executive officers, including the
Executive.
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3. Termination of
Employment .
(a) Death, Retirement or
Disability . The Executive’s employment shall terminate
automatically upon the Executive’s death or Retirement during
the term of this Agreement. For purposes of this Agreement, “
Retirement ” means a voluntary termination of
employment that qualifies as normal or early retirement under the
Company’s then-current retirement plan, or if there is no
such retirement plan, “ Retirement ” shall mean
voluntary separation from service, as defined pursuant to Internal
Revenue Code Section 409A, after age 65 with ten years of
service. As of the Effective Date, the Company’s retirement
plan defines early retirement as voluntary termination after age 55
with five years of service, and normal retirement as voluntary
termination after age 65. If the Company determines in good faith
that the Disability of the Executive has occurred (pursuant to the
definition of Disability set forth below), it may give to the
Executive written notice in accordance with Section 11(b) of
this Agreement of its intention to terminate the Executive’s
employment. In such event, the Executive’s employment with
the Company shall terminate effective on the 90th day after receipt
of such notice by the Executive (the “ Disability
Effective Date ”), provided that, within the 90 days
after such receipt, the Executive shall not have returned to
full-time performance of the Executive’s duties. For purposes
of this Agreement, “ Disability ” means the
Executive is (1) unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12
months, as determined by a physician selected by the Company or its
insurers and acceptable to the Executive, or (2) by reason of
any medically determinable physical or mental impairment that can
be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than three months
under an accident and health plan covering employees of the
Company, whichever is more favorable to the Executive.
(b) Cause . The Company may
terminate the Executive’s employment for Cause. For purposes
of this Agreement, “ Cause ” shall
mean:
(i) the continued failure of the
Executive to perform substantially the Executive’s duties
hereunder (other than any such failure resulting from incapacity
due to physical or mental illness), after a written demand for
substantial performance is delivered to the Executive by the Board
which specifically identifies the manner in which the Board
believes that the Executive has not substantially performed the
Executive’s duties, or
(ii) the willful engaging by the
Executive in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Company, or
(iii) conviction of a felony or a
guilty or nolo contendere plea by the Executive with respect
thereto.
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For purposes of this provision, no act or
failure to act, on the part of the Executive, shall be considered
“willful” unless it is done, or omitted to be done, by
the Executive in bad faith or without reasonable belief that the
Executive’s action or omission was in the best interests of
the Company. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board (or any
committee of the Board) or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be
done, by the Executive in good faith and in the best interests of
the Company. The cessation of employment of the Executive shall not
be deemed to be for Cause unless and until there shall have been
delivered to the Executive a copy of a resolution duly adopted by
the affirmative vote of not less than two-thirds of the entire
membership of the Board at a meeting of the Board called and held
for such purpose (after reasonable notice is provided to the
Executive and the Executive is given an opportunity, together with
counsel, to be heard before the Board) finding that, in the good
faith opinion of the Board, the Executive is guilty of the conduct
described in subparagraph (i) or (ii) above, and
specifying the particulars thereof in detail.
(c) Good Reason . The
Executive’s employment may be terminated by the Executive for
Good Reason. In order to invoke a termination for Good Reason, the
Executive shall provide written notice to the Company of one or
more of the conditions described in clauses (i) through
(vii) below within 90 days following the Executive’s
actual knowledge of the initial existence of such condition,
specifying in reasonable detail the conditions constituting Good
Reason, and the Company shall have 30 days following receipt of
such written notice (the “ Cure Period ”) during
which it may remedy the condition. In the event that the Company
fails to remedy the condition constituting Good Reason during the
applicable Cure Period, the Executive’s “separation
from service” (within the meaning of Internal Revenue Code
Section 409A) must occur, if at all, within two years
following such Cure Period in order for such termination as a
result of such condition to constitute a termination for Good
Reason. Furthermore, in the event that the party to whom notice is
given by Mr. Watjen pursuant to Section 3(c) asserts or
wishes to assert that such notice is untimely, the party making
such an assertion that the notice is untimely must show that he,
she or it was actually prejudiced by the late notice. For purposes
of this Agreement, “ Good Reason ” shall mean
the following events:
(i) the assignment to the Executive
of any duties materially inconsistent with the Executive’s
position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as
contemplated by Section 2(a)(i) of this Agreement, or any
other action by the Company which results in a material diminution
in such position, authority, duties or responsibilities or the
budget over which the Executive retains authority, excluding for
this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith;
(ii) any material failure by the
Company to comply with any of the provisions of Section 2(b)
of this Agreement (including, but not limited to, any reduction in
Annual Base Salary), other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith;
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(iii) any purported termination by
the Company of the Executive’s employment otherwise than as
expressly permitted by this Agreement;
(iv) any material failure by the
Company to comply with and satisfy Section 9(c) of this
Agreement;
(v) any required relocation of the
Executive to a location more than 35 miles from the
Executive’s location as of immediately prior to the Effective
Date, other than if such relocation is to the Company’s
headquarters;
(vi) any required relocation of the
Executive (whether or not to the Company’s headquarters) of
more than 35 miles from the Executive’s location as of
immediately prior to the Effective Date, if such required
relocation occurs during the CIC Period; or
(vii) any material diminution in the
authority, duties, or responsibilities of those to whom the
Executive is required to report, including without limitation any
requirement that the Executive report to a corporate officer or
employee instead of reporting directly to the Board of Directors of
the Company.
