This Employment
Agreement (“Agreement”) is dated as of March 31,
2008 (the “Effective Date”), by and between Wyndham
Worldwide Corporation, a Delaware corporation (the
“Company”) and Geoff Ballotti (the
“Executive”).
WHEREAS, the
Company desires to employ the Executive, and the Executive desires
to serve the Company, in accordance with the terms and conditions
of this Agreement.
NOW THEREFORE, in
consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
EMPLOYMENT; POSITION AND
RESPONSIBILITIES
The Company agrees
to employ the Executive, and the Executive agrees to be employed by
the Company, for the Period of Employment as provided in
Section II below and upon the terms and conditions provided in
this Agreement. During the Period of Employment, the Executive
shall serve as, Chief Executive Officer of Group RCI (the
Company’s global vacation exchange and rental business). The
Executive shall report to, and be subject to the direction of, the
Chief Executive Officer of the Company (the “Supervising
Officer”). The Executive shall perform such duties and
exercise such supervision with regard to the business of the
Company as are associated with his respective positions, such as
exercising responsibility for the vacation exchange and rentals
segment results, as well as such reasonable additional duties as
may be prescribed from time to time by the Supervising Officer. The
Executive shall, during the Period of Employment, devote
substantially all of his time and attention during normal business
hours to the performance of services for the Company. The Executive
shall maintain a primary office and conduct his business in
Parsippany, New Jersey (the “Business Office”), except
for normal and reasonable business travel in connection with his
duties hereunder.
The period of the
Executive’s employment under this Agreement (the
“Period of Employment”) shall begin on the Effective
Date and shall end on the third anniversary of the Effective Date,
subject to earlier termination as provided in this Agreement. No
later than 180 days prior to the expiration of the Period of
Employment, the Company and the Executive will commence a good
faith negotiation regarding extending the Period of Employment;
provided,
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that, neither
party hereto shall have any obligation hereunder or otherwise to
consummate any such extension or any new agreement relating to the
Executive’s employment with the Company. For the avoidance of
doubt, the Executive shall not be entitled to payments pursuant to
Section VI(a) of this Agreement by reason of the Company
electing to not enter into a new agreement with the Executive
following the Period of Employment.
COMPENSATION AND
BENEFITS
For all services
rendered by the Executive pursuant to this Agreement during the
Period of Employment, including services as an executive officer,
director or committee member of the Company or any subsidiary or
affiliate of the Company, the Executive shall be compensated as
follows:
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(a)
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Base Salary. The Company shall initially pay the
Executive a fixed base salary (“Base Salary”) of not
less than $550,000, per annum, and thereafter the Executive shall
be eligible to receive annual increases as the Compensation
Committee (the “Committee”) of the Company’s
Board of Directors deems appropriate, in accordance with its
customary procedures regarding salaries of senior officers. Base
Salary shall be payable according to the customary payroll
practices of the Company, but in no event less frequently than once
each month.
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(b)
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Annual Incentive Awards.
The Executive will be
eligible to earn an annual bonus for each fiscal year of the
Company during the Period of Employment based upon a target bonus
equal to 100% of Base Salary earned during each such year, subject
to the attainment by the Company and/or Group RCI of applicable
performance targets established and certified by the Committee,
including, if approved by the Committee, performance and bonus
targets relating to the attainment of above-target performance
(each such annual bonus, an “Incentive Compensation
Award”). With respect to 2008 performance, provided that the
Executive is employed by the Company on the date that 2008
performance-based bonuses are paid to employees, the
Executive’s Incentive Compensation Award (i) shall be
not less than 100% of Base Salary earned by the Executive in 2008
(the “Minimum 2008 Bonus”) and (ii) may equal up
to 125% of Base Salary earned by the Executive in 2008 upon the
attainment of by the Company and/or Group RCI of above-performance
targets established and certified by the Committee. The
Executive’s bonus targets relating to Incentive Compensation
Awards will be established by the Company based upon financial
performance targets substantially equivalent to those applicable to
other comparable senior executive officers (excluding the
Supervising Officer).
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(c)
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Long-Term Incentive
Awards . As
promptly as possible after the opening the Company’s first
trading window following the Effective Date, the Committee shall
grant the Executive a long term equity award with an aggregate
grant date
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value equal to $1,850,000, which
shall be comprised of (i) restricted stock units with a grant
date value equal to $1,387,500 and (ii) stock appreciation
rights (which shall be settled in Company common stock) with a
Black-Scholes value on the date of grant equal to $462,500
(together, the “Initial Grant”). The Initial Grant
shall vest as determined by the Committee, including with respect
to any performance-based conditions applicable to vesting, in its
sole and absolute discretion, and shall be subject to the terms and
conditions of the Company’s 2006 Equity and Incentive Plan, a
copy of which was previously provided to the Executive and which is
publicly available as an exhibit to the Company’s periodic
filings with the Securities and Exchange Commission, and the
applicable agreement evidencing such award as determined by the
Committee. Thereafter, the Executive shall be eligible for long
term incentive awards as determined by the Committee, and the
Executive will participate in such grants at a target compensation
level commensurate with his position as a senior executive officer
of the Company. For purposes of this Agreement, awards described in
this paragraph are referred to as “Long Term Incentive
Awards.”
