Exhibit 10.3
EMPLOYMENT
AGREEMENT
This Employment Agreement (the
“ Agreement ”) is made and entered into
effective as of March 20, 2008 the “ Effective
Date ”), by and between Marsh & McLennan
Companies, Inc. (together with its successors and assigns, “
MMC ”, or the “Company”) and Simon V.
Freakley (the “ Executive ”).
WHEREAS, the Executive and the
Company desire to embody in this Agreement the terms and conditions
of the Executive’s continued employment by the
Company;
NOW, THEREFORE
, in consideration of the premises
and mutual promises contained in this Agreement, including the
compensation paid to the Executive, the parties hereby
agree:
ARTICLE 1
Employment, Duties and
Responsibilities
1.1 Employment; Reporting .
MMC shall cause Kroll Inc. (“Kroll”) to continue to
employ the Executive as its Chief Executive Officer. The Executive
hereby accepts such continued employment, subject to the terms and
conditions of this Agreement. The Executive shall report directly
to the Chief Executive Officer of MMC (the “Chief Executive
Officer”); provided that such reporting relationship may
change in connection with the removal of the Executive from his
position as Chief Executive Officer or President of Kroll under
circumstances described in the final sentence of
Section 5.2.
1.2 Duties and
Responsibilities .
The Executive shall have such duties
and responsibilities and power and authority as those normally
associated with the position of Chief Executive Officer of Kroll,
as well as any additional duties, responsibilities and/or powers
and authority assigned to him by the Chief Executive Officer which
are consistent with his position as Chief Executive Officer of
Kroll.
The Executive agrees to use his best
efforts to promote the interests of MMC and Kroll, and agrees that
he will devote his entire working time, care and attention to his
duties, responsibilities and obligations to the Company and Kroll
throughout the Term (as defined in Section 2.1 hereof). The
Executive may serve on the boards of other civic, charitable and
corporate entities with the prior written consent of the Chief
Executive Officer and manage his personal investments and affairs,
so long as such activities do not, either individually or in the
aggregate, interfere with the Executive’s duties and
responsibilities as Chief Executive Officer of Kroll.
1.3 Existing Employment
Agreement . The existing Employment Agreement dated
July 7, 2004, among the Executive, Marsh USA, Inc. and Kroll
Inc. (the “ Prior
Agreement ”) shall terminate as of the
Effective Date and will thereafter be of no further force or
effect.
ARTICLE 2
Term
2.1 Employment Period . The
initial term of the Executive’s employment under this
Agreement (the “ Initial Term ”) shall
commence on the Effective Date and shall continue through
July 6, 2010. Thereafter, this Agreement shall automatically
renew for successive one (1) year terms (each, a “
Renewal Term ”) unless either party sends a
notice of termination to the other party in accordance with
Section 6.2 hereof at least ninety (90) days prior to the
expiration of the Initial Term or Renewal Term, as the case may be.
The Initial Term, together with any and all Renewal Terms, if any,
are the “ Term .” After the expiration of the
Term for any reason the Executive will become an
“at-will” employee of the Company.
ARTICLE 3
Compensation
As compensation and consideration
for the performance by the Executive of his obligations under this
Agreement (including as Chief Executive Officer of CARG (defined
below)), during the Term the Executive shall be entitled to the
compensation and benefits set this Article 3 (subject, in each
case, to the provisions of Article 5 hereof).
3.1 Base Salary . The
Executive shall receive an annual base salary (“ Base
Salary ”) of $1,000,000. The Base Salary shall be
reviewed at least annually by the Compensation Committee (the
“ Committee ”) of the Board of Directors of MMC
(the “ Board ”) and may be increased (but not
decreased) in the sole discretion of the Committee. If the
Executive’s Base Salary is increased, the increased amount
shall thereafter be the Base Salary. The Base Salary shall be
payable in installments, consistent with the Company’s
payroll procedures in effect from time to time.
3.2 Annual Bonus . In
addition to Base Salary, the Executive shall be eligible to
participate throughout the Term in such annual bonus plans and
programs as may be in effect from time to time in accordance with
the Company’s or Kroll’s compensation practices and the
terms and provisions of any such plans or programs. The
Executive’s annual bonus will range between zero and two
hundred fifty percent (250%) of his Base Salary. The actual
bonus amounts will be determined by the Committee based on the
achievement of entity and individual performance goals; provided
that the annual bonus for 2008 will be no less than $750,000. The
annual bonus shall be paid in the same time and manner as
corresponding awards to other senior executives of the Company
generally. Notwithstanding the foregoing, in no event shall the
annual bonus be paid later than March 15 of the year following
the year with respect to which such bonus is payable.
