Exhibit 10.5
EMPLOYMENT
AGREEMENT
This Employment Agreement (the
“ Agreement ”) dated as of May 14, 2007 is
entered between Montpelier Re Holdings Ltd. (“ Montpelier
Holdings ” and, collectively, with its subsidiaries and
affiliated companies, the “ Company ”), and
Stanley J. Kott (the “ Executive ”).
WHEREAS, the Company and the
Executive wish to enter into an employment agreement whereby the
Executive shall be employed by the Company in accordance with the
terms and conditions stated below.
NOW, THEREFORE, the parties hereby
agree as follows:
ARTICLE 1
EMPLOYMENT, DUTIES AND RESPONSIBILITIES
Section 1.01 .
Employment. The Executive shall serve as Chief Executive
Officer of Montpelier Underwriting Inc. (“ MUI
”), an entity within the Company; provided, however,
that Montpelier Holdings reserves the right to change the entity
that employs the Executive, and correspondingly the
Executive’s title, based on the need of the Company’s
growing international infrastructure to comply with various
regulatory and tax regimes; and provided further that the
Executive may be concurrently employed by two entities within the
Company. The Executive acknowledges that such employment
commenced as of the Commencement Date (as defined
below).
Section 1.02 . Duties
and Responsibilities. (a) The Executive shall
report to the President and Chief Executive Officer of Montpelier
Holdings. Regardless of the entity or entities that
employ(s) the Executive, the Executive’s
responsibilities shall be commensurate with those of executives who
occupy chief executive positions at similarly situated
companies.
(b)
The Executive shall devote substantially all of his business time
and services to the Company’s business and affairs and shall
perform faithfully the duties reasonably assigned to him to the
best of his ability. In addition, and as set forth in greater
detail in Article 4, the Executive agrees to be subject to
covenants regarding non-competition and non-solicitation,
confidentiality, untrue statements, intellectual property and
nondisparagement. The Executive agrees that all of his
activities as an employee of the Company shall be in material
compliance with all policies, rules and regulations of the
Company and whichever Company entity(ies) serve(s) as his
employer. The Executive acknowledges that he has reviewed and
acknowledged in writing the requisite company employee handbook(s),
the terms of which are incorporated by reference in this Agreement,
and Montpelier Holdings’ Code of Conduct and Ethics, as each
may be amended from time to time.
(c)
The Executive shall work in various locations, including but not
limited to MUI’s main office in Hartford, Connecticut, the
Executive’s home in Auburn, New York and such other offices
of the Company in the United States as may be established from time
to time. The Executive shall make himself available to attend
meetings and participate in conference calls at various other
locations and at such times as may be reasonably
required.
ARTICLE 2
TERM
Section 2.01 .
Term. The term of the Executive’s employment
pursuant to this Agreement (the “ Term ”)
commenced on May 13, 2007 (the “ Commencement
Date ”) and shall continue for a period of five
(5) years from the Commencement Date.
ARTICLE 3
COMPENSATION, BENEFITS AND EXPENSES
Section 3.01 . Salary
and Benefits. As compensation and consideration for the
performance by the Executive of his obligations under this
Agreement, the Executive shall be entitled to the following during
the Term (subject, in each case, to the provisions of
Article 5).
(a)
The Company shall pay the Executive a base salary during the Term
at the rate of US$425,000 per year, payable monthly in arrears or
as outlined in applicable payroll processes once they have been
established.
(b)
Beginning with the 2007 year, the Executive shall be entitled to
participate in the MUI Annual Bonus Plan, based upon the
performance of MUI. The Executive shall be eligible to
receive an annual bonus in an amount of 30% of the MUI pool, based
upon his personal performance; provided that, in respect of
each of the 2007 and 2008 years, the Executive shall be eligible
for a guaranteed minimum bonus equal to 20% of his base salary. At
the discretion of the board and shareholders of MUI and subject to
authorization by the board of Montpelier Holdings, such bonus may
be paid in all cash or part cash and part stock, subject to vesting
requirements. The Executive shall be paid his bonus at the
same time annual bonuses are generally paid to other executives of
MUI and, in any event, no later than March 15 of the year
immediately following the year in respect of which the bonus is
being paid; provided that the Executive is actively employed
within the Company on the date that annual bonuses are paid and has
not given or received any notice of termination of
employment.
