Exhibit 10.41
Employment
Agreement
This Employment
Agreement (this “Agreement”) is entered into as of the
9 th day of October 2007 (the
“Effective Date”) by and between Saks Incorporated (the
“Company”) and Michael Rodgers (the
“Executive”).
WHEREAS, the Company and the
Executive desire that the Company commence or continue the
employment of the Executive as Executive Vice President, IT,
Operations and Credit pursuant to the terms of this
Agreement;
NOW, THEREFORE, in consideration of
the premises and the mutual agreements contained herein, the
Company and the Executive hereby agree as follows:
1. Employment; Term . The
Company shall continue to employ the Executive, and during the
Executive’s employment the Executive shall continue to serve,
as Executive Vice President, IT, Operations and Credit. The
Executive shall report to the Company’s Chief Executive
Officer and the Executive’s place of business shall be
located in Jackson, Mississippi. The term of this Agreement shall
commence on the Effective Date and shall continue until the fifth
anniversary of the Effective Date (the “Initial Term
Date”), provided that the term of this Agreement shall
automatically be extended for an additional year on each
anniversary thereafter unless the Board of Directors of the Company
(the “Board”) notifies the Executive of its intention
to amend or terminate the Agreement. If the Board decides to amend
or terminate the Agreement, it must notify the Executive within the
(30) days prior to the applicable anniversary of the Effective
Date, provided that the Board may not notify the Executive of any
amendment or termination of the Agreement earlier than the thirty
(30) days prior to the fourth anniversary of the Effective
Date or amend or terminate the Agreement prior to the Initial Term
Date. If the Board notifies the Executive of an amendment adverse
to the Executive or terminates the Agreement, any such adverse
amendment or termination shall be effective no earlier than the
second anniversary (i.e., 2 years) following such notification. The
Executive shall have thirty (30) days following any such
notification of an adverse amendment to accept such amendment or
terminate the Agreement, provided that the date of termination
shall be mutually agreed to by the Company and the Executive and
shall be no later than 120 days from the date on which the
Executive provides notice to the Company. Notwithstanding the
foregoing, this Agreement may be terminated prior to or after the
Initial Term Date pursuant to Section 4, 5, 6, 7, 8 or 9 of
this Agreement. The date on which employment is terminated pursuant
to the terms of this Agreement shall be the “Employment
Termination Date.” On the Effective Date, all prior
agreements and arrangements shall terminate and shall be of no
further force or effect.
2. Duties . During his
employment, the Executive shall devote substantially all of his
working time, energies and skills to the benefit of the
Company’s business. The Executive shall serve the Company
diligently and to the best of his ability and use his best efforts
to follow the policies and directions of the Company’s Chief
Executive Officer and of the Board. The Executive may engage in
charitable, civic or community activities, manage his personal
investments and, with prior approval of the Board of Directors of
the Company (the “Board”), may serve as a director of
any other business corporation, provided that such activities or
service do not materially interfere with the Executive’s
duties hereunder or violate the terms of any of the covenants
contained in Section 12 hereof.
3. Compensation . During his
employment, the Executive’s compensation and benefits under
this Agreement shall be as follows:
(a) Base Salary . The Company
shall pay to the Executive a base salary at a rate of not less than
$380,000.00 per year (such base salary at that rate or any higher
rate from time to time in effect, “Base Salary”). Base
Salary shall be paid in installments in accordance with the
Company’s normal payment schedule for its senior executives
but not less frequently than monthly. The level of Base Salary
shall be reviewed at such times as the levels of the salaries of
other senior executives are reviewed.
(b) Bonus . The Executive
shall be eligible for an annual cash bonus. The bonus for plan
achievement at the threshold level shall be not less than 25% of
Base Salary, the bonus for plan achievement at the target level
shall be not less than 50% of Base Salary and the bonus for plan
achievement at the maximum level shall be not less than 71.88% of
Base Salary or such higher maximum as may be provided by the
Company’s bonus program, in all circumstances in accordance
with, and subject to, the terms and conditions of the
Company’s bonus program in effect from time to
time.
(c) Long-Term Equity
Incentive . The Executive shall be eligible for a long-term
equity incentive award, to be granted annually, with specified
values for achievement at the threshold, target and maximum
levels.
