Exhibit 10.1
E MPLOYMENT A GREEMENT
This Employment Agreement
(“Agreement”) is entered into January 20, 2009, by
and between Capella Education Company, a Minnesota corporation (the
“Company”), and J. Kevin Gilligan
(“Executive”).
B ACKGROUND
A. Executive desires to be employed
by the Company, and the Company wishes to hire Executive upon the
terms and conditions set forth in this Agreement.
B. During employment with the
Company Executive will have access to confidential, proprietary and
trade secret information of the Company. It is desirable and in the
best interests of the Company and its shareholders to protect
confidential, proprietary and trade secret information of the
Company, to prevent unfair competition by former executives of the
Company following separation of their employment with the Company
and to secure cooperation from former executives with respect to
matters related to their employment with the Company.
C. Executive understands that
Executive’s employment and receipt of the compensation and
benefits provided for in this Agreement depends on, among other
things, Executive’s willingness to agree to and abide by the
non-disclosure, non-competition, non-solicitation, assignment of
inventions and other covenants contained in Exhibit A attached to
this Agreement (the “Confidentiality Agreement”).
Executive and the Company acknowledge that Executive was provided a
copy of this Agreement and Exhibit A before Executive accepted
employment with the Company.
D. The parties acknowledge that
nothing in this Agreement limits either party’s right to
terminate Executive’s employment at any time and for any
reason.
In consideration of
Executive’s employment with the Company, the compensation and
benefits payable in connection with such employment, and the
foregoing premises and other good and valuable consideration
provided for in this Agreement, the receipt and adequacy of which
are hereby acknowledged, Executive and the Company agree as
follows:
A GREEMENT
1. E MPLOYMENT . Commencing no later than March 5, 2009,
or such other date mutually agreed upon by the parties (the
“Effective Date”), the Company will employ Executive,
and Executive will accept such employment and perform services for
the Company, under the terms and conditions set forth in this
Agreement. Executive’s employment under the terms and
conditions set forth in this Agreement will continue until
terminated in accordance with Section 5 below. In addition, as
of the Effective Date, Executive shall be appointed to the Board
and, in connection with the Company’s 2009 annual meeting of
shareholders, Executive shall be included in the slate of directors
recommended by the Board.
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2. E MPLOYMENT AS C HIEF E XECUTIVE O FFICER . While Executive is employed by the Company
during the Term, Executive shall serve as the Company’s Chief
Executive Officer. Executive shall report to the Board and shall
perform such duties and responsibilities as the Board may assign to
Executive from time to time consistent with such
position.
3. P ERFORMANCE OF D UTIES AND R ESPONSIBILITIES . Executive shall serve the Company faithfully
and to the best of Executive’s ability, devoting
Executive’s full working time, attention, and efforts to the
business of the Company. Executive shall follow and comply with
applicable policies and procedures adopted by the Board or the
Company from time to time, including without limitation policies
relating to business ethics, conflict of interest,
non-discrimination and non-harassment, confidentiality and
protection of trade secrets, and insider trading. Executive shall
not engage in any other employment or other material business
activity, except as approved in writing by the Board. It will not
be a violation of this Agreement for Executive to (i) serve on
civic or charitable boards or committees or (ii) manage
personal investments, so long as such activities do not materially
interfere with the performance of Executive’s
responsibilities to the Company. Executive hereby represents and
confirms that Executive is under no contractual or legal
commitments that would prevent Executive from fulfilling the duties
and responsibilities as set forth in or contemplated by this
Agreement.
4. C OMPENSATION . While Executive is employed by the Company
during the Term, Executive will be provided with the following
compensation and benefits:
(a) Annual Base Salary . The
Company will pay to Executive for services provided hereunder an
Annual Base Salary at a rate determined from time to time by the
Board, which Annual Base Salary will be paid in accordance with the
Company’s normal payroll policies and procedures. Upon
commencement of Executive’s employment hereunder,
Executive’s Annual Base Salary will be $575,000.00. The Board
(or authorized committee of the Board) will review
Executive’s performance and compensation on an annual basis
and determine any adjustments to Executive’s Annual Base
Salary in its sole discretion.
(b) Incentive
Compensation . Executive will be eligible to participate in the
Company’s Annual Incentive Plan as approved by the Board, in
accordance with the terms and conditions of such plan as may be in
effect from time to time. For the Company’s fiscal year 2009,
Executive’s target incentive award under the Company’s
Annual Incentive Plan will be 100% of Executive’s Annual Base
Salary, with a minimum award of 0% and a maximum award of 200% of
Annual Base Salary. Any Annual Incentive Plan award earned by
Executive for a fiscal year shall be paid at the same time the
Company pays incentive awards for other executive officers, but in
no event no later than 2 1 / 2 months after the end of the
fiscal year.
(c) Employee Benefits .
Executive will be entitled to participate in all employee benefit
plans and programs generally available to executive employees of
the Company, such as medical, dental, retirement and vacation time,
to the extent that Executive meets the eligibility requirements for
each individual plan or program. Executive’s participation in
any plan or program will be subject to the provisions, rules, and
regulations of, or applicable to, the plan or program. The Company
provides no assurance as to the adoption or continuation of any
particular employee benefit plan or program.
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(d) Expenses . The Company
will reimburse Executive for all reasonable and necessary
out-of-pocket business, travel, and entertainment expenses incurred
by Executive in the performance of duties and responsibilities to
the Company during the Term. Such reimbursement shall be subject to
the Company’s normal policies and procedures for expense
verification, documentation, and reimbursement.
(e) Equity . From time to
time the Board in its sole discretion may grant to Executive stock
options, restricted stock or other equity-based awards, on such
terms and conditions as the Board may provide, subject to
applicable plans and agreements to be entered into relating to such
equity-based awards . Provided Executive remains actively
employed by the Company as of the date the Company awards equity
compensation to other executive officers for fiscal year 2009, and
subject to the terms and conditions of the Equity Inventive Plan
and standard equity award agreement(s) to be entered into by and
between the Company and Executive, the Company will grant Executive
equity-based awards in the form of stock options, restricted stock
or a combination thereof with an aggregate value of at least
$1,000,000.00 (the “2009 Equity Grant”). The exercise
price of any stock options and the value of any restricted stock
granted in connection with the 2009 Equity Grant shall be the Fair
Market Value (as defined in the Equity Incentive Plan) of the
Company’s common stock as of the date of grant. The value of
any stock option in connection with the 2009 Equity Grant will be
based on the Black-Scholes value calculation method.
(f) Initial Equity . The
Company shall grant to Executive 6,000 shares of restricted stock,
subject to a two-year ratable vesting period and the terms and
conditions of the Equity Incentive Plan and standard equity award
agreement(s) to be entered into by and between the Company and
Executive. If Executive commences employment on or before
February 24, 2009, then the grant date for such 6,000 shares
of restricted stock will be February 24, 2009; if Executive
commences employment between February 25, 2009 and
March 5, 2009, then the grant date will be date on which
Executive commences employment.
5. T ERMINATION OF E MPLOYMENT . Executive’s employment hereunder is at
will. The Company may terminate Executive’s employment with
or without cause at any time, and Executive may resign at any time,
with or without advance notice, subject to the rights and
obligations of the parties under this Agreement. Executive’s
employment with the Company under this Agreement will terminate
upon:
(a) The Company providing written
notice to Executive of the termination of his employment, effective
as of the date stated in such notice;
(b) The Company’s receipt of
Executive’s written resignation from the Company, effective
as of the date indicated in such resignation or at such earlier
date as the Board in
