AMENDED AND
RESTATED EMPLOYMENT AGREEMENT
This
Amended Employment Agreement (the “ Agreement ”)
is entered into effective as of December 31, 2008 (the
“Amended Effective Date”), by and between Eugene A.
Hall, an individual (“ Executive ”) and Gartner,
Inc., a Delaware corporation (the “ Company ”)
and amends and restates the employment agreement entered into on
February 15, 2007, effective as of January 1, 2007 (the
“Original Effective Date”), by the Company and
Executive.
1.
Employment . Executive will serve as Chief Executive Officer
of the Company for the Employment Term specified in
Section 3 below. Executive will report solely to the
Board of Directors (the “ Board ”) and will
render such services consistent with the foregoing role as the
Board may from time to time direct. Executive’s office will
be located at the executive offices of the Company in Stamford,
Connecticut. Executive may (i) serve on corporate, civic or
charitable boards or committees and (ii) deliver lectures,
fulfill speaking engagements or teach at educational institutions,
to the extent that such activities are (x) consistent with the
Company’s policies (as applicable) or (y) disclosed to
the Board and the Board determines in good faith that such
activities do not interfere with the performance of
Executive’s responsibilities hereunder.
2.
Board of Directors . The Executive is currently a member of
the Board, and during the Employment Term, the Company will, in
good faith, include Executive on the Company’s slate of
nominees to be elected to the Board at appropriate meetings of
stockholders of the Company. Upon termination of the Employment
Term for any reason, Executive will promptly resign as a director
of the Company if the Board so requests.
3.
Term . The employment of Executive pursuant to this
Agreement will continue through December 31, 2011 (the “
Employment Term ”), unless extended or earlier
terminated as provided in this Agreement. The Employment Term
automatically will be extended for additional one-year periods
commencing on January 1, 2012 and continuing each year
thereafter, unless either Executive or the Company gives the other
written notice, in accordance with Section 14(a) and at
least sixty (60) days prior to the then scheduled expiration
of the Employment Term, of such party’s intention not to
extend the Employment Term. Upon termination of the Employment Term
for any reason, Executive will promptly resign from all positions
he holds with the Company if the Board so requests.
4.
Salary . As compensation for the services rendered by
Executive under this Agreement, the Company will pay to Executive
an annual base salary (“ Base Salary ”) equal to
$724,065, payable to Executive on a semi-monthly basis in
accordance with the Company’s payroll practices as in effect
from time to time during the Employment Term. The Base Salary will
be subject to adjustment by the Board or the Compensation Committee
of the Board (the “ Committee ”), in the sole
discretion of the Board or such Committee, on an annual basis;
provided, however, that Executive’s Base Salary may not be
decreased other than pursuant to a reduction consistent with a
general reduction of pay across the executive staff as a group, as
an economic or strategic measure due to poor financial performance
by the Company.
5.
Bonus . In addition to Base Salary, Executive will be
entitled to participate in the Company’s executive bonus
program. Executive’s annual target bonus (the “
Target Bonus ”) will be 100% of Base Salary, and will
be payable based on achievement of specified Company and individual
objectives. The actual bonus paid may be higher or lower than the
Target Bonus for over-or under-achievement of Company and
individual objectives, as determined by the Committee; provided,
however, that the maximum actual bonus will not exceed 200% of Base
Salary. Bonus amounts will be subject to annual adjustment by the
Board or the Committee, in the sole discretion of the Board or the
Committee; provided, however, that Executive’s Target Bonus
may not be decreased without Executive’s consent other than
pursuant to a reduction consistent with a general reduction of pay
across the executive staff as a group, as an economic or strategic
measure due to poor financial performance of the Company. To
receive a bonus, Executive must be an employee at the time bonuses
are paid to executives.
