Employment Agreement between
Gartner, Inc. and Eugene A. Hall
Dated February 15, 2007
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This Employment
Agreement (the “ Agreement ”) is entered into on
February 15, 2007, effective as of January 1, 2007 (the
“Effective Date”), by and between Eugene A. Hall, an
individual (“ Executive ”) and Gartner, Inc., a
Delaware corporation (the “ Company
”).
1.
Employment . Executive will serve as Chief Executive Officer
of the Company for the Employment Term specified in
Section 3 below. Executive will report solely to the
Board of Directors (the “ Board ”) and will
render such services consistent with the foregoing role as the
Board may from time to time direct. Executive’s office will
be located at the executive offices of the Company in Stamford,
Connecticut. Executive may (i) serve on corporate, civic or
charitable boards or committees and (ii) deliver lectures,
fulfill speaking engagements or teach at educational institutions,
to the extent that such activities are (x) consistent with the
Company’s policies (as applicable) or (y) disclosed to
the Board and the Board determines in good faith that such
activities do not interfere with the performance of
Executive’s responsibilities hereunder.
2. Board
of Directors . The Executive is currently a member of the
Board, and during the Employment Term, the Company will, in good
faith, include Executive on the Company’s slate of nominees
to be elected to the Board at appropriate meetings of stockholders
of the Company. Upon termination of the Employment Term for any
reason, Executive will promptly resign as a director of the Company
if the Board so requests.
3.
Term . The employment of Executive pursuant to this
Agreement will continue through December 31, 2011 (the “
Employment Term ”), unless extended or earlier
terminated as provided in this Agreement. The Employment Term
automatically will be extended for additional one-year periods
commencing on January 1, 2012 and continuing each year
thereafter, unless either Executive or the Company gives the other
written notice, in accordance with Section 14(a) and at
least sixty (60) days prior to the then scheduled expiration
of the Employment Term, of such party’s intention not to
extend the Employment Term. Upon termination of the Employment Term
for any reason, Executive will promptly resign from all positions
he holds with the Company if the Board so requests.
4.
Salary . As compensation for the services rendered by
Executive under this Agreement, the Company will pay to Executive
an annual base salary (“ Base Salary ”)
initially equal to $702,975, payable to Executive on a semi-monthly
basis in accordance with the Company’s payroll practices as
in effect from time to time during the Employment Term. The Base
Salary will be subject to adjustment by the Board or the
Compensation Committee of the Board (the “ Committee
”), in the sole discretion of the Board or such Committee, on
an annual basis; provided, however, that Executive’s Base
Salary may not be decreased other than pursuant to a reduction
consistent with a general reduction of pay across the executive
staff as a group, as an economic or strategic measure due to poor
financial performance by the Company.
5.
Bonus . In addition to Base Salary, Executive will be
entitled to participate in the Company’s executive bonus
program. Executive’s annual target bonus (the “
Target Bonus ”) will be 100% of Base Salary, and will
be payable based on achievement of specified Company and individual
objectives. The actual bonus paid may be higher or lower than the
Target Bonus for over-or under-achievement of Company and
individual objectives, as determined by the Committee; provided,
however, that the maximum actual bonus will not exceed 200% of Base
Salary. Bonus amounts will be subject to annual adjustment by the
Board or the Committee, in the sole discretion of the Board or the
Committee; provided, however, that Executive’s Target Bonus
may not be decreased without Executive’s consent
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other than
pursuant to a reduction consistent with a general reduction of pay
across the executive staff as a group, as an economic or strategic
measure due to poor financial performance of the Company. Except as
provided in Section 7 , to receive a bonus, Executive
must be an employee at the time bonuses are paid to
executives.
