EXECUTION COPY
EXHIBIT 10.1
[LETTERHEAD OF MERRILL LYNCH]
November 14,
2007
John A.
Thain
c/o
Dechert LLP
30 Rockefeller Plaza
New York, NY 10112
Dear
John:
The purpose of this letter agreement (this
“Agreement”) is to set forth the terms and conditions
of our offer to you of employment with Merrill Lynch & Co.,
Inc. (the “Company”). This Agreement and our offer of
employment shall expire if you do not commence employment with the
Company on or before December 7, 2007.
1.
Start Date. You have informed us that you expect your first
day of employment with the Company to be December 1, 2007, but
in no event shall such first day be later than December 7,
2007 (such first day, the “Start Date”).
2.
Term. The term of your employment with the Company shall
commence on the Start Date and continue until terminated by you or
the Company (the term of your employment, the “Term”).
You agree that, subject to the terms of this Agreement and any
other agreement you may enter into with the Company, your
employment may be terminated by you or the Company at any time, for
any reason and without notice.
3.
Position. On the Start Date, you shall be appointed, and you
agree to serve as, (i) a member of the Board of Directors of
the Company (the “Board”) and the Chairman of the Board
and (ii) the Chief Executive Officer of the Company. During
the Term, you agree to devote substantially all your business time,
attention and skill to the performance of your duties to the
Company, subject to reasonable allowances for illness and vacation.
In addition, you shall be permitted to engage in civic, charitable
and trade association activities, as well as family and personal
business and investment activities, in each case, to the extent
such activities do not interfere, and are consistent, with your
duties and obligations to the Company.
4.
Make-Whole Payments. To compensate you for your forfeiture
of earned, but not yet vested, amounts from your current employer
(the “Current Employer”), the Company shall pay or
grant to you the following:
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With respect to the unvested Current Employer stock options
forfeited by you as a result of your commencing employment
with |
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the Company (the “Forfeited Options”), you shall be
granted Company stock options (the “Replacement
Options”) on the Start Date having (i) a strike price
per share of Company common stock equal to the mean of the high and
low sales prices per Company common share on the trading day
immediately preceding the Start Date (the “Start Date
Price”), (ii) the same vesting schedule and expiration
date as the applicable Forfeited Options and (iii) a number of
underlying Company common shares determined so that, as of the
Start Date, the Black-Scholes value of the Replacement Options is
equal to the Black-Scholes value of the Forfeited Options. In the
event the Company terminates your employment without cause (as
defined below), the Replacement Options shall become fully vested
and exercisable. Except as described above, the Replacement Options
shall be subject to the terms and conditions set forth in the
Company’s form of stock option award agreement for executives
previously provided to you, including with respect to vesting and
exercisability after termination of employment (including upon
death, disability and retirement) and upon a change in control. The
Company’s obligation to deliver the Replacement Options to
you is conditioned on your providing the Company with reasonably
satisfactory evidence of the Forfeited Options and your forfeiture
thereof. |
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With respect to the unvested Current Employer restricted stock
units forfeited by you as a result of your commencing employment
with the Company (the “Forfeited RSUs”), you shall be
granted Company restricted stock units (the “Replacement
RSUs”) on the Start Date having (i) a number of
underlying Company common shares determined so that, as of the
trading day immediately preceding the date hereof, the aggregate
value of the Company common shares underlying the Replacement RSUs
is equal to the aggregate value of the Current Employer common
shares underlying the Forfeited RSUs (in each case, based on the
mean of the high and low sales prices per share of Company and
Current Employer common stock on their respective trading days
immediately preceding the date hereof) and (ii) the same
vesting schedule as the applicable Forfeited RSUs. In the event the
Company terminates your employment without cause, the Replacement
RSUs shall become fully vested. Except as described above, the
Replacement RSUs shall be subject to the terms and conditions set
forth in the Company’s form of restricted stock unit award
agreement for executives previously provided to you, including with
respect to vesting after termination of employment (including upon
