Exhibit 10.2
EMPLOYMENT
AGREEMENT
THIS AGREEMENT, by and between AVON
PRODUCTS, INC., a New York corporation (“Avon” or the
“Corporation”) and BRIAN CONNOLLY (the
“Executive”), dated as of March 23,
2007.
WITNESSETH
WHEREAS, the Corporation desires to
recognize the Executive’s commitment to the Corporation and
to confirm the right of the Executive to certain employment,
compensation and severance benefits;
NOW, THEREFORE, in consideration of
the promises and mutual covenants herein contained, and other good
and valuable consideration, the Corporation, and the Executive do
hereby agree as follows:
1. Employment . The
Corporation shall employ the Executive and the Executive agrees to
serve as an executive of the Corporation, in such capacities, and
upon such conditions as are hereinafter set forth and shall serve
in such other executive capacities as may be determined by the
Corporation from time to time.
2. Term . The Executive shall
be considered an at-will employee and his employment may be
terminated by either party subject to the obligations of the
parties upon such termination as may be set forth
hereinafter.
3. Position and Duties
.
(a) Position . The Executive
shall continue to serve as Executive Vice President Global
Sales.
(b) Business Time . The
Executive agrees to devote his full business time during normal
business hours to the business and affairs of the Corporation and
to use his best efforts to perform faithfully and efficiently the
responsibilities assigned to him hereunder, to the extent necessary
to discharge such responsibilities. The Executive’s
continuing to serve on any boards and committees on which he is
serving or with which he is otherwise associated immediately
preceding the date hereof, or his service on any other boards or
committees of which the Corporation has knowledge and does not
object, in writing, within thirty (30) days after first
becoming aware of such service, shall not be deemed to interfere
with the performance of the Executive’s services to the
Corporation.
4. Compensation . The
Executive shall be entitled to the following compensation for as
long as the Executive remains an employee of the
Corporation:
(a) Base Salary . The
Executive shall receive a base salary (the “Base
Salary”) payable in bi-weekly installments of $600,000. The
Corporation shall review the Base Salary periodically and in light
of such review may increase (but not decrease) the Base Salary
taking into account any change in the Executive’s
responsibilities, increases in compensation of other executives
with comparable responsibilities, performance of the Executive and
other pertinent factors, and such adjusted Base Salary shall then
constitute “Base Salary” for purposes of this
agreement. Neither the Base Salary nor any increase in the Base
Salary after the date hereof shall serve to limit or reduce any
obligation of the Corporation hereunder.
(b) Annual Bonus . For each
fiscal year of the Corporation during which he is employed by the
Corporation, the Executive shall be eligible to receive an annual
bonus (“Annual Bonus”) under the Avon Products, Inc.
Management Incentive Plan or the Avon Products, Inc Executive
Incentive Plan (collectively the “MIP”), whichever is
applicable, or a successor annual incentive award plan for senior
officers. Such Annual Bonus shall be determined on the basis of an
annual target bonus opportunity of at least eighty percent
(80%) of the Base Salary paid to the Executive with respect to
such fiscal year, which annual target bonus opportunity may be
increased but not decreased except for annual reductions of up to
ten percent (10%) that apply to all officers of the
Corporation. Each Annual Bonus will be paid in accordance with the
terms of the MIP.
(c) Incentive and Savings Plans,
Retirement and Death Benefit Programs . The Executive shall be
entitled to participate in all incentive and savings plans and
programs, including stock option plans and equity-based
compensation plans, and in all employee retirement and executive
death benefit plans (including a supplemental life insurance
program) on a basis no less favorable than that basis generally
available to executives of the Corporation holding comparable
positions or having comparable responsibilities who become an
elected or appointed officer of the Corporation on or after the
date on which the Executive first became an elected or appointed
officer of the Corporation. The Executive is entitled to a death
benefit under the Corporation’s supplemental life insurance
program of $500,000.
(d) Other Benefit Plans . The
Executive, his spouse, and their eligible dependents (as defined
in, and to the extent permitted by, the applicable plan), as the
case may be, shall be entitled to participate in or to be covered
under all medical, dental, disability, group life, severance,
accidental death and travel accident insurance plans and programs
of the Corporation and any affiliated company on a basis no less
favorable than that basis generally available to executives of the
Corporation holding comparable positions or having comparable
responsibilities who become an elected or appointed officer of the
Corporation on or after the date on which the Executive first
became an elected or appointed officer of the
Corporation.
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(e) Other Perquisites . The
Executive shall also be entitled to:
(i) prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with
the policies and procedures of the Corporation;
(ii) paid vacation and fringe
benefits on the same basis as is made available to other senior
officers of the Corporation; and
(iii) all forms of perquisites made
available to senior officers of the Corporation.
5. Termination Events —
Payments and Benefits .
