Exhibit 10.2
DOLBY LABORATORIES,
INC.
EMPLOYMENT
AGREEMENT
This Employment Agreement (the
“Agreement”) is entered into as of February 24,
2009, by and between Dolby Laboratories, Inc., a Delaware
corporation (the “Company”) and Kevin Yeaman (the
“Executive”).
1. Duties and Scope of
Employment .
(a) Positions and Duties . As
of March 28, 2009, (the “Effective Date”),
Executive will serve as the Company’s Chief Executive
Officer. Executive will report to the Company’s Board of
Directors (the “Board”). As of the Effective Date,
Executive will render such business and professional services in
the performance of his duties, consistent with Executive’s
position within the Company, as will reasonably be assigned to him
by the Board. The period Executive is employed by the Company under
this Agreement is referred to herein as the “Employment
Term”.
(b) Board Membership .
Executive will be appointed to serve as a member of the Board as of
the Effective Date. Thereafter, at each annual meeting of the
Company’s stockholders during the Employment Term, the
Company will nominate Executive to serve as a member of the Board.
Executive’s service as a member of the Board will be subject
to any required stockholder approval. Upon the termination of
Executive’s employment for any reason, unless otherwise
requested by the Board, Executive will be deemed to have resigned
from the Board (and all other positions held at the Company and its
affiliates), without any further required action by Executive, as
of the end of Executive’s employment and Executive, at the
Board’s request, will execute any documents necessary to
reflect his resignation.
(c) Obligations . During the
Employment Term, Executive will devote Executive’s full
business efforts and time to the Company and will use good faith
efforts to discharge Executive’s obligations under this
Agreement to the best of Executive’s ability and in
accordance with each of the Company’s Corporate Governance
Guidelines and Code of Business Conduct and Ethics. For the
duration of the Employment Term, Executive agrees not to actively
engage in any other employment, occupation, or consulting activity
for any direct or indirect remuneration without the prior approval
of the Board (which approval will not be unreasonably withheld);
provided, however, that Executive may, without the approval of the
Board (but in accordance with any Company policy then in effect),
serve in any capacity with any civic, educational, or charitable
organization, provided such services do not interfere with
Executive’s obligations to Company.
(d) Other Entities .
Executive agrees to serve and will be appointed, without additional
compensation, as an officer and director for each of the
Company’s subsidiaries, partnerships, joint ventures, limited
liability companies and other affiliates, including entities in
which the Company has a significant investment as determined by the
Company. As used in this Agreement, the term
“affiliates” will include any entity controlled by,
controlling, or under common control of the Company. As
applicable
2. At-Will Employment .
Executive and the Company agree that Executive’s employment
with the Company constitutes “at-will” employment.
Executive and the Company acknowledge that this employment
relationship may be terminated at any time, upon written notice to
the other party, with or without good cause or for any or no cause,
at the option either of the Company or Executive. However, as
described in this Agreement, Executive may be entitled to severance
benefits depending upon the circumstances of Executive’s
termination of employment.
3. Compensation .
(a) Base Salary . As of the
Effective Date, the Company will pay Executive an annual salary of
$550,000 as compensation for his services (such annual salary, as
is then effective, to be referred to herein as “Base
Salary”). The Base Salary will be paid periodically in
accordance with the Company’s normal payroll practices and be
subject to the usual, required withholdings. Executive’s Base
Salary will be reviewed on an annual basis by the Compensation
Committee of the Board (the “Committee”) and may be
increased from time to time, in the discretion of the
Committee.
(b) Annual Incentive .
Executive will be eligible to receive annual cash incentives
payable for the achievement of performance goals established by the
Committee. For the Company’s fiscal year 2009,
Executive’s target annual cash incentive (“Target
Annual Incentive”) will be adjusted to reflect a target not
less than 77% of Base Salary. Thereafter and for the remainder of
the Employment Term, Executive’s Target Annual Incentive will
be not less than 85% of Base Salary. The actual earned annual cash
incentive, if any, payable to Executive for any performance period
will depend upon the extent to which the applicable performance
goal(s) specified by the Committee are achieved or exceeded and may
be adjusted for under- or over-performance.
(c) Equity Awards
.