(d) Benefits . During the
Executive’s employment the Company shall (i) reimburse
the Executive for his costs incurred for annual financial and tax
planning services and for annual personal income tax preparation
services, in an amount not to exceed $9,999 annually, (ii) pay
the costs for annual physical examinations at a medical facility
selected by the Company, (iii) reimburse the Executive for all
reasonable travel and entertainment expenses incurred in accordance
with the Company’s policies in effect from time to time with
respect to its senior executives, and (iv) make available to
the Executive each employee benefit applicable to senior
executives. The amount of any expenses eligible for reimbursement
during any taxable year of the Executive shall have no effect upon
the amount of expenses eligible for reimbursement in any other
taxable year of the Executive, and each such expense reimbursement
shall be made on or before the last day of the taxable year of the
Executive following the taxable year of the Executive in which such
expense was incurred.
(e) Withholding Taxes . The
Company shall deduct from the amounts payable to the Executive
pursuant to this Agreement the amount of all required federal,
state and local withholding taxes in accordance with the
Executive’s Form W-4 on file with the Company, and all
applicable federal employment taxes.
4. Termination without Cause or
for Good Reason . The Company may terminate the
Executive’s employment at any time without
“Cause” and the Executive may terminate his employment
at any time for “Good Reason” (as such terms are
defined in Section 4(c) hereof), in the case of termination
without Cause, upon 14 days prior written notice given by the
Company
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to the Executive, and in the case of termination
for Good Reason, upon 30 days prior written notice given by the
Executive to the Company within 90 days following the first day on
which the Executive is aware of the action giving rise to Good
Reason, subject to the Company’s right to remedy the action
giving rise to Good Reason during such 30-day period. The notice
given by the Executive shall specify in detail the reasons for the
termination of employment. Upon termination of the
Executive’s employment in accordance with this
Section 4, this Agreement shall terminate, except for the
obligations of the Company in this Section 4 and in Sections
10, 11, 13(f) and 13(h) hereof, and except for the obligations of
the Executive in Sections 11, 12 and 13(h) hereof, each of which
will continue in effect in accordance with its terms.
(a) Prior to a Change in
Control . If the Executive’s employment is terminated
prior to a “Change in Control” (as such term is defined
in Section 4(c) hereof), either by the Company without Cause
or by the Executive for Good Reason, the Company shall make the
payments and provide the benefits to the Executive as
follows:
(i) The Company shall pay to the
Executive within 10 days following the Employment Termination
Date:
(A) the Executive’s current
base salary through the Employment Termination Date to the extent
not theretofore paid;
(B) any accrued vacation pay due the
Executive as of the Employment Termination Date to the extent not
theretofore paid; and
(C) any expense reimbursement due
the Executive as of the Employment Termination Date to the extent
not theretofore paid.
(ii) Provided that the Executive has
executed and delivered to the Company, and has not revoked, the
general release in substantially the form attached hereto as
Attachment A (the “Release”), the Company shall make
the following payments and shall provide the following benefits,
provided that if the Executive directly or indirectly engages in
conduct that constitutes an Association (as defined in
Section 12(b)(iv)(D) hereof), the Company’s obligation
to make the following payments and to provide the following
benefits shall immediately terminate:
(A) an amount equal to the sum of
two times the Executive’s Base Salary and one times the
Executive’s target bonus potential amount of 50% of Base
Salary for the fiscal year during which the termination of
employment occurs, which amount shall, except as otherwise provided
in Section 10 hereof, be paid to the Executive by the Company
in 24 equal monthly installments commencing with the month
following the month in which the Employment Termination Date
occurs;
(B) the amount of any annual cash
bonus earned by the Executive and payable, but not yet paid, for
the fiscal year prior to the fiscal year in which the Employment
Termination Date occurs, with the entire amount of such bonus being
determined in accordance with the applicable formula or the
achievement of the corporate objectives applicable to the Executive
and his direct reports, which bonus shall be paid to the Executive
by the Company at the time that bonuses for such fiscal year are
paid to the other senior executives of the Company;
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(C) if the Employment Termination
Date occurs during the second six months of the Company’s
fiscal year, the amount of any annual cash bonus earned by the
Executive for the fiscal year in which the Employment Termination
Date occurs, determined following the end of such fiscal year, with
the entire amount of such bonus being determined in accordance with
the applicable formula or the achievement of the corporate
objectives applicable to the Executive and his direct reports,
which bonus amount shall be (1) multiplied by a fraction the
numerator of which is the number of days that have elapsed during
the fiscal year in which the Employment Termination Date occurs to
and including the Employment Termination Date and the denominator
of which is 365, and (2) paid to the Executive by the Company
at the time that bonuses for such fiscal year are paid to the other
senior executives of the Company; but if the Employment Termination
Date occurs during the first six months of the Company’s
fiscal year, no bonus amount shall be payable for such fiscal
year;
(D) the Executive’s
unexercisable stock options, unvested shares of restricted stock
and unvested performance shares shall vest as follows:
(1) performance shares that have
been fully earned but are subject to restrictions on vesting based
on time shall vest immediately;
(2) performance shares that have not
been earned and are subject to restrictions on vesting based on the