- 2 -
3.3 Long-Term and Equity
Compensation . The Executive shall also be eligible to
participate in MMC’s or Kroll’s long-term incentive
compensation plans (including its equity-compensation plans) as
determined by MMC’s Compensation Committee. The specific
awards under these plans will be made by the Committee in its sole
discretion, commensurate with the Executive’s position as
Chief Executive Officer of Kroll. Notwithstanding the foregoing,
the Committee shall each year grant to the Executive, no later than
it makes corresponding awards to other senior executives of the
Company generally, and on terms and conditions that are both
consistent with this Agreement and no less favorable to the
Executive than the terms and conditions that apply to corresponding
awards to other similarly situated participants generally,
long-term incentive compensation with a combined grant-date target
value between one hundred percent (100%) and two hundred
percent (200%) of the Executive’s Base
Salary.
3.4 Benefit Plans . The
Executive and the Executive’s spouse and eligible dependents,
as the case may be, shall be eligible to participate in employee
benefit and fringe benefit plans and programs provided by Kroll,
including but not limited to retirement, life insurance, health,
dental and disability plans and programs, on terms and conditions
generally applicable to executives of Kroll. Nothing herein shall
limit Kroll’s ability to change, modify, cancel or amend any
such plans.
3.5 Expenses . Kroll will
reimburse the Executive for reasonable business-related expenses
incurred by him in connection with the performance of his duties
hereunder during the Term, subject, however, to its written
policies relating to business-related expenses as in effect, from
time to time, during the Term, a copy of which has previously been
made available to the Executive.
3.6 Vacation . The Executive
shall be entitled to paid vacation in accordance with Kroll’s
policy in effect from time to time during the Term.
3.7 Indemnification . The
Executive shall be entitled to indemnification in accordance with
the Company’s by-laws as in effect on the date hereof,
subject to applicable law. Any expenses (including damages, losses,
judgments, fines, penalties, settlements, costs, attorneys’
fees, and expenses of establishing a right to indemnification),
that are subject to such indemnification and are or may be incurred
in connection with a proceeding shall be paid by the Company in
advance within 30 days of a request by the Executive, which shall
be accompanied by documentation substantiating such expenses.
Executive shall promptly deliver to the Company an undertaking, in
such form as the Company shall specify, to reimburse the Company
for expenses to which Executive is adjudged not to be entitled to
indemnification.
- 3 -
ARTICLE 4
Noncompetition/Nonsolicitation/Confidentiality
4.1 Noncompetition and
Nonsolicitation Periods
(a) During the Executive’s
employment with the Company or any subsidiary and during the 12
month period following termination of the Executive’s
employment with the Company or any subsidiary for any reason, the
Executive shall not, directly or indirectly:
|
|
(i)
|
engage in any
Competitive Activity or
|
|
|
(ii)
|
whether on
behalf of himself or any other person or entity (x) solicit
any customer or client of the Company or any subsidiary with
respect to a Competitive Activity or (y) solicit or employ any
employee of the Company or any subsidiary for the purpose of
causing such employee to terminate his or her employment with the
Company or such subsidiary.
|
For purposes of this Agreement,
“Competitive Activity” shall mean the Executive’s
engaging in an activity – whether as an employee, consultant,
principal, member, agent, officer, director, partner or shareholder
(except as a less than 1% shareholder of a publicly traded company)
– that is competitive with any business of the Company or any
subsidiary conducted by the Company or such subsidiary as of the
date of the termination of the Executive’s employment;
provided, however, that the Executive may be employed by or
otherwise associated with:
|
|
(i)
|
a business of
which a subsidiary, division, segment, unit, etc. is in competition
with the Company or any subsidiary but as to which such subsidiary,
division, segment, unit, etc., the Executive has absolutely no
direct or indirect responsibilities or involvement, or
|
|
|
(ii)
|
a company where
the Competitive Activity is:
|
|
|
(x)
|
from the
perspective of such company, de minimis with respect to the
business of such company and its affiliates, and
|
|
|
(y)
|
from the
perspective of the Company or any subsidiary, not in material
competition with the Company or any subsidiary.
|
In the event that the
Executive’s employment with Kroll or the Company terminates
after the Term, and provided that the Executive has worked for the
Company through the end of the Term, the Company may elect to
enforce the foregoing noncompetition/nonsolicitation covenant for
up to twelve (12) months following such termination of
employment, provided the Company pays the Executive his Base Salary
(as in effect at the end of the Term) in installments over the 12
month period (or a pro-rata amount for such shorter period), during
which the Executive shall be bound by such covenant. The
installments shall be paid consistent with Kroll’s payroll
procedures in effect from time to time.