(a) Termination by the
Corporation for Cause or Voluntary Termination by the Executive
. The Corporation at any time may terminate the Executive’s
employment for Cause and the Executive may voluntarily terminate
employment at any time. For purposes of this agreement, a
termination for “Cause” shall mean a termination of the
employment relationship between the Executive and the Corporation
due to the Executive’s discharge for any of the following
reasons: (i) the Executive’s continued failure to
perform substantially his duties with the Corporation, as
determined by the Corporation in its sole discretion (other than
any such failure resulting from the Executive’s temporary
incapacity during physical or mental illness); (ii) the
Executive’s willful conduct which is demonstrably and
materially injurious to the Corporation, monetarily, or otherwise;
(iii) the Executive’s personal dishonesty in the
performance of his duties; (iv) the Executive’s breach
of fiduciary duty involving personal profit; (v) the Executive
is convicted of a felony or a misdemeanor; or (vi) the
Executive willfully or repeatedly violates any Corporation rule or
procedure, including without limitation, absenteeism, violation of
safety rules and insubordination. Any other type of termination of
employment ( e . g . disability, termination not for
“Cause”, etc.) will not be considered a “For
Cause” termination of employment. Upon a termination by the
Corporation for Cause or a voluntary termination by the Executive,
the Executive will receive his accrued vacation pay and his unpaid
Base Salary. Payments of benefits from all employee benefit plans
will be governed by the terms of such plans.
(b) Termination by the
Corporation not for Cause, on Account of a, Disability, Death or
Retirement or by the Executive on Account of Constructive
Termination . If the Corporation terminates the
Executive’s employment not for Cause, the Executive’s
employment terminates on account of Disability, death or
Retirement, or the Executive terminates his employment for reasons
of Constructive Termination, in lieu of benefits under the Avon
Products, Inc. Severance Pay Plan or its successor, the Executive
will receive cash payments equal to twenty-four (24) months of
Base Salary determined at the Executive’s last day of active
employment (the “Separation Date”). For purposes of
this agreement, Disability shall be defined in the Avon Products,
Inc. Long Term Disability Plan. Retirement will mean retirement in
accordance with the terms of the Avon Products, Inc. Personal
Retirement Account Plan (the “PRA”). Constructive
Termination will be a termination by the Executive upon any of the
following events: (I) a reduction in Base Salary under
Section 4(a) above; (II) a reduction in the Annual Bonus
target opportunity (excluding annual reductions of up to 10% that
apply to all officers of the Corporation) specified in
Section 4(b) above; (III) a
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change of more than twenty-five (25) miles
in the office or location where the Executive is based; (IV) a
demotion to an office below Executive Vice President, Global Sales;
(V) a change in the Corporation’s strategic corporate
goals, business plans or personnel, which in the opinion of the
Executive, negatively impacts the office of the Executive Vice
President, Global Sales; or (VI) a material reduction in his
employee benefit programs (unless applicable to all the
Corporation’s officers).
All payments specified below will
have all required taxes and other withholdings made. In the event
that the payments below are made over a specified period, such
payments will be in equal bi-weekly installments. The method and
period of payments will depend upon the Executive’s
Separation Date and will assume that the Executive is a
“specified employee” as such term is defined under
Internal Revenue Code Section 409A on such Separation Date.
The Executive will not accrue any vacation days after the
Separation Date.
(i) Separation Date is on or
before June 30, 2008 . If the Executive’s Separation
Date is on or before June 30, 2008, he will receive salary
continuation payments and, depending on the Separation Date, a lump
sum cash payment, in the aggregate amount of twenty-four months of
Base Salary. For the period beginning no earlier than the later of
January 1, 2008 or the date which is six months after the
Executive’s Separation Date (the “Waiting Period
Date”) and continuing until May 31, 2009 (the
“Payment Period”), the Executive will receive:
(A) for the period beginning on the Waiting Period Date and
continuing through December 31, 2008, he will receive salary
continuation payments, which, when added to the amount of Base
Salary already paid to him as an active employee for such calendar
year is equivalent to one year’s Base Salary; (B) for
the period beginning on January 1, 2009 and ending on
May 31, 2009, he will receive salary continuation payments
equivalent to one year’s Base Salary. In addition, no later
than June 30, 2009, the Executive will receive a lump sum cash
payment equal to the remaining amount of the total twenty-four
months of Base Salary due the Executive which has not yet been paid
by May 31, 2009.
(ii) Separation Date is on or
after July 1, 2008 but before May 31, 2009 . If the
Executive’s Separation Date is on or after July 1, 2008
but before May 31, 2009, he will receive salary continuation
payments and a lump sum cash payment, in the aggregate amount of
twenty-four (24) months of Base Salary. For the period
beginning no earlier than the date which is six months after the
Executive’s Separation Date and continuing until May 31,
2009 (the “Payment Period”), the amount of such salary
continuation payments will be one year’s Base Salary. In
addition, no later than the later of June 30, 2009, or the
date which is six months after the Executive’s Separation
Date, the Executive will receive a lump sum cash payment equal to
the remaining amount of the total twenty-four months due the
Executive which has not yet been paid by May 31,
2009.