achievement of performance goals shall vest based on the
achievement of such performance goals, such achievement to be
determined following the end of the performance period, with the
number of such performance shares determined to have vested being
multiplied by a fraction, the numerator of which is the number of
days between the date of grant of such performance shares and the
Employment Termination Date and the denominator of which is the
number of days between the date of grant of such performance shares
and the date of the end of the performance period, which
performance shares shall be paid to the Executive by the Company at
the time that performance shares for such performance period are
paid to the other senior executives of the Company;
(3) unvested shares of restricted
stock and unexercisable stock options that are subject to cliff
vesting shall vest prorata, with the number of such unvested shares
of restricted stock or shares subject to such unexercisable stock
options being multiplied by a fraction, the numerator of which is
the number of days between the date of grant of such award and the
Employment Termination Date and denominator of which is the number
of days between the date of grant of such award and the date on
which shares of restricted stock or stock options are scheduled to
cliff vest;
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(4) unvested shares of restricted
stock and unexercisable stock options that vest in installments
shall vest prorata, with the number of shares in each unvested
installment being multiplied by a fraction, the numerator of which
is the number of days between the date of grant of such award and
the Employment Termination Date and the denominator of which is the
number of days between the date of grant of such award and the date
on which such installment is scheduled to vest;
(E) reimbursement of the Executive
for the amount expended by the Executive for the cost of medical
insurance coverage under COBRA for the Executive and the
Executive’s dependents during the 18-month period following
the Employment Termination Date; and
(F) for the remainder of the
Executive’s lifetime, provided that the Executive has been
employed by the Company for at least one year, the Executive shall
be entitled to the normal associate discount in effect from time to
time applicable to active associates of the Company or its
successors, provided that the benefit of such discount shall not
exceed $25,000 in any calendar year and no portion of the unused
discount for any calendar year may be carried over to any
succeeding calendar year.
(b) In Anticipation of, Upon or
Following a Change in Control . If the Executive’s
employment is terminated in anticipation of, upon or following a
Change in Control either by the Company without Cause or by the
Executive for Good Reason, the Company shall make the payments and
provide the benefits to the Executive as follows:
(i) the Company shall make the
payments to the Executive in the amounts and at the times described
in Sections 4(a)(i)(A) (B) and (C); and
(ii) provided that the Executive has
executed and delivered to the Company, and has not revoked, the
Release, the Company shall make the following payments and shall
provide the following benefits, provided that if the Executive
directly or indirectly engages in conduct that constitutes an
Association (as defined in Section 12(b)(iv)(D) of this
Agreement), the Company’s obligation to make such payments
and to provide such benefits shall immediately
terminate:
(A) not less than eight, and not
more than 10, days following the Executive’s execution and
delivery of the Release, or at such other time provided pursuant to
Section 10 hereof, a lump sum amount equal to the sum of two
times the Executive’s Base Salary and one times the
Executive’s target bonus potential amount of 50% of Base
Salary for the fiscal year during which the Employment Termination
Date occurs;
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(B) not less than eight, and not
more than 10, days following the Executive’s execution and
delivery of the Release, the amount of any annual cash bonus earned
by the Executive and payable, but not yet paid, for the fiscal year
prior to the fiscal year in which the Employment Termination Date
occurs, with the portion of the bonus that is based on corporate
objectives being paid in accordance with the applicable formula or
the achievement of the corporate objectives applicable to the
Executive and his direct reports, and the portion of the bonus that
is based on personal objectives being paid at the target level of
the achievement;
(C) not less than eight, and not
more than 10, days following the Executive’s execution and
delivery of the Release, an amount equal to the product of the
Executive’s target bonus potential amount of 50% of Base
Salary for the fiscal year during which the Employment Termination
Date occurs multiplied by a fraction the numerator of which is the
number of days that have elapsed during the fiscal year in which
the termination of employment occurs to and including the
Employment Termination Date and denominator of which is
365;
(D) the amounts and at the times
described in Sections 4(a)(ii)(E) and (F);
(E) all of the Executive’s
unexercisable stock options, unvested shares of restricted stock
and fully earned performance shares subject to restrictions on
vesting based on time and the target number of performance shares
that have not been earned and are subject to restrictions on
vesting based on performance shall immediately vest in full,
provided that all such equity awards shall vest in full upon a
Change in Control in which the shareholders of the Company receive
consideration other than publicly-traded stock; and
(c) For purposes of this
Agreement:
“Cause” shall mean and
be strictly limited to: (i) serious willful misconduct;
(ii) commission of a felony arising from specific conduct of
the Executive and having, in the reasonable judgment of the Board,
an adverse effect upon the Executive’s qualifications or
ability (personal or professional) to perform his duties hereunder;
(iii) perpetration of a fraud against the Company; or
(iv) the refusal of the Executive to testify, if requested to
do so, in any proceeding in which the testimony requested relates
in any manner to the duties of the Executive as an officer or
director of the Company.