(a)
Equity Grants . On February 15, 2007, and on the first
market trading day of the first open trading window for Company
executives under the Company’s insider trading policy on or
after January 1 each year thereafter during the Employment Term,
Executive will be granted equity-based incentive awards settled in
Common Stock of the Company (collectively, the “ Incentive
Awards ”). The Incentive Awards granted in 2007 will have
an aggregate value of $5,594,050 on the date of grant, as
determined by (a) using the Black-Scholes-Merton valuation
method for stock appreciation rights and the fair market value of
the Company’s Common Stock for restricted stock units, or
such other valuation method as the Committee may use to value
equity-based incentive awards, and (b) assuming that the
number of the restricted stock units initially granted in 2007 will
not be adjusted during such year, as discussed in clause
(i) below. The Incentive Awards granted in 2008 and later
years will have an aggregate value on the date of grant (using the
methods described in the preceding sentence) that is no less than
the result of $7,000,000 minus the sum of the Base Salary and
Target Bonus for the year of grant. Executive’s entitlement
to be granted the Incentive Awards for any given year under this
Agreement shall accrue as of January 1 of such year. Except as
otherwise provided herein, the Incentive Awards will be granted on
terms consistent with the Company’s 2003 Long Term Incentive
Plan (the “ Plan ”). Each year’s Incentive
Awards will be divided among:
(i)
Restricted Stock Units . Each year during the Employment
Term, all or a portion of the aggregate value of the Incentive
Awards may, as determined by the Committee, be in the form of
restricted stock units, with a par value purchase price. During
each year of the Employment Term, the number of restricted stock
units initially granted to Executive will be based upon an
assumption that specified Company objectives will be achieved
during such year. The restricted stock units granted to Executive
each year may be adjusted so as to be higher or lower than the
number of restricted stock units initially granted in such year by
reason of over-or under-achievement during such year of such
specified Company objectives, as determined by the Committee. Upon
the vesting of a restricted stock unit, and in the sole discretion
of the Company, the Company may pay earned restricted stock units
in cash, shares of Common Stock of the Company, or in a combination
thereof. Except as otherwise set forth in this Agreement, if
Executive’s employment with the Company terminates for any
reason, any portion of the restricted stock units still subject to
restrictions will be forfeited to the Company.
(ii)
Stock Appreciation Rights . Each year during the Employment
Term, all or a portion of the value of the Incentive Awards may, as
determined by the Committee, be in the form of stock appreciation
rights, which upon exercise will be settled in shares of Common
Stock of the Company. Executive will have the right to exercise
such stock appreciation right upon its vesting, and will receive
the excess, if any, of the value of a share of Common Stock of the
Company on the date of exercise over the value of such share on the
date of grant.
The 2007 Incentive
Awards will be divided such that 70% of the aggregate fair value of
the Incentive Awards will be in the form of restricted stock units
(the number of which will be subject to increase or decrease based
upon the over-or under-achievement of specified Company objectives,
as discussed in clause (i) above), and 30% of the Incentive
Awards will be in the form of stock appreciation rights. The 2007
Incentive Awards will be scheduled to vest in equal annual
installments on the first four (4) annual anniversaries of the
date of grant, and all other Incentive Awards granted pursuant to
this Agreement will be scheduled to vest in four equal installments
on January 1 of each year following the
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date of grant,
subject in each case to Executive’s continued employment with
the Company through the applicable date, except as provided in
Section 7. Notwithstanding the preceding sentence, if a Change
in Control occurs prior to the termination of Executive’s
employment and prior to the expiration of the Incentive Awards,
then the Incentive Awards will vest in full and, with respect to
stock appreciation rights, be exercisable as to all of the covered
shares, including shares as to which the stock appreciation rights
would not otherwise be exercisable, and subsequently will expire in
accordance with their terms.
(b)
Other Employee and Executive Benefits . Executive will be
entitled to receive all benefits provided to senior executives,
executives and employees of the Company generally from time to
time, including medical, dental, life insurance and long-term
disability, and the executive split-dollar life insurance,
executive disability plan, and all other benefits under the
Company’s Executive Benefits program, in each case so long as
and to the extent the same exist; provided, that with respect to
each such plan Executive is otherwise eligible and insurable in
accordance with the terms of such plans. Notwithstanding the
preceding sentence, Executive’s right to receive severance
payments and benefits will be only as provided in
Section 7 hereof. Furthermore, the Company will provide
Executive with an automobile and driver for Executive’s
ground transportation needs during the Employment Term.
(c)
Vacation, Sick Leave, Holidays and Sabbatical . Executive
will be entitled to paid time off (“ PTO ”),
sick leave, holidays and sabbatical in accordance with the policies
of the Company as they exist from time to time. Executive
understands that under the current policy he is entitled to
thirty-five (35) PTO days per calendar year. PTO not used
during any calendar year will roll over to the following year only
to the extent provided under the Company’s PTO policies as
they exist from time to time.