(iii) Separation Date is on or
after June 1, 2009 . If the Executive’s Separation
Date is on or after June 1, 2009, Executive will receive a
lump sum cash payment equal to twenty-four months of Base Salary no
later than six months after the Executive’s Separation
Date.
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In the event the Executive dies during
employment or, after the Separation Date, before the Executive has
received twenty-four months of Base Salary, the Executive’s
spouse or beneficiary, as the Executive has designated in writing
to Avon, will receive any portion of the twenty-four months of Base
Salary that had not been paid at the time of the Executive’s
death.
In addition to the cash payments
specified in Section 5(b)(i)-(iii) above, the Executive
would also be entitled to continuing coverage under medical, dental
and life insurance plans through May 31, 2009. All other
perquisites will be subject to the standard severance
terms.
(c) Benefits . Generally, any
post-termination benefits payable from an employee benefit plan
under Sections 5 (a) or (b) above will be governed by the
terms of such plan. Notwithstanding the preceding sentence the
following benefits will be modified:
(i) MIP Awards . In addition,
to any MIP awards normally payable under the MIP relating to the
years prior to and including the year in which the Separation Date
occurs, if the Executive’s employment terminates under
Section 5(b) above, for the calendar year following the
calendar year in which the Separation Date occurs, Executive will
be entitled to a MIP Award of 100% of the target award (80% of Base
Salary as specified in Section 4(b) above) based upon one year
of the Executive’s Base Salary at the rate in effect on the
Separation Date. Such special MIP award may not be deferred into
the Avon Products, Inc. Deferred Compensation Plan.
(ii) SERP Benefits . This
agreement will be treated as an outside agreement under
Section 2.16 of the Supplemental Executive Retirement and Life
Plan of Avon Products, Inc. (the “SERP”) and will
override any SERP provisions to the contrary as indicated below.
First, no amendment to the SERP after the date of this agreement is
permitted to reduce the benefits payable under this section, nor
can the rate of accrual under the SERP be reduced before
May 31, 2009. Second, if the Executive dies prior to
May 31, 2009, the Executive’s beneficiary will be
treated as if the Executive had not died for purposes of crediting
service under the SERP and the Executive will continue to receive
credited service under the SERP through May 31, 2009 as if the
Executive had survived at which point, the Executive’s
beneficiary will be treated as if s/he were the Executive for
purposes of benefit payments under the SERP. If the Executive dies
on or after May 31, 2009, the SERP benefits normally payable
in such event will be payable. Third, if the Separation Date occurs
after December 31, 2007 under Section 5(b) above, the
SERP benefit payable as an annuity upon retirement under the SERP
will not be less than the SERP benefit payable as an annuity upon
retirement under the SERP had the Executive terminated on
December 31, 2007 with salary continuation payable in
accordance with 5(b)(i) above.
(iii) Restricted Stock Units
. Upon the Executive’s Separation Date under
Section 5(b) above, any unvested restricted stock units on
such date will become 100% vested and will be payable in accordance
with the terms of the outstanding restricted stock unit
awards.
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6. Release and Agreement to
Covenants and Other Obligations .
Prior to any payments under this
agreement, the Executive will be required to sign, and the
Executive hereby agrees to sign, a release agreeing to and
confirming the covenants and other obligations listed in
Section 7 below. Such release will include a waiver of all
claims the Executive may have (including claims under the Age
Discrimination in Employment Act). The Corporation may withhold any
payments under this agreement until such release has been signed,
and for an additional seven (7) days after such release as has
been signed. The release shall be similar to the release attached
as Exhibit A.
7. Covenants and Other
Obligations .
The Executive agrees to the
following covenants and obligations:
(a) Non-Disclosure of
Information . The Executive will not knowingly use or disclose,
without Avon’s written consent (which may only be provided by
the Chief Executive Officer of Avon), any secret, confidential, or
proprietary information or knowledge relating to Avon or any of its
affiliated companies, and their respective businesses, that he
obtained during or as a result of his employment with Avon, such
as, but not limited to, financial information and projections,
marketing information and plans, product formulations and
production methods, intellectual property and trade secrets, and
other types of information not generally available to the
public.
(b) Non-Disparagement . The
Executive will not knowingly take any action or make any statement,
whether written or oral, whether in public or private, that
disparages or defames the goodwill or reputation of Avon or any of
its associated companies, or of any of their directors, officers,
and associates.
(c) Confidentiality of Our
Agreement . The Executive will not disclose the terms and
conditions of this agreement to anyone