death, disability and retirement) and upon a change in control. The
Company’s obligation to deliver the Replacement RSUs to you
is conditioned on your providing the |
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Company with reasonably satisfactory evidence of the Forfeited
RSUs and your forfeiture thereof. The Replacement Options and
Replacement RSUs shall be granted under, and subject to the terms
and conditions of, the Company’s Long-Term Incentive
Compensation Plan for executives, as amended April 27, 2001
(the “Company Stock Plan”), except as described
above. |
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With respect to your forfeited annual bonus from the Current
Employer for 2007, you shall be paid a lump sum cash amount of
$15,000,000, which shall be paid on or as soon as practicable after
the Start Date, but in no event later than December 15,
2007. |
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For purposes of this Agreement, the Replacement Options, the
Replacement RSUs, the Sign-on Options and the Sign-on RSUs,
“Cause” shall mean the occurrence of any of
(i) your engagement in (A) willful misconduct resulting
in material harm to the Company or (B) gross negligence,
(ii) your conviction of, or pleading nolo contendere to, a
felony or any other crime involving fraud, financial misconduct or
misappropriation of Company assets, or (iii) your willful and
continual failure, after written notice from the Board, to
(A) perform substantially your employment duties consistent
with your position and authority or (B) follow, consistent
with your position, duties and authorities, the lawful mandates of
the Board. |
5.
Sign-on Equity Awards. In consideration of your accepting
employment with the Company, the Company shall grant to you on the
Start Date (i) options to acquire 1,800,000 shares of Company
common stock (the “Sign-on Options”) and
(ii) 500,000 restricted stock units in respect of Company
common stock (the “Sign-on RSUs”), which, in each case,
shall be granted under, and subject to the terms and conditions of,
the Company Stock Plan, except as described below.
The Sign-on Options shall have a strike price per
Company common share equal to the Start Date Price and shall expire
on the date that is the tenth anniversary of the Start Date, unless
earlier exercised or forfeited. The Sign-on Options shall become
vested and exercisable, subject to your continued employment with
the Company, at the following times: (i) one-third of the
Sign-on Options (“Tranche 1”) shall vest and become
exercisable in two equal annual installments on the first two
anniversaries of the Start Date, (ii) one-third of the Sign-on
Options (“Tranche 2”) shall vest and become exercisable
if the average of the Company’s closing common stock prices
over any period of 15 consecutive trading days is at least equal to
the sum of the Start Date Price plus $20 (the “First Price
Target”) and (iii) one-third of the Sign-on Options
(“Tranche 3”) shall vest and become exercisable if the
average of the Company’s closing common stock prices over any
period of 15 consecutive trading days is at least equal to the sum
of the Start Date Price plus $40 (the “Second Price
Target”). Notwithstanding the foregoing, the Sign-on Options
shall not be exercisable, whether or not vested, prior to the
second anniversary of the Start Date, except that such restriction
shall
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not
apply in the event your employment is terminated by the Company
without Cause or your employment terminates because of your death
or disability.
The Sign-on RSUs shall vest, subject to your
continued employment with the Company, in five equal annual
installments on the first five anniversaries of the Start Date. The
Sign-on RSUs shall include the right to receive currently (without
deferral or vesting limitations) in cash the amount of any
dividends paid on the underlying Company common shares.
In addition, in the event of a Change in Control
(as defined in the Company Stock Plan), (i) (A) 100% of the
Tranche 1 Sign-on Options shall automatically vest and become
exercisable, (B) 100% of the Tranche 2 Sign-on Options shall
vest and become exercisable if the price per share of Company
common stock paid in the Change in Control is equal to or greater
than the First Price Target and (C) 100% of the Tranche 3
Sign-on Options shall vest and become exercisable if the price per
share of Company common stock paid in the Change in Control is
equal to or greater than the Second Price Target and (ii)
(A) two-thirds of the then unvested Sign-on RSUs shall
automatically vest, (B) one-sixth of the then unvested Sign-on
RSUs shall vest if the price per share of Company common stock paid
in the Change in Control is equal to or greater than the First
Price Target and (C) one-sixth of the then unvested Sign-on
RSUs shall vest if the pr
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