(a)
At Will Employment . Executive’s employment will be
“at will.” Either the Company or Executive may
terminate this agreement and Executive’s employment at any
time, with or without Business Reasons, in its or his sole
discretion, upon sixty (60) days’ prior written notice
of termination.
(b)
Involuntary Termination . If at any time during the term of
this Agreement (other than following a Change in Control to which
Section 7(c) applies) the Company terminates the
employment of Executive involuntarily and without Business Reasons
or a Constructive Termination occurs, or if the Company elects not
to renew this Agreement upon the expiration of the Employment Term
and Executive within ninety (90) days following the expiration
of the Employment Term terminates his employment, then, subject to
Executive signing and not revoking a general release of claims
against the Company and its successors substantially in the form
attached hereto as Exhibit A , Executive will be
entitled to receive the following:
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(i) Base
Salary and PTO accrued through the Termination Date plus continued
Base Salary for a period of thirty-six (36) months following
the Termination Date. Such payments will commence on the first
regular Company pay day at least six (6) months after the
Termination Date. This first payment will be a lump sum
representing the continuation of Executive’s Base Salary for
the period commencing on the Termination Date and concluding on
such payment date. Thereafter, the remaining payments of Base
Salary will be payable in accordance with the Company’s
regular payroll schedule as in effect from time to time.
(ii) Any
accrued but un-granted Incentive Awards pursuant to
Section 6(a) above, which will be granted to Executive
on the first market trading day of the first open trading window
for Company executives under the Company’s insider trading
policy following the Termination Date.
(iii) 300%
of Executive’s Target Bonus for the fiscal year in which the
Termination Date occurs, which will be payable in a lump sum as
soon as practicable following the six (6) month period
commencing on the Termination Date, plus any earned but unpaid
bonus from the prior fiscal year, which will be paid at the same
time as bonuses for such fiscal year are paid to the other Company
executives. !
(iv) Thirty-six
(36) months’ continued vesting under all Incentive
Awards and any other outstanding stock options and other equity
arrangements subject to vesting and held by Executive other than
any award that vests pursuant to performance-based criteria (and in
this regard, all such stock appreciation rights and other
exercisable rights held by Executive will remain exercisable for
thirty (30) days following the last day of the thirty-six
(36) month continued vesting period, subject to the maximum
term of the award).
(v) reimbursement
for premiums incurred to continue group health benefits (or, at the
Company’s election, to obtain substantially similar health
benefits through a third party carrier) for thirty-six
(36) months for Executive, his spouse and any children,
provided the Executive makes the appropriate health continuation
election pursuant to the Consolidated Omnibus Budget Reconciliation
Act of 1985 (“COBRA”). The Company will make payments
under this clause (v) for the first six (6) months of
health coverage in a lump sum payable as soon as practicable
following the six (6) month period commencing on the
Termination Date, and thereafter, the payments will be made on a
monthly basis.
(vi) no
other compensation, severance or other benefits, except only that
this provision will not limit any benefits otherwise available to
Executive under Section 7(c)(ii) in the case of a
Change in Control. Notwithstanding the foregoing, if Executive
violates in a material respect the provisions set forth in
Section 12 , Executive no longer will be entitled to
receive any severance payments and benefits and Executive’s
outstanding Incentive Awards and other stock options and equity
arrangements will expire immediately.
(i)
Benefits . If during the term of this Agreement a
“Change in Control” occurs, then Executive will be
entitled to receive the following: (A) Base Salary and PTO
accrued though the date of the Change in Control plus an amount
equal to three (3) years of Executive’s Base Salary as
then in effect, payable immediately upon the Change in Control,
(B) an amount equal to three (3) times Executive’s
Target Bonus for the fiscal year in which the Change in Control
occurs (as well as any earned but unpaid bonus from the prior
fiscal year, such bonus not to be multiplied by three (3)), all
payable immediately upon the Change in Control, and (C)
(a) for at least three (3) years following the date of
the Change in Control (even if Executive ceases employment),
continuation of group health benefits at the Company’s cost
pursuant to the Company’s standard programs as in effect from
time to time (or at the
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Company’s
election substantially similar health benefits as in effect at the
Termination Date (if applicable), through a third party carrier)
for Executive, his spouse and any children, and (b) thereafter, to
the extent COBRA will be applicable, continuation of health
benefits for such persons at Executive’s cost, for a period
of eighteen (18) months or such longer period as may be
applicable under the Company’s policies then in effect,
provided the Executive makes the appropriate COBRA election and
payments, and (D) no other compensation, severance or other
benefits. Anything to the contrary herein notwithstanding, in the
event of a Change in Control, the Executive’s Incentive
Awards will automatically vest as provided in
Section 6(a) . Additionally, any Incentive Awards
accrued but un-granted pursuant to Section 6(a) will be
granted to Executive prior to the Change in Control.