(i) As of March 16, 2009,
Executive will be granted a nonstatutory stock option to purchase
121,000 shares of the Company’s Class A common stock at
a per share exercise price equal to the closing price per share on
the New York Stock Exchange on the date of grant (the “Option
Grant”). The Option Grant will be granted under and subject
to the terms, definitions and provisions of the Company’s
2005 Stock Plan (the “Plan”) and, except as provided in
this Agreement, will be scheduled to vest in accordance with the
Company’s standard stock option vesting schedule assuming
Executive’s continued employment with the Company on each
scheduled vesting date. Notwithstanding anything in this Agreement
to the contrary, the Option Grant shall be forfeited and Executive
shall have no further rights thereunder, should Executive not
become the Chief Executive Officer of the Company as of
March 28, 2009. Except as provided in this Agreement, the
Option Grant will be subject to the Company’s standard terms
and conditions for options granted under the Plan.
(ii) As of March 16, 2009,
Executive will also be granted 30,000 restricted stock units (the
“RSU Grant”). The RSU Grant will be granted under and
subject to the terms,
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definitions and provisions of the
Company’s Plan, and, except as provided in this Agreement,
will be scheduled to vest in accordance with the Company’s
standard restricted stock unit vesting schedule assuming
Executive’s continued employment with the Company on each
scheduled vesting date. Notwithstanding anything in this Agreement
to the contrary, the RSU Grant shall be forfeited and Executive
shall have no further rights thereunder, should Executive not
become the Chief Executive Officer of the Company as of
March 28, 2009. Except as provided in this Agreement, the RSU
Grant will be subject to the Company’s standard terms and
conditions for restricted stock units granted under the
Plan.
4. Employee Benefits
.
(a) Generally . Executive
will be eligible to participate in accordance with the terms of all
Company employee benefit plans, policies and arrangements that are
applicable to other executive officers of the Company, as such
plans, policies and arrangements may exist from time to
time.
(b) Vacation . Executive will
be entitled to receive paid annual vacation in accordance with
Company policy for other senior executive officers.
5. Expenses . The Company
will reimburse Executive for reasonable travel, entertainment and
other expenses incurred by Executive in the furtherance of the
performance of Executive’s duties hereunder, in accordance
with the Company’s expense reimbursement policy as in effect
from time to time.
6. Termination of Employment
. In the event Executive’s employment with the Company
terminates for any reason, Executive will be entitled to any
(a) unpaid Base Salary accrued up to the effective date of
termination; (b) pay for accrued but unused vacation;
(c) benefits or compensation as provided under the terms of
any employee benefit and compensation agreements or plans
applicable to Executive (e) unreimbursed business expenses
required to be reimbursed to Executive, and (e) rights to
indemnification Executive may have under the Company’s
Articles of Incorporation, Bylaws, the Agreement, or separate
indemnification agreement, as applicable. In addition, if the
termination is by the Company without Cause or Executive resigns
for Good Reason, Executive will be entitled to the amounts and
benefits specified in Section 7.
7. Severance .
(a) Termination Without Cause or
Resignation for Good Reason other than in Connection with a Change
of Control . If Executive’s employment is terminated by
the Company without Cause or if Executive resigns for Good Reason,
and such termination is not in Connection with a Change of Control,
then, subject to Section 8(a), Executive will receive:
(i) a single lump sum cash severance payment equal to 150% of
the Executive’s Base Salary for the year in which the
termination occurs (less applicable tax withholdings); (ii) a
single lump sum cash severance payment in an amount determined by
multiplying the Target Annual Incentive by a fraction with a
numerator equal to the number of days between the start of the
current fiscal year and the date of termination and a denominator
equal to 365 (for the avoidance of doubt, Executive shall be paid
this severance payment in an amount determined pursuant to this
Section 7(a)(ii) in lieu of the actual annual incentive for
the year of termination which will be forfeited (regardless of the
level of performance
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obtained thereunder as of such termination
date)); (iii) fifty percent (50%) of Executive’s
then outstanding and unvested stock options (including specifically
the Initial Option), fifty percent (50%) of unvested
restricted stock units (including specifically the RSU Grant) and
fifty percent (50%) of any other equity award denominated in
shares of Company Class A common stock (collectively the
“Equity Awards”) shall become vested and, to the extent
applicable, exercisable on the termination date; and
(iv) reimbursement for premiums paid for continued health
benefits for Executive (and any eligible dependents) under the
Company’s health plans until the earlier of (A) eighteen
(18) months, payable when such premiums are due (provided
Executive validly elects to continue coverage under the
Consolidated Omnibus Budget Reconciliation Act
(“COBRA”), or (B) the date upon which Executive
and Executive’s eligible dependents become covered under
similar plans.