(a)
Equity Grants . On February 15, 2007, and no later than
ten (10) days following the first market trading day of the
first open trading window for Company executives under the
Company’s insider trading policy on or after January 1 each
year thereafter during the Employment Term, Executive will be
granted equity-based incentive awards settled in Common Stock of
the Company (collectively, the “ Incentive Awards
”), provided that Executive must be an employee at the time
Incentive Awards are scheduled to be granted. The Incentive Awards
granted in 2007 will have an aggregate value of $5,594,050 on the
date of grant, as determined by (a) using the
Black-Scholes-Merton valuation method for stock appreciation rights
and the fair market value of the Company’s Common Stock for
restricted stock units, or such other valuation method as the
Committee may use to value equity-based incentive awards, and
(b) assuming that the number of the restricted stock units
initially granted in 2007 will not be adjusted during such year, as
discussed in clause (i) below. The Incentive Awards granted in
2008 and later years will have an aggregate value on the date of
grant (using the methods described in the preceding sentence) that
is no less than the result of $7,000,000 minus the sum of the Base
Salary and Target Bonus for the year of grant. Executive’s
entitlement to be granted the Incentive Awards for any given year
under this Agreement shall accrue as of January 1 of such year.
Except as otherwise provided herein, the Incentive Awards will be
granted on terms consistent with the Company’s 2003 Long Term
Incentive Plan (the “ Plan ”). Each year’s
Incentive Awards will be divided among:
(i)
Restricted Stock Units . Each year during the Employment
Term, all or a portion of the aggregate value of the Incentive
Awards may, as determined by the Committee, be in the form of
restricted stock units, with a par value purchase price. During
each year of the Employment Term, the number of restricted stock
units initially granted to Executive will be based upon an
assumption that specified Company objectives will be achieved
during such year. The restricted stock units granted to Executive
each year may be adjusted so as to be higher or lower than the
number of restricted stock units initially granted in such year by
reason of over-or under-achievement during such year of such
specified Company objectives, as determined by the Committee. Upon
the vesting of a restricted stock unit, and in the sole discretion
of the Company, the Company may pay earned restricted stock units
in cash, shares of Common Stock of the Company, or in a combination
thereof. Except as otherwise set forth in
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this
Agreement, if Executive’s employment with the Company
terminates for any reason, any portion of the restricted stock
units still subject to restrictions will be forfeited to the
Company.
(ii)
Stock Appreciation Rights . Each year during the Employment
Term, all or a portion of the value of the Incentive Awards may, as
determined by the Committee, be in the form of stock appreciation
rights, which upon exercise will be settled in shares of Common
Stock of the Company. Executive will have the right to exercise
such stock appreciation right upon its vesting, and will receive
the excess, if any, of the value of a share of Common Stock of the
Company on the date of exercise over the value of such share on the
date of grant.
The
2007 Incentive Awards will be divided such that 70% of the
aggregate fair value of the Incentive Awards will be in the form of
restricted stock units (the number of which will be subject to
increase or decrease based upon the over-or under-achievement of
specified Company objectives, as discussed in clause
(i) above), and 30% of the Incentive Awards will be in the
form of stock appreciation rights. The 2007 Incentive Awards will
be scheduled to vest in equal annual installments on the first four
(4) annual anniversaries of the date of grant, and all other
Incentive Awards granted pursuant to this Agreement will be
scheduled to vest in four equal installments on January 1 of each
year following the date of grant, subject in each case to
Executive’s continued employment with the Company through the
applicable date and subject to achievement of any performance goals
applicable to such Incentive Awards, except as provided in
Section 7 . Notwithstanding the preceding sentence, if
a Change in Control occurs prior to the termination of
Executive’s employment and prior to the expiration of the
Incentive Awards, then the Incentive Awards will vest in full, all
performance goals or other vesting criteria will be deemed achieved
at target levels and, with respect to stock appreciation rights, be
exercisable as to all of the covered shares, including shares as to
which the stock appreciation rights would not otherwise be
exercisable, and subsequently will expire in accordance with their
terms.