Notwithstanding the foregoing,
(x) placing the Executive on a paid leave for up to 30 days,
pending the determination of whether there is a basis to terminate
the Executive for Cause, shall not constitute a Good Reason event
(but if the Executive is subsequently terminated for Cause, then
the Executive shall repay any amounts paid by the Company to the
Executive during such paid leave period); and (y) a Notice of
Termination for Good Reason given by the Executive shall constitute
a notice of resignation of all elected positions the Executive may
hold with the Company or any of its subsidiaries or affiliates
(including, but not limited to, all directorships), effective as of
the Date of Termination (regardless of whether the Notice of
Termination expressly states that the Executive is resigning from
such elected positions).
(d) Change in Control . For
purposes of this Agreement, “ Change in Control
” shall mean the occurrence of any one of the following
events:
(i) during any period of two
consecutive years, individuals who, at the beginning of such
period, constitute the Board (the “ Incumbent
Directors ”) cease for any reason to constitute at least
a majority of the Board, provided that any person becoming a
director and whose election or nomination for election was approved
by a vote of at least two-thirds of the Incumbent Directors then on
the Board (either by a specific vote or by approval of the proxy
statement of the Company in which such person is named as a nominee
for director, without written objection to such nomination) shall
be an Incumbent Director; provided, however, that no individual
initially elected or nominated as a director of the Company as a
result of an actual or threatened election contest (as described in
Rule 14a-11 under the Securities Exchange Act of 1934 (the
“Act”)) (“ Election Contest ”) or
other actual or threatened solicitation of proxies or consents by
or on behalf of any “ person ” (as such term is
defined in Section 3(a)(9) of the Act and as used in Sections
13(d)(3) and 14(d)(2) of the Act) other than the Board (“
Proxy Contest ”), including by reason of any agreement
intended to avoid or settle any Election or Contest or Proxy
Contest, shall be deemed an Incumbent Director;
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(ii) any person is or becomes a
“ beneficial owner ” (as defined in Rule 13d-3
under the Act), directly or indirectly, of securities of the
Company representing 20% (30% with respect to deferred compensation
subject to Internal Revenue Code Section 409A) or more of the
combined voting power of the Company’s then outstanding
securities eligible to vote for the election of the Board (the
“ Company Voting Securities ”); provided,
however, that the event described in this paragraph (ii) shall
not be deemed to be a Change in Control of the Company by virtue of
any of the following acquisitions: (A) by the Company of any
subsidiary, (B) by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any subsidiary,
(C) by an underwriter temporarily holding securities pursuant
to an offering of such securities, (D) pursuant to a
Non-Qualifying Transaction (as defined in paragraph (iii)) or
(E) a transaction (other than one described in
(iii) below) in which Company Voting Securities are acquired
from the Company, if a majority of the Incumbent Directors approve
a resolution providing expressly that the acquisition pursuant to
this clause (E) does not constitute a Change in Control of the
Company under this paragraph (ii);
(iii) the consummation of a merger,
consolidation, statutory share exchange or similar form of
corporate transaction involving the Company or any of its
subsidiaries that requires the approval of the Company’s
stockholders, whether for such transaction or the issuance of
securities in the transaction (a “ Reorganization
”), or sale or other disposition of all or substantially all
of the Company’s assets to an entity that is not an affiliate
of the Company (a “ Sale ”), unless immediately
following such Reorganization or Sale: (A) more than 50% of
the total voting power of (x) the corporation resulting from
such Reorganization or the corporation which has acquired all or
substantially all of the assets of the Company (in either case, the
“ Surviving Corporation ”), or (y) if
applicable, the ultimate parent corporation that directly or
indirectly has beneficial ownership of 100% of the voting
securities eligible to elect directors of the Surviving Corporation
(the “ Parent Corporation ”), is represented by
the Company Voting Securities that were outstanding immediately
prior to such Reorganization or Sale (or, if applicable, is
represented by shares into which such Company Voting Securities
were converted pursuant to such Reorganization or Sale), and such
voting power among the holders thereof is in substantially the same
proportion as the voting power of such Company Voting Securities
among the holders thereof immediately prior to the Reorganization
or Sale, (B) no person (other than any employee benefit plan
(or related trust) sponsored or maintained by the Surviving
Corporation or the Parent Corporation) is or becomes the beneficial
owner, directly or indirectly, of 20% (30% with respect to deferred
compensation subject to Internal Revenue Code Section 409A) or
more of the total voting power of the outstanding voting securities
eligible to elect directors of the Parent Corporation (or, if there
is no Parent Corporation, the Surviving Corporation) and
(C) at least a majority of the members of the board of
directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) following the consummation
of the Reorganization or Sale were Incumbent Directors at the time
of the Board’s approval of the execution of the
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initial agreement providing for such
Reorganization or Sale (any Reorganization or Sale which satisfies
all of the criteria specified in (A), (B) and (C) above
shall be deemed to be a “ Non-Qualifying Transaction
”); or
(iv) the stockholders of the Company
approve a plan of complete liquidation or dissolution of the
Company.