(b) Termination Without Cause or
Resignation for Good Reason in Connection with a Change of
Control . If Executive’s employment is terminated by the
Company without Cause or by Executive for Good Reason, and the
termination is in Connection with a Change of Control, then,
subject to Section 8(a), Executive will receive: (i) a
single lump sum cash severance payment equal to 200% of the
Executive’s Base Salary for the year in which the termination
occurs (less applicable tax withholdings); (ii) a single lump
sum cash severance payment equal to 100% of the Target Annual
Incentive; (iii) one hundred percent (100%) of
Executive’s then outstanding and unvested Equity Awards shall
become vested and, to the extent applicable, exercisable on the
termination date; and (iv) reimbursement for premiums paid for
continued health benefits for Executive (and any eligible
dependents) under the Company’s health plans until the
earlier of (A) twenty-four (24) months, payable when such
premiums are due (provided Executive validly elects to continue
coverage under COBRA), or (B) the date upon which Executive
and Executive’s eligible dependents become covered under
similar plans.
(c) Voluntary Termination Without
Good Reason or Termination for Cause . If Executive’s
employment is terminated voluntarily, including due to death or
Disability, without Good Reason or is terminated for Cause by the
Company, then, except as provided in Section 6, (i) all
further vesting of Executive’s outstanding Equity Awards will
terminate immediately (unless the terms and conditions of the Plan
and the applicable Equity Awards provide otherwise); (ii) all
payments of compensation by the Company to Executive hereunder will
terminate immediately, and (iii) Executive will be eligible
for severance benefits only in accordance with the Company’s
then established, if any, severance plans and
arrangements.
8. Conditions to Receipt of
Severance; No Duty to Mitigate .
(a) Separation Agreement and
Release of Claims . The receipt of any severance or other
benefits pursuant to Section 7 will be subject to Executive
signing, returning to the Company within fifty (50) days and
not revoking a release of claims in a form attached hereto as
Exhibit A . No severance or other benefits will be paid or
provided, and Executive will forfeit any rights to such severance
or other benefits, until the release agreement becomes effective.
Any payments that are delayed until the release of claims becomes
effective shall be paid to Executive in a cash lump sum within
sixty (60) days following Executive’s termination of
employment; provided that, in no event shall severance payments or
benefits be paid or provided until the release of claims actually
becomes effective and irrevocable.
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(b) Non-solicitation . The
receipt of any severance or other benefits pursuant to
Section 7 will be subject to Executive agreeing that during
the Employment Term and Continuance Period, Executive will not
solicit any employee of the Company (other than Executive’s
personal assistant) for employment other than at the
Company.
(c) Non-disparagement .
During the Employment Term and the Continuance Period, neither the
Company nor the Executive will knowingly and materially disparage,
criticize, or otherwise make any derogatory statements regarding
the other. Notwithstanding the foregoing, nothing contained in this
agreement will be deemed to restrict Executive, the Company or any
of the Company’s current or former officers and/or directors
from providing information to any governmental or regulatory agency
(or in any way limit the content of any such information) to the
extent they are requested or required to provide such information
pursuant to applicable law or regulation.
(d) Other Requirements .
Executive’s receipt of severance payments pursuant to this
Agreement will be subject to Executive continuing to comply with
the terms of the Confidential Information Agreement and the
provisions of this Section 8.
(e) No Duty to Mitigate .
Executive will not be required to mitigate the amount of any
payment contemplated by this Agreement, nor will any earnings that
Executive may receive from any other source reduce any such
payment.
9. Excise Tax .
(a) In the event that the severance
and other benefits provided in this Agreement or otherwise payable
to Executive constitute “parachute payments” under
Section 280G of the Internal Revenue Code of 1986, as amended
(the “Code”) and would be subject to the excise tax
imposed by Section 4999 of the Code, then, except as provided
by Section 9(b) below, Executive’s benefits shall be
either (i) delivered in full, or (ii) delivered as to
such lesser extent which would result in no portion of such
benefits being subject to the excise tax, whichever of the
foregoing amounts results in the receipt by Executive on an
after-tax basis, of the greatest amount of benefits. Any reduction
in payments and/or benefits required by this Section shall occur in
the following order: (i) reduction of cash payments;
(ii) reduction of vesting acceleration of Equity Awards; and
(iii) reduction of other benefits paid or provided to
Executive. In the event that acceleration of vesting of Equity
Awards is to be reduced, such acceleration of vesting shall be
cancelled in the reverse order of the date of grant for the
Executive’s Equity Award