“Change in Control”
shall have the meaning set forth in the definition of such term in
Section 18(a) of the Saks Incorporated 2004 Long-Term
Incentive Plan.
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“Good Reason” shall
mean: (i) a material diminution in the Executive’s
duties, responsibilities or authority; (ii) any other material
breach of the terms of this Agreement by the Company, it being
understood that (A) in anticipation of, upon or following a
Change in Control, any reduction in the Executive’s Base
Salary, annual bonus opportunity or severance payment upon a
termination of employment, without the substitution of an
equivalent benefit, shall constitute a material breach of the terms
of this Agreement, and (B) not in anticipation of, upon or
following a Change in Control, any reduction in the
Executive’s Base Salary, annual bonus opportunity or
severance payment upon a termination of employment, in any such
case below the level specified by this Agreement without the
substitution of an equivalent benefit, shall constitute a material
breach of the terms of this Agreement; (iii) a relocation of
the Executive’s principal place of business that increases
the Executive’s commute to his principal place of business by
more than 35 miles; (iv) the failure of the Company to obtain
the assumption agreement from any successor as contemplated in
Section 13(g) hereof, it being understood that if the
Executive terminates his employment for Good Reason as a result of
the Company’s failure to obtain such assumption agreement,
the obtaining of such assumption agreement subsequent to such
termination of employment shall have no effect upon the
Executive’s rights to receive payments and benefits upon his
termination of employment for Good Reason; (v) an amendment of
the terms of this Agreement by the Board in a manner adverse to the
Executive pursuant to Section 1; or (vi) the termination
of this Agreement by the Board other than in compliance with
Section 1. Following a Change in Control, or with respect to
an action taken by the Company in anticipation of a Change in
Control, any good faith determination of Good Reason made by the
Executive shall be conclusive, provided that any action that is
remedied by the Company within 30 days after receipt of notice of
Good Reason given by the Executive shall not constitute Good
Reason.
5. Termination Due to
Retirement . This Agreement shall terminate upon the
Executive’s retirement upon or after the date on which the
Executive attains age 65, except that (a) the Executive shall
have the right to receive the payments in the amounts and at the
times described in Sections 4(a)(i)(A), (B) and
(C) hereof and described in Section 4(b)(ii)(B) hereof;
(b) the Executive’s unexercisable stock options,
unvested shares of restricted stock and unvested performance shares
shall vest as described in Section 4(b)(ii)(E) hereof;
(c) the Executive shall have the right to receive all benefits
in accordance with Section 3(d) hereof that would be payable
upon the Executive’s retirement; and (d) the
Company’s obligations in Sections 11, 13(f) and 13(h) of this
Agreement, and the Executive’s obligations in Sections 11, 12
and 13(h) of this Agreement, shall continue in effect in accordance
with their respective terms.
6. Termination Due to Death .
This Agreement shall terminate upon the Executive’s death,
except that (a) the Executive’s estate shall have the
right to receive the payments in the amounts and at the times
described in Sections 4(a)(i)(A), (B) and (C) hereof and
described in Section 4(b)(ii)(B) hereof, but without regard to
any delay in payment provided in Section 10 hereof;
(b) the Executive’s unexercisable stock options,
unvested shares of restricted stock and unvested performance shares
shall vest as described in Section 4(b)(ii)(E) hereof; and
(c) the Executive’s estate shall have the right to
receive all benefits in accordance with Section 3(d) hereof
that would be payable upon the Executive’s death. In
addition, the Executive’s estate and dependents shall have
any rights that they may have under COBRA or any other federal or
state law or that are derived independent of this Agreement by
reason of the Executive’s participation in any employee
benefit arrangement or plan maintained by the Company.