Notwithstanding the foregoing, a
Change in Control of the Company shall not be deemed to occur
solely because any person acquires beneficial ownership of more
than 20% (30% with respect to deferred compensation subject to
Internal Revenue Code Section 409A) of the Company Voting
Securities as a result of the acquisition of Company Voting
Securities by the Company which reduces the number of Company
Voting Securities outstanding; provided, that if after such
acquisition by the Company such person becomes the beneficial owner
of additional Company Voting Securities that increases the
percentage of outstanding Company Voting Securities beneficially
owned by such person, a Change in Control of the Company shall then
occur.
(e) Notice of Termination .
Any termination by the Company or by the Executive shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 11(b) of this Agreement. For
purposes of this Agreement, a “ Notice of Termination
” means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision
so indicated and (iii) specifies the Date of Termination (as
defined below). The failure by the Executive or the Company to set
forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive
any right of the Executive or the Company, respectively, hereunder
or preclude the Executive or the Company, respectively, from
asserting such fact or circumstance in enforcing the
Executive’s or the Company’s rights
hereunder.
(f) Date of Termination .
“ Date of Termination ” means (i) if the
Executive’s employment is terminated by the Company for
Cause, the date of receipt of the Notice of Termination or any
later date specified therein within 90 days of such notice,
(ii) if the Executive’s employment is terminated by
reason of death or Disability, the date of death of the Executive
or the Disability Effective Date, as the case may be, (iii) if
the Executive’s employment is terminated by the Company other
than for Cause, death or Disability, 90 days after giving such
notice, (iv) if the Executive’s employment is terminated
by the Executive, 90 days after the giving of such notice by the
Executive (or such shorter period as may be specified in the Notice
of Termination) provided that the Company may elect to place the
Executive on paid leave for all or any part of such up-to 90-day
period or accelerate the Date of Termination, and (v) if the
Executive’s employment is terminated pursuant to a Notice of
Non-Renewal, the date specified in Section 1 as the end of the
term in which such notice is provided or any other mutually agreed
upon date. The Company and the Executive shall take all steps
necessary (including with regard to any post-termination services
by the Executive) to ensure that any termination described in this
Section 3 constitutes a “separation from service”
within the meaning of Internal Revenue Code Section 409A, and
notwithstanding anything contained herein to the contrary, the date
on which such separation from service takes place shall be the
“Date of Termination.”
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4. Obligations of the Company
upon Termination .
(a) Good Reason; Other Than for
Cause or Disability . If, the Company shall terminate the
Executive’s employment during the Agreement Term other than
for Cause or Disability, or the Executive shall terminate
employment for Good Reason, this Agreement shall terminate without
further obligation to the Executive other than as
follows:
(i) except as otherwise provided
below, the Company shall pay to the Executive in a lump sum in cash
within ten (10) days, subject to the Executive’s
execution and nonrevocation, within thirty (30) days after the
Date of Termination, of a general release substantially in the form
attached hereto as Attachment B:
A. the product of three
(3) times the sum of (x) the average of the annual
bonuses paid (or payable but deferred) to the Executive for the
three (3) completed calendar years prior to the year in which
the Date of Termination occurs (the “ Recent Annual
Bonus ”) and (y) the Executive’s Annual Base
Salary (disregarding any decrease in Annual Base Salary
constituting Good Reason); and
B. the sum of (x) the
Executive’s Annual Base Salary through the Date of
Termination to the extent not theretofore paid (disregarding any
decrease in Annual Base Salary constituting Good Reason),
(y) subject to the attainment of any performance goal designed
to comply with the requirements of the performance based
compensation exception of Internal Revenue Code Section 162(m)
(a “Section 162(m) Performance Goal”) that (i) has
been established by the Human Capital Committee of the Board of
Directors of the Company as of the Date of Termination for any
bonus plan in which the Executive is eligible to participate as of
the Date of Termination and (ii) is applicable to the
Executive, the product of (1) the Recent Annual Bonus
multiplied by (2) a fraction, the numerator of which is the
number of days in the fiscal year in which the Date of Termination
occurs through the Date of Termination and the denominator of which
is 365 (such product, the “Pro Rata Bonus”), provided
that, if (A) a Section 162(m) Performance Goal has not
been established as of the Date of Termination for a bonus plan in
which the Executive is eligible to participate as of the Date of
Termination, (B) such a performance goal has been established
for such a plan but is not intended to apply to the Executive or
(C) the Date of Termination occurs on or following a Change of
Control, the Executive shall be paid the Pro Rata Bonus, regardless
of the attainment of any Section 162(m) Performance Goal (the
sum of the amounts described in clauses (x) and (y) shall
be hereinafter referred to as the “ Accrued
Obligations ”);
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C. an amount equal to the excess of
(x) the actuarial present value of the Retirement Benefit
determined using the actuarial assumptions prescribed under
t