(c)
The Executive shall be entitled to welfare and retirement benefits
(excluding his vacation and sick leave entitlement) in an amount of
up to
2
US$100,000. This entitlement shall be
comprised of a package of life insurance policies, long-term care
benefits covering the Executive and his spouse and disability
policies, as well as company contributions to a deferred income
fund and a defined contribution plan. The Executive and the
Company anticipate that the annual cost for some of these benefits
( e.g. , long-term care benefits, disability policies and,
to the extent the Executive is able to participate in one, a
401(k) plan) shall increase over time, thereby reducing the
annual cost of other benefits ( e.g ., company contributions
to a deferred income fund) borne by the Company.
(d) In
addition to ten (10) paid public U.S. holidays, the
Executive’s vacation entitlement shall be thirty (30) working
days per calendar year (prorated according to the Commencement
Date) as set out in the MUI employee handbook. The Executive
shall also be entitled to up to ten (10) sick leave days
(prorated according to the Commencement Date) as set out in the MUI
employee handbook.
Section 3.02 .
Long-Term Incentive Plan. The Executive shall be granted
a one-time award of restricted stock units (“ RSUs
”) representing the value of 100,000 common shares of
Montpelier Holdings, pursuant to Montpelier Holdings’
Long-Term Incentive Plan (“ LTIP ”), which
became effective on May 23, 2007. This award shall be
made as soon as reasonably practicable, subject to the approval of
Montpelier Holdings’ Compensation and Nominating Committee
(the “ Committee ”), and shall vest pro
rata over five (5) years, beginning with the first
anniversary of the Commencement Date. The shares underlying the
RSUs shall not be transferable until the fifth anniversary of the
Commencement Date. In the event the one-time award of RSUs is
not made to the Executive on a timely basis, the Executive shall
receive, in lieu of such RSUs, on each anniversary of the
Commencement Date for a five (5) year period beginning on the
Commencement Date, an amount in cash equal to one-fifth of the
value of the common shares underlying such RSUs, measured as of the
Commencement Date; provided that the Executive is actively
employed within the Company on the date of such cash payment and
has not given or received any notice of termination of
employment. Beginning with the 2008 year, subject to
satisfactory performance and the approval of the Committee, the
Executive shall be eligible for participation in the LTIP at a
level and with terms and conditions that are commensurate with
those generally of other executives of the Company.
Section 3.03 .
Expenses. The Company shall reimburse the Executive for
all reasonable travel, hotel and other out-of-pocket expenses which
are properly incurred by the Executive in or about the performance
of his duties hereunder and for which receipts (if so required) are
provided to the Company’s reasonable satisfaction.
3
ARTICLE 4
COVENANTS
Section 4.01 .
Non-competition; Non-solicitation. Since the Executive
has obtained in the course of his employment on and after the
Commencement Date and is likely to obtain in the course of his
employment hereunder knowledge of the trade secrets and also other
confidential information in regard to the business of the Company
and of any of the entities within the Company with which he becomes
associated, the Executive hereby agrees with the Company that he
shall not in Bermuda, the United States of America, the United
Kingdom or the European Union:
(a)
During the Executive’s employment within the Company and the
period of twelve (12) months following the termination of his
employment for any reason other than as a result of his death (the
“ Relevant Period ”), either on his own account
or for any other person, firm or entity, directly or indirectly be
engaged in or concerned with any business or undertaking which is
engaged in or carries on in Bermuda, the United States of America,
the United Kingdom or the European Union any insurance business
which competes or seeks to compete with the business carried on by
the Company at the date of termination.
(b)
During the Executive’s employment within the Company and the
Relevant Period, either on his own account or for any other person,
firm or company, directly or indirectly solicit, interfere with or
endeavour to entice away from the Company the business of any
person, firm or entity that was a customer or client in the habit
of dealing with the Company or that was to the Executive’s
knowledge negotiating with the Company in relation to all or part
of its business.
(c)
During the Executive’s employment within the Company and the
Relevant Period, either on his own account or for any other person,
firm or entity, solicit the services of or recruit, hire or employ
or endeavour to entice away from the Company any director, employee
or other personnel of the Company (whether or not such person would
commit any breach of his or her agreement of employment or other
service by reason of leaving the service of the Company), nor shall
the Executive knowingly employ or aid or assist in or procure the
employment by any other person, firm or entity of any such
person.
Section 4.02 .
Confidentiality. (a) The Executive shall not either
during the continuance of his employment hereunder (otherwise than
in the proper performance of his duties hereunder) or at any time
after the termination thereof divulge to any person whomsoever and
shall use his reasonable endeavours to prevent the publication or
disclosure of any trade secret or other confidential information
concerning the business, finances, accounts, dealings, transactions
or affairs of the Company or of any of its clients entrusted to him
or arising or coming to his knowledge du