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(d)
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Relocation . The Executive will be provided
with relocation assistance in accordance with the Company’s
relocation policy.
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(e)
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Additional Benefits
. The Executive shall be
entitled to participate in all other compensation and employee
benefit plans or programs and receive all benefits and perquisites
for which salaried employees of the Company generally are eligible
under any plan or program now in effect, or later established by
the Company, on the same basis as most similarly situated senior
executives of the Company with comparable duties and
responsibilities. The Executive shall participate to the extent
permissible under the terms and provisions of such plans or
programs, and in accordance with the terms of such plans and
program. For 2008, such programs shall include access to a
company-provided car, financial planning and tax services and
executive medical benefits upon the same terms and conditions
applicable to similarly situated executives of the Company (other
than the Supervising Officer).
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The Company shall
promptly reimburse the Executive for all reasonable travel and
other expenses incurred by the Executive in connection with the
performance of his duties and obligations under this Agreement. The
Executive shall comply with such limitations and reporting
requirements with respect to expenses as may be established by the
Company from time to time for its executive officers and shall
promptly provide all appropriate and requested documentation in
connection with such expenses.
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The Period of
Employment shall end upon the Executive’s death. If the
Executive becomes Disabled (as defined below) during the Period of
Employment, the Period of Employment may be terminated at the
option of the Executive upon notice of resignation to the Company,
or at the option of the Company upon notice of termination to the
Executive. For purposes of this Agreement, “Disability”
shall have the meaning set forth in Section 409A (“Code
Section 409A”) of the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder. The
Company’s obligation to make payments to the Executive under
this Agreement shall cease as of such date of termination, except
for Base Salary and any Incentive Compensation Awards earned but
unpaid as of the date of such termination. Notwithstanding the
foregoing, the Company will not take any action with respect to the
Executive’s employment status pursuant to this paragraph
earlier than the date on which the Executive becomes eligible for
long-term disability benefits under the Company’s long-term
disability plan in effect from time to time.
EFFECT OF TERMINATION OF
EMPLOYMENT
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(a)
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Without Cause Termination and
Constructive Discharge . If the Executive’s
employment terminates during the Period of Employment due to either
a Without Cause Termination or a Constructive Discharge (each as
defined below): the Company shall pay the Executive (or his
surviving spouse, estate or personal representative, as
applicable), in accordance with paragraph (d) below, a lump
sum payment equal to 200% multiplied by the sum of (A) the
Executive’s then current Base Salary, plus (B) the
Executive’s then current target Incentive Compensation Award
(or, if the Executive terminates employment in 2008 due to either a
Without Cause Termination or a Constructive Discharge, the
Executive’s Minimum 2008 Bonus). In addition, upon such
event, all time-based Long Term Incentive Awards (including all
stock options and stock appreciation rights) granted on or after
the Effective Date which would have otherwise vested within one
year following the Executive’s termination of employment,
will become vested and, subject to paragraph (d) below, paid
upon the Executive’s termination of employment, and any such
awards which are stock options or stock appreciation rights will
remain outstanding for a period of two years (but not beyond the
original expiration date) following the Executive’s
termination of employment. With respect to any performance-based
Long Term Incentive Awards (including restricted stock units but
excluding stock options and stock appreciation rights) granted on
or after the Effective Date, provided that the performance goals
applicable to the Long-Term Incentive Award are achieved, the
Executive shall be entitled to vest in and be paid a pro-rata
portion of such Long Term Incentive Award based upon the portion of
the full performance
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period during which the Executive
was employed by the Company plus 12 months (or, if less,
assuming employment for the entire performance period). Subject to
paragraph (d) below, any vested performance-based Long Term
Incentive Awards shall be paid to the Executive at the time that
the awards vest and are paid to employees generally. The provisions
relating to Long Term Incentive Awards set forth in this paragraph
shall not supersede or replace any provision or right of the
Executive relating to the acceleration of the vesting of such
awards in the event of a change in control of the Company or the
Executive’s death or disability, whether pursuant to an
applicable stock plan document or award agreement.
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(b)
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Termination for Cause;
Resignation .
If the Executive’s employment terminates due to a Termination
for Cause or a Resignation, Base Salary earned but unpaid as of the
date of such termination shall be paid to the Executive in
accordance with paragraph (d) below. Outstanding stock options
and other equity awards held by the Executive as of the date of
termination shall be treated in accordance with their
terms.
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(c)
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For
purposes of this Agreement, the following terms have the following
meanings:
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(i)
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“Termination for Cause”
means (a) the Executive’s willful failure to
substantially perform his duties as an employee of the Company or
any subsidiary (other than any such failure resulting from
incapacity due to physical or mental illness), (b) any act of
fraud, misappropriation, dishonesty, embezzlement or similar
conduct against the Company or any subsidiary, (c) the
Executive’s conviction of a felony or any crime involving
moral turpitude (which conviction, due to the passage of time or
otherwise, is not subject to further appeal), (d) the
Executive’s gross
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