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7. Termination Due to
Disability . If at any time prior to the termination of this
Agreement the Executive shall become disabled, this Agreement and
the Executive’s employment shall continue for a period of 12
months from the date on which the Executive becomes disabled. The
date on which Executive shall be deemed to have become disabled
shall be the date on which the Executive becomes entitled to
receive disability benefits in accordance with the Company’s
short-term disability/sick pay plan. During such 12-month period
the Executive shall continue to receive all payments and benefits
provided by this Agreement, including without limitation the
benefits described in Sections 3 and 11 of this Agreement and the
benefits that would be payable upon a termination of the
Executive’s employment as described in Sections 4, 5, 6, 8 or
9 of this Agreement, less all disability payments received pursuant
to the Company’s short-term disability/sick pay plan or its
Group Long-Term Disability Insurance Policy. If the
Executive’s disability continues after the end of such
12-month period, the Company may terminate this Agreement and the
Executive’s employment for disability (“Disability
Termination”). Disputes regarding the existence of the
Executive’s disability shall be resolved by the determination
of a physician selected by the Board who is reasonably acceptable
to the Executive. The Executive shall submit to appropriate medical
examinations for purposes of determining disability. Upon a
Disability Termination, the Executive shall be entitled to
(a) the payments in the amounts and at the times described in
Sections 4(a)(i)(A), (B) and (C) hereof and described in
Section 4(b)(ii)(B) hereof; (b) the Executive’s
unexercisable stock options, unvested shares of restricted stock
and unvested performance shares shall vest as described in
Section 4(b)(ii)(E) hereof; and (c) all other benefits in
accordance with Section 3(d) of this Agreement that would be
payable upon such Disability Termination. Upon a Disability
Termination, the Company’s obligations in Sections 11, 13(f)
and 13(h) of this Agreement, and the Executive’s obligations
in Sections 11, 12, and 13(h) of this Agreement, shall continue in
effect in accordance with their respective terms.
8. Termination by the Executive
without Good Reason . The Executive may terminate his
employment hereunder without Good Reason upon 60 days prior written
notice to the Company (or such shorter period as may be permitted
by the Board). Upon such termination, all of the obligations of the
Company hereunder shall cease, except that (a) the Executive
shall be entitled to the payments in the amounts and at the times
described in Sections 4(a)(i)(A), (B) and (C) hereof;
(b) the Executive shall be entitled to exercise unexercised
stock options, if any, in accordance with and subject to the plan
and the stock option agreement applicable to such stock options;
(c) the Executive’s unvested shares of restricted stock
and unvested performance shares shall be forfeited in accordance
with and subject to the applicable plan and the agreements
applicable to such awards; and (d) the Executive shall be
entitled to receive all of the benefits in accordance with
Section 3(d) of this Agreement that would be payable upon the
Executive’s termination of his employment without Good
Reason. Such termination of employment shall terminate the
Company’s obligations hereunder, but shall not terminate the
Executive’s obligations pursuant to Sections 12 or 13(h) of
this Agreement.
9. Termination by the Company for
Cause . The Company may at any time terminate the
Executive’s employment hereunder for Cause, effective upon
notice given to the Executive. Upon such termination, all of the
rights of the Executive hereunder shall cease,
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except as described in Sections 4(a)(i)(A) and
(C) hereof and in clauses (b) and (c) of
Section 8 hereof, as applied to a termination for Cause. Such
termination shall terminate the Company’s obligations
hereunder, but shall not terminate the Executive’s
obligations under Sections 12 or 13(h) of this
Agreement.
10. Application of IRC Code
Section 409A . Notwithstanding any other provision of this
Agreement, if on the Employment Termination Date (a) the
Company is a publicly traded corporation and (b) the Company
determines that the Executive is a “specified
employee,” as defined in Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”), then to
the extent any amount payable under this Agreement (i) is
payable as a result of the separation of the Executive’s
service, (ii) constitutes the payment of nonqualified deferred
compensation within the meaning of Section 409A of the Code
and (iii) under the terms