(ii)
Additional Payments by the Company .
(A)
If any payment or benefit Executive would receive pursuant to
Section 7(c)(i) or otherwise (collectively, the “
Payment ”) would (x) constitute a
“parachute payment” within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended
(the “ Code ”), and (y) be subject to the
excise tax imposed by Section 4999 of the Code or any interest
or penalties payable with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter
collectively referred to as the “ Excise Tax ”),
then Executive will be entitled to receive from the Company an
additional payment (the “ Gross-Up Payment ,”
and any iterative payments pursuant to this paragraph also will be
“ Gross-Up Payments ”) in an amount that will
fund the payment by Executive of any Excise Tax on the Payment, as
well as all income and employment taxes on the Gross-Up Payment,
any Excise Tax imposed on the Gross-Up Payment and any interest or
penalties imposed with respect to income and employment taxes
imposed on the Gross-Up Payment.
(B)
Subject to the provisions of clause F below, all determinations
required to be made under this Section 7(c)(ii) ,
including whether an Excise Tax is payable by Executive and the
amount of such Excise Tax and whether a Gross-Up Payment is
required and the amount of such Gross-Up Payment, will be made by
the Company’s independent accountants prior to the Change in
Control (the “ Accounting Firm ”). The Company
will direct the Accounting Firm to submit its determination and
detailed supporting calculations to both the Company and Executive
within fifteen (15) calendar days after the date of the Change
in Control or the date of Executive’s termination of
employment, if applicable, and any other such time or times as may
be requested by the Company or Executive. If the Accounting Firm
determines that any Excise Tax is payable by Executive, the Company
will pay the required Gross-Up Payment to Executive within five
(5) business days after receipt of such determination and
calculations. If the Accounting Firm determines that no Excise Tax
is payable by Executive, it will, at the same time as it makes such
determination, furnish Executive with an opinion that he has
substantial authority not to report any Excise Tax on his federal,
state, local income or other tax return. Any determination by the
Accounting Firm as to the amount of the Gross-Up Payment will be
binding upon the Company and Executive. As a result of the
uncertainty in the application of Section 4999 of the Code (or
any successor provision thereto) and the possibility of similar
uncertainty regarding applicable state or local tax law at the time
of any determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by
the Company should have been made (an “ Underpayment
”), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts or fails to
pursue its remedies pursuant to clause F below and Executive
thereafter is required to make a payment of any Excise Tax, the
Company or Executive may direct the Accounting Firm to determine
the amount of the Underpayment that has occurred and to submit its
determination and detailed supporting calculations to both the
Company and Executive as promptly as possible. Any such
Underpayment will be promptly paid by the Company to Executive
within twenty (20) days after receipt of such determination
and calculations.
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(C)
The Company and Executive will each provide the Accounting Firm
access to and copies of any books, records and documents in the
possession of the Company or Executive, as the case may be,
reasonably requested by the Accounting Firm, and otherwise
cooperate with the Accounting Firm in connection with the
preparation and issuance of the determination contemplated by
clause B above.
(D)
The federal, state and local income or other tax returns filed by
Executive will be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax
payable by Executive. Executive will make proper payment of the
amount of any Excise Tax, and at the request of the Company,
provide to the Company true and correct copies (with any
amendments) of his federal income tax return as filed with the
Internal Revenue Service and corresponding state and local tax
returns, if relevant, as filed with the applicable taxing
authority, and such other documents reasonably requested by the
Company, evidencing such payment. If prior to the filing of
Executive’s federal income tax return, or corresponding state
or local tax return, if relevant, the Accounting Firm determines
that the amount of the Gross-Up Payment should be reduced,
Executive will within twenty (20) days thereafter pay to the
Company the amount of such reduction.
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