- 4 -
(b) At all times prior to and
following the Executive’s termination of employment, the
Executive shall not disclose to anyone or make use of any trade
secret or proprietary or confidential information of the Company or
any subsidiary, including such trade secret or proprietary or
confidential information of any customer or client or other entity
to which the Company or any subsidiary owes an obligation not to
disclose such information, which the Executive acquires during the
Executive’s employment with the Company or any subsidiary,
including but not limited to records kept in the ordinary course of
business except:
|
|
(i)
|
As such
disclosure or use may be required or appropriate in connection with
the Executive’s work as an employee of the Company or any
subsidiary;
|
|
|
(ii)
|
When required
to do so by a court of law, by any governmental agency having
supervisory authority over the business of the Company or any
subsidiary or by any administrative or legislative body (including
a committee thereof) with apparent jurisdiction to order the
Executive to divulge, disclose or make accessible such
information;
|
|
|
(iii)
|
As to such
confidential information that becomes generally known to the public
or trade without the Executive’s violation of this
Section 4.1(b); or
|
|
|
(iv)
|
To the
Executive’s spouse and/or the Executive personal tax and
financial advisors as reasonably necessary or appropriate to
advance the Executive’s tax, financial and other personal
planning (each an “Exempt Person”), provided,
however , that any improper disclosure or use of any trade
secret or proprietary or confidential information of the Company or
any subsidiary by an Exempt Person shall be deemed to be a breach
of this Section 4.1(b) by the Executive.
|
(c) The Executive acknowledges and
agrees that the covenants contained in Sections 4.1(a) and
(b) hereof are reasonable and necessary to protect the
confidential information and goodwill of the Company and its
subsidiaries. The Executive further represents that his experience
and capabilities are such that the provisions of
Sections 4.1(a) and (b) hereof will not prevent him
from earning a livelihood.
(d) Section 4.1(a)(i) shall not
prevent the Executive from carrying out the minimum amount of work
required to ensure that his UK Insolvency License (the
“License”) does not lapse in the 12 month period
following the termination of the Executive’s employment. The
minimum levels of work required to prevent the License lapsing (the
“License Minimum”) will be as detailed by the relevant
regulatory body during that period. It is a condition of
this
- 5 -
Section that before the Executive undertakes any
work pursuant to this Section 4.1(d) which would otherwise be
a breach of Section 4.1(a)(i) the Executive must:
|
|
(i)
|
give no less
than two week’s written notice to the General Counsel of the
Company or such other person as the Company may nominate in writing
at any time (“the Nominee”); of his intention to
undertake work in respect of the License, providing a summary of
the work to be undertaken, and the identity of the parties
involved, and
|
|
|
(ii)
|
obtain written
consent from the Nominee to carrying out the work specified under
Section 4.1(d)(i) above, such consent not to be unreasonably
withheld.
|
(e) The Executive has been appointed
by the UK Court in respect of the insolvency of Federal-Mogul
Corporation (the “Appointment”) and is retaining Kroll
to provide services in connection the Appointment.
Section 4.1(a)(i) will not prevent the Executive continuing
with such Appointment following the termination of his employment
for so long as he continues to use Kroll for such services as they
have been providing up to the date of termination.