(b)
Other Employee and Executive Benefits . Executive will be
entitled to receive all benefits provided to senior executives,
executives and employees of the Company generally from time to
time, including medical, dental, life insurance and long-term
disability, and the executive split-dollar life insurance,
executive disability plan, and all other benefits under the
Company’s Executive Benefits program, in each case so long as
and to the extent the same exist; provided, that with respect to
each such plan Executive is otherwise eligible and insurable in
accordance with the terms of such plans. Notwithstanding the
preceding sentence, Executive’s right to receive severance
payments and benefits will be only as provided in Section 7
hereof. Furthermore, the Company will provide Executive with an
automobile and driver for Executive’s ground transportation
needs during the Employment Term.
(c)
Vacation, Sick Leave, Holidays and Sabbatical . Executive
will be entitled to paid time off (“ PTO ”),
sick leave, holidays and sabbatical in accordance with the policies
of the Company as they exist from time to time. Executive
understands that under the current policy he is entitled to
thirty-five (35) PTO days per calendar year. PTO not used
during any calendar year will roll over to the following year only
to the extent provided under the Company’s PTO policies as
they exist from time to time.
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(a)
At Will Employment . Executive’s employment will be
“at will.” Either the Company or Executive may
terminate this agreement and Executive’s employment at any
time, with or without Business Reasons, in its or his sole
discretion, upon sixty (60) days’ prior written notice
of termination.
(b)
Involuntary Termination . If at any time during the term of
this Agreement (other than following a Change in Control to which
Section 7(c) applies) the Company terminates the
employment of Executive involuntarily and without Business Reasons
or a Constructive Termination occurs, or if the Company elects not
to renew this Agreement upon the expiration of the Employment Term
and Executive within ninety (90) days following the expiration
of the Employment Term terminates his employment, then, subject to
Executive signing and not revoking a general release of claims
against the Company and its successors substantially in the form
attached hereto as Exhibit A within the period required
by the release and in no event later than sixty (60) days
following the Termination Date, inclusive of any revocation period
set forth in the release, Executive will be entitled to receive the
following:
(i) Base
Salary and PTO accrued through the Termination Date plus continued
Base Salary for a period of thirty-six (36) months following
the Termination Date. In accordance with Section 7(i) below,
such payments will commence on the first regular Company pay day at
least six (6) months after the Termination Date or, if later, at
least six (6) months after the date of Executive’s
Separation from Service. This first payment will be a lump sum
representing the continuation of Executive’s Base Salary for
the period commencing on the Termination Date and concluding on
such payment date. Thereafter, the remaining payments of Base
Salary will be payable in accordance with the Company’s
regular payroll schedule as in effect from time to time.
(ii) A
lump sum cash payment with respect to the accrued but un-granted
Incentive Awards pursuant to Section 6(a) above
determined by multiplying the percentage of such un-granted
Incentive Awards that would have vested pursuant to
Section 7(b)(iv) below by no less than the result of
$7,000,000 minus the sum of the Base Salary and Target Bonus for
the year in which the Termination Date occurs. For purposes of
illustration, if the accrued but un-granted Incentive Awards would
have vested over a four (4) year vesting schedule, the
percentage described in the preceding sentence will be seventy-five
percent (75%). In accordance with Section 7(i) below,
this payment will be made on the first regular Company pay day at
least six (6) months after the Termination Date or, if later,
at least six (6) months after the date of Executive’s
Separation from Service.
(iii) 300%
of the average of Executive’s earned annual bonuses for the
three (3) fiscal years immediately preceding the year in which
the Termination Date occurs, which, in accordance with
Section 7(i) below, will be payable in a lump sum as
soon as practicable following but in no event later than thirty
(30) days later than the six (6) month period commencing
on the Termination Date, or, if later, following the six
(6) month period commencing on the date of Executive’s
Separation from Service, plus any earned but unpaid bonus from the
prior fiscal year, which will be paid at the same time as bonuses
for such fiscal year are paid to the other Company
executives.
