Exhibit
10.15
EMPLOYMENT AGREEMENT
AGREEMENT entered into as of January 30, 2006,
by and between MEREDITH CORPORATION, an Iowa corporation (the
"Company"), and STEPHEN M. LACY ("Lacy"), to become effective
July 1, 2006.
WITNESSETH:
WHEREAS, Lacy has been employed by the Company
as its President; and
WHEREAS, the Company wishes to continue to
employ Lacy pursuant to the terms and conditions hereof, and in
order to induce Lacy to enter into this agreement (the "Agreement")
and to secure the benefits to accrue from his performance hereunder
is willing to undertake the obligations assigned to it herein;
and
WHEREAS, Lacy is willing to continue his
employment with the Company under the terms hereof and to enter
into the Agreement;
NOW THEREFORE, in consideration of the premises
and mutual covenants contained herein and for other good and
valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1.
Position; Duties; Responsibilities .
1.1 Lacy
shall initially serve as President and Chief Executive Officer of
the Company effective July 1, 2006. Lacy shall at all
times report to and be subject to the supervision, control and
direction of the Board of Directors of the Company. Lacy
shall at all times be the most senior executive officer of the
Company. Subject only to Lacy’s duty to report to
the Board, Lacy’s responsibilities and authorities hereunder
shall include day to day and strategic authority over the Company
and its affiliates, P&L authority over all operations of the
Company and its affiliates, and the duty and authority to hire,
make employment decisions, and terminate all subordinates employed
by the Company or its affiliates and Lacy shall report directly and
exclusively to the Board, and all other officers, employees, and
consultants of the Company shall (except to the extent otherwise
prescribed by law, regulation, or principles of good corporate
governance) report directly (or indirectly through subordinates) to
Lacy. Lacy shall have such other responsibilities and
authorities consistent with the status, titles and reporting
requirements set forth herein as are appropriate to said positions,
subject to change (other than diminution in position, authority,
duties or responsibilities) from time to time by the Board of
Directors of the Company.
1.2 During
the course of his employment, Lacy agrees to devote his full time
and attention and give his best efforts and skills to furthering
the business and interests of the Company, which, subject to the
mutual agreement of Lacy and the Board of Directors, which shall
not be unreasonably withheld, may include Lacy volunteering his
time and efforts on behalf of charitable, civic, professional
organizations and boards of other corporations.
2.
Term .
The term of employment under this Agreement
shall commence as of July 1, 2006, and shall continue through
June 30, 2009, unless sooner terminated in accordance with
this Agreement, and thereafter as herein
provided. Lacy's term of employment shall automatically
renew for subsequent one (1) year terms, the first of which would
begin on July 1, 2009, subject to the terms of this Agreement
unless either party gives written notice six (6) months or more
prior to the expiration of the then existing term of its decision
not to renew (the "Term").
In the event this Agreement expires at the end
of the Term, as extended if applicable, after the Company has
delivered a Non-Renewal Notice to Lacy, such termination of
Lacy’s employment with the Company will be treated for all
purposes hereunder as a termination of employment by the Company
Without Cause pursuant to Section 9.4.
3.
Base Salary .
3.1 The
Company shall pay Lacy a base salary during the Term of this
Agreement at the minimum annual rate of Eight Hundred Ten Thousand
Dollars ($810.000) ("Base Salary"), payable in accordance with the
standard payroll practices of the Company.
3.2 It
is understood that the Base Salary is to be Lacy's minimum annual
compensation during the Term. The Base Salary may
increase at the discretion of the Compensation Committee of the
Company's Board of Directors ("Compensation
Committee"). Base Salary shall include all such
increased amounts, and, if increased, Base Salary shall not
thereafter be decreased.
4.
Long-Term Incentive Plans .
During the Term of this Agreement, Lacy shall be
eligible to participate in all long-term incentive plans,
including, without limitation, stock incentive plans adopted by the
Company and in effect (collectively, "Long-Term Incentive Plans"),
at levels of awards to be granted by the Compensation Committee
commensurate with the level of Lacy's responsibilities and
performance thereof. At its regular August 2006 meeting
the Compensation Committee shall approve an award to Lacy of One
Hundred Six Thousand (106,000) stock options with a three (3) year
cliff vesting schedule and a strike price equal to the fair market
value of Meredith common stock on the date of such
award.
5.
Bonus .
5.1 During
the Term of this Agreement, Lacy shall be eligible to participate
in the Meredith Management Incentive Plan (or any successor or
replacement annual incentive plan of the Company) ("MIP"), for such
periods as it continues in effect, subject to the terms of the MIP,
and to the discretion vested in the Compensation Committee under
the MIP; provided, however, that the percentage of Base Salary
payable as a target bonus under the MIP shall not be less than one
hundred percent (100%) (actual Company financial results may result
in an actual bonus paid to Lacy equal to less than or more than one
hundred percent (100%) of Base Salary).
5.2 All
bonuses pursuant to this Section 5 shall be paid to Lacy in
conformance with the Company's normal bonus pay policies following
the end of the respective fiscal year. For the purpose
of this Section 5, bonuses paid with respect to the fiscal year
shall include payments made outside of the fiscal year but for such
fiscal year and shall exclude payments made in the fiscal year that
are for another fiscal year.
6.
Short-Term Disability .
During any period of short-term disability, the
Company will continue to pay to Lacy the Base Salary throughout the
period of short-term disability, but in no event beyond the end of
Term. In addition, Lacy will continue to receive all
rights and benefits under the benefit plans and programs of the
Company in which Lacy is a participant as determined in accordance
with the terms of such plans and programs, and Lacy shall be
eligible to receive the benefit of his target MIP bonus for the
initial year in which the short-term disability occurs without
reduction for the period of short-term disability. In
the event of Lacy's death during a period of short-term disability,
the provisions of Section 9.1 shall apply. For the
purposes of this Agreement, short-term disability shall be defined
as the incapacitation of Lacy by reason of sickness, accident or
other physical or mental disability which continues for a period
not to exceed the fifth month anniversary of the date of the cause
or onset of such incapacitation. All benefits provided
under this Section 6 shall be in replacement of and not in addition
to benefits payable under the