ARTICLE 5
Termination; Change of
Control
5.1 Termination by the
Company . The Company shall have the right, subject to the
terms of this Agreement, to terminate the Executive’s
employment at any time, with or without “Cause.” The
Company shall give the Executive written notice of a termination
for Cause (the “ Cause Notice ”) in
accordance with Section 6.2 hereof. The Cause Notice shall
state the particular
action(s) or inaction(s) giving rise to the
termination for Cause. No action(s) or inaction(s) will
constitute Cause unless (1) a resolution finding that Cause
exists has been approved by a majority of all of the members of the
Board at a meeting at which the Executive is allowed to appear with
his legal counsel and (2) where remedial action is feasible,
the Executive fails to remedy the action(s) or
inaction(s) within ten (10) days after receiving the
Cause Notice. If the Executive so effects a cure to the
satisfaction of the Board, the Cause Notice shall be deemed
rescinded and of no force or effect. For purposes of this
Agreement, “ Cause ” shall mean only:
(a) any willful refusal by the
Executive to follow lawful directives of the Chief Executive
Officer or the Board which are consistent with the scope and nature
of the Executive’s duties and responsibilities as set forth
herein;
(b) the Executive’s conviction
of, or plea of guilty or nolo contendere to, a felony or of
any crime involving moral turpitude, fraud or
embezzlement;
(c) any gross negligence or willful
misconduct of the Executive resulting in a material loss to the
Company or any of its subsidiaries, or material damage to the
reputation of the Company or any of its subsidiaries;
- 6 -
(d) any material breach by the
Executive of any one or more of the covenants referred to in
Article 4 hereof; or
(e) any violation of any statutory
or common law duty of loyalty to the Company or any of its
subsidiaries.
5.2 Termination by the
Executive . The Executive shall have the right, subject to the
terms of this Agreement, to terminate his employment at any time
with or without “Good Reason”. For purposes of this
Agreement, “Good Reason,” shall mean the occurrence of
any of the following during the Term, without the Executive’s
prior written consent (provided that an isolated, insubstantial or
inadvertent action not taken in bad faith shall not constitute Good
Reason): (A) a material diminution in the Executive’s
position (including status, offices, titles, and reporting
requirements), authority, duties or responsibilities as
contemplated by this Agreement, other than in connection with the
removal of the Executive from his position as Chief Executive
Officer or President of Kroll under circumstances described in the
final sentence of this Section 5.2; (B) any removal of
the Executive from his position as Chief Executive Officer or
President of Kroll (other than a removal under circumstances
described in the final sentence of this Section 5.2) or, after
the Executive’s appointment as Chief Executive Officer of
CARG (defined below) (which shall be the position to which
Executive is appointed if his employment with the Company continues
after his removal as Chief Executive Officer or President of
Kroll), the Executive’s removal from his position as Chief
Executive Officer of CARG; (C) any failure by the Company to
comply with the provisions of Article 3 hereof; (D) a failure
by the Company to comply with any other material provision of this
Employment Agreement; or (E) a change in the Executive’s
principal work location to more than 50 miles from his current work
location. The Executive must give the Company written notice, in
accordance with Section 6.2 hereof of any Good Reason
termination of employment within 30 days of the first occurrence
(as determined without regard to any prior occurrence that was
subsequently remedied by the Company) of a Good Reason circumstance
set forth above. Such notice must specify which of the
circumstances set forth above the Executive is relying on and the
particular action(s) or inaction(s) giving rise to such
circumstance. The Good Reason termination must be effective no
earlier than 30 days after the Executive’s delivery of the
written notice and no later than 60 days after the occurrence of
the circumstance giving rise to Good Reason; provided, however,
that the Company may remedy such circumstances within 30 days after
receipt of the written notice. The removal of the Executive from
his position as Chief Executive Officer or President of Kroll in
connection with his simultaneous appointment as Chief Executive
Officer of the Corporate Advisory & Restructuring group
within Kroll (or within such other affiliate of Kroll to which the
Corporate Advisory & Restructuring group may be moved
(“CARG”)), shall not affect the parties’ rights
and obligations under this Employment Agreement, but shall not be
treated as Good Reason; provided, however, that notwithstanding any
provision in this Employment Agreement to the contrary, if the
Executive thereafter terminates his employment within the 30-day
period commencing twelve months after such removal and appointment,
such termination shall be treated as a termination of employment
with Good Reason which the Company shall not have the right to
remedy.
- 7 -
5.3 Death . In the event the
Executive dies during the Term, the Executive’s employment
shall automatically terminate, such termination to be effective on
the date of the Executive’s death.
5.4 Disability . In the event
that the Executive shall suffer a disability during the Term which
shall have prevented him from performing satisfactorily his
obligations hereunder for a period of at least ninety
(90) consecutive days or one hundred eighty
(180) non-consecutive days within any three hundred sixty-five
(365) day period (“ Disability ”), the
Company shall have the right to terminate the Executive’s
employment, such termination to be effec