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(iv) Thirty-six
(36) months’ continued vesting under all Incentive
Awards and any other outstanding stock options and other equity
arrangements subject to vesting and held by Executive other than
the restricted stock award granted to Executive on August 16,
2004 pursuant to which Executive received 500,000 shares of
restricted stock subject to certain performance-based criteria (the
“Restricted Stock Award”) (and in this regard, all such
stock appreciation rights and other exercisable rights held by
Executive will remain exercisable for thirty (30) days
following the last day of the thirty-six (36) month continued
vesting period, subject to the maximum term of the award).
Notwithstanding the foregoing, with respect to each
performance-based restricted stock unit award or other equity
compensation award subject to achievement of performance-based
criteria (each a “Performance-Based Equity Award”)
other than the Restricted Stock Award, Executive will be entitled
to thirty-six (36) months’ continued vesting only if and
to the extent that the performance-based criteria applicable to the
Performance-Based Equity Award is achieved during the award’s
performance period, as determined by the Compensation Committee in
accordance with the terms and conditions of the 2003 Long-Term
Incentive Plan (or such other Company stock plan under which the
award was granted) and the award agreement entered into by and
between the Company and Executive. For purposes of clarity, the
thirty-six (36) months’ continued vesting to which
Executive is entitled will be measured from the Termination Date
and not from the date that achievement of the applicable
performance-based criteria is determined. Notwithstanding anything
to the contrary herein or in any award agreement evidencing the
Incentive Awards and any other outstanding stock options or other
equity arrangements, to the extent such awards are considered
“deferred compensation” within the meaning of
Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”), and the final regulations and any
guidance promulgated thereunder (“Section 409A”) and in
accordance with Section 7(i) below, the awards otherwise payable
during the period beginning on the Termination Date and ending on
the date that is six (6) months following the Termination Date
or, if later, six (6) months following the date of
Executive’s Separation from Service, instead will be paid on
the date six (6) months and one (1) day following the
later of the Termination Date or the date of Executive’s
Separation from Service. Thereafter, each such award shall be paid
in accordance with the vesting schedule applicable to such
award.
(v) reimbursement
for premiums incurred to continue group health benefits (or, at the
Company’s election, to obtain substantially similar health
benefits through a third party carrier) for thirty-six
(36) months for Executive, his spouse and any children,
provided the Executive makes the appropriate health continuation
election pursuant to the Consolidated Omnibus Budget Reconciliation
Act of 1985 (“COBRA”). The Company will make payments
under this clause (v) on a monthly basis.
(vi) no
other compensation, severance or other benefits, except only that
this provision will not limit any benefits otherwise available to
Executive under Section 7(c)(ii) in the case of a
Change in Control. Notwithstanding the foregoing, if Executive
violates in a material respect the provisions set forth in
Section 12 , Executive no longer will be entitled to
receive any severance payments and benefits and Executive’s
outstanding Incentive Awards and other stock options and equity
arrangements will expire immediately.
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(i)
Benefits . If during the term of this Agreement a
“Change in Control” occurs, then Executive will be
entitled to receive the following: (A) Base Salary and PTO
accrued though the date of the Change in Control plus an amount
equal to three (3) years of Executive’s Base Salary as
then in effect, payable immediately upon the Change in Control,
(B) an amount equal to three (3) times Executive’s
Target Bonus for the fiscal year in which the Change in Control
occurs (as well as any earned but unpaid bonus from the prior
fiscal year, such bonus not to be multiplied by three (3)), all
payable immediately upon the Change in Control, and (C)
(a) for at least three (3) years following the date of
the Change in Control (even if Executive ceases employment),
continuation of group health benefits at the Company’s cost
pursuant to the Company’s standard programs as in effect from
time to time (or at the Company’s election substantially
similar health benefits as in effect at the Termination Date (if
applicable), through a third party carrier) for Executive, his
spouse and any children, and (b) thereafter, to the extent
COBRA will be applicable, continuation of health benefits for such
persons at Executive’s cost, for a period of eighteen
(18) months or such longer period as may be applicable under
the Company’s policies then in effect, provided the Executive
makes the appropriate COBRA election and payments, and (D) no
other compensation, severance or other benefits. Anything to the
contrary herein notwithstanding, in the event of a Change in
Control, the Executive’s Incentive Awards will automatically
vest as provided in Section 6(a) . Additionally, any
Incentive Awards accrued but un-granted pursuant to
Section 6(a) will be granted to Executive prior to the
Change in Control. Further, payments for continuing group health
benefits made by the Company pursuant to
Section 7(c)(i)(C) above will be made directly by the
Company to the applicable insurer and/or administrator when
premiums for such coverage are due in accordance with the terms and
conditions of the applicable insurance policy or administrative
services agreement (subject to the grace period permitted under
Section 1.409 A-3(d) of the Treasury Regulations under
Section 409A and provided that under no circumstances will
Executive be permitted, directly or indirectly, to designate the
taxable year in which payments for continuing coverage are made by
the Company).
(ii)
Additional Payments by the Company .
(A)
If any payment or benefit Executive would receive pursuant to
Section 7(c)(i) or otherwise (collectively, the “
Payment ”) would (x) constitute a
“parachute payment” within the meaning of
Section 280G of the Code, and (y) be subject to the
excise tax imposed by Section 4999 of the Code or any interest
or penalties payable with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter
collectively referred to as the “ Excise Tax ”),
then Executive will be entitled to receive from the Company an
additional payment (the “ Gross-Up Payment ,”
and any iterative payments pursuant to this paragraph also will be
“ Gross-Up Payments ”) in an amount that will
fund the payment by Executive of any Excise Tax on the Payment, as
well as all income and employment taxes on the Gross-Up Payment,
any Excise Tax imposed on the Gross-Up Payment and any interest or
penalties imposed with respect to income and employment taxes
imposed on the Gross-Up Payment.
(B)
Subject to the provisions of clause F below, all determinations
required to be made under this Section 7(c)(ii),
including whether an
6
Excise Tax
is payable by Executive and the amount of such Excise Tax and
whether a Gross-Up Payment is required and the amount of such
Gross-Up Payment, will be made by the Company’s independent
accountants prior to the Change in Control (the “
Accounting Firm ”). The Company will direct the
Accounting Firm to submit its determination and detailed supporting
calculations to both the Company and Executive within fifteen
(15) calendar days after the date of the Change in Control or
the date of Executive’s termination of employment, if
applicable, and any other such time or times as may be requested by
the Company or Executive. If the Accounting Firm determines that
any Excise Tax is payable by Executive, the Company will pay the
required Gross-Up Payment to Executive within five
(5) business days after receipt of such determination and
calculations. If the Accounting Firm determines that no Excise Tax
is payable by Executive, it will, at the same time as it makes such
determination, furnish Executive with an opinion that he has
substantial authority not to report any Excise Tax on his federal,
state, local income or other tax return. Any determination by the
Accounting Firm as to the amount of the Gross-Up Payment will be
binding upon the Company and Executive. As a result of the
uncertainty in the application of Section 4999 of the Code (or
any successor provision thereto) and the possibility of similar
uncertainty regarding applicable state or local tax law at the time
of any determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by
the Company should have been made (an “ Underpayment
”), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts or fails to
pursue its remedies pursuant to clause F below and Executive
thereafter is required to make a payment of any Excise Tax, the
Company or Executive may direct the Accounting Firm to determine
the amount of the Underpayment that has occurred and to submit its
determination and detailed supporting calculations to both the
Company and Executive as promptly as possible. Any such
Underpayment will be promptly paid by the Company to Executive
within twenty (20) days after receipt of such determination
and calculations.
(C)
The Company and Executive will each provide the Accounting Firm
access to and copies of any books, records and documents in the
possession of the Company or Executive, as the case may be,
reasonably requested by the Accounting Firm, and otherwise
cooperate with the Accounting Firm in connection with the
preparation and issuance of the determination contemplated by
clause B above.
(D)
The federal, state and local income or other tax returns filed by
Executive will be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax
payable by Executive. Executive will make proper payment of the
amount of any Excise Tax, and at the request of the Company,
provide to the Company true and correct copies (with any
amendments) of his federal income tax return as filed with the
Internal Revenue Service and corresponding state and local tax
returns, if relevant, as filed with the applicable taxing
authority, and such other documents reasonably requested by the
Company, evidencing such payment. If prior to the filing of
Executive’s federal income tax return, or corresponding state
or local tax return, if relevant, the Accounting Firm determines
that the amount of the Gross-Up Payment should be reduced,
Executive will within twenty (20) days thereafter pay to the
Company the amount of such reduction.
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(E)
The fees and expenses of the Accounting Firm for its services in
connection with the determinations and calculations contemplated by
clauses B and D above will be borne by the Company. If such fees
and expenses are initially advanced by Executive, the Company will
reimburse Executive the full amount of such fees and expenses
within twenty (20) days after receipt from Executive of a
statement therefore and reasonable evidence of his payment
thereof.
(F)
Executive will notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the
payment by the Company of a Gross-Up Payment. Such notification
will be given as promptly as practicable but no later than thirty
calendar days after Executive actually receives notice of such
claim and Executive will further apprise the Company of the nature
of such claim and the date on which such claim is requested to be
paid (in each case, to the extent known by Executive). Executive
will not pay such claim prior to the earlier of (i) the
expiration of the 30-calendar-day period following the date on
which he gives such notice to the Company and (ii) the date
that any payment of amount with respect to such claim is due. If
the Company notifies Executive in writing prior to the expiration
of such period that it desires to contest such claim, Executive
will:
(1)
provide the Company with any written records or documents in his
possession relating to such claim reasonably requested by the
Company;
(2)
take such action in connection with contesting such claim as the
Company will reasonably request in writing from time to time,
including without limitation accepting legal representation with
respect to such claim by an attorney competent in respect of the
subject matter and approved by the Company, which approval will not
be unreasonably withheld;
(3)
cooperate with the Company in good faith in order effectively to
contest such claim; and
(4)
permit the Company to participate in any proceedings relating to
such claim;
provided,
however, that the Company will bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection
with such contest and will indemnify and hold harmless Executive,
on an after-tax basis, for and against any Excise Tax or income
tax, including interest and penalties with respect thereto, imposed
as a result of such representation and payment of costs and
expenses. Without limiting the foregoing provisions of this clause
F, the Company will control all proceedings taken in connection
with the contest of any claim contemplated by this clause F and, at
its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim (provided that Executive may
participate therein at his own cost and expense) and may, at its
option, either direct Executive to pay the tax claimed and sue for
a refund or contest the claim in any permissible manner, and
Executive agrees to prosecute such contest to a
8
determination
before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company
will determine; provided, however, that if the Company directs
Executive to pay the tax claimed and sue for a refund, the Company
will advance the amount of such payment to Executive on an
interest-free basis and will indemnify and hold Executive harmless,
on an after-tax basis, from any Excise Tax or income tax, including
interest or penalties with respect thereto, imposed with respect to
such advance; and provided further, however, that any extension of
the statute of limitations relating to payment of taxes for the
taxable year of Executive with respect to which the contested
amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company’s control of any such
contested claim will be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and Executive will be
entitled to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing
authority.
(G)
If, after the receipt by Executive of an amount advanced by the
Company pursuant to clause F above, Executive receives any refund
with respect to such claim, Executive will (subject to the
Company’s complying with the requirements of clause F above)
within twenty (20) days thereafter pay to the Company the
amount of such refund (together with any interest paid or credited
thereon after any taxes applicable thereto). If, after the receipt
by Executive of an amount advanced by the Company pursuant to
clause F above, a determination is made that Executive will not be
entitled to any refund with respect to such claim and the Company
does not notify Executive in writing of its intent to contest such
denial or refund prior to the expiration of thirty (30) days
after such determination, then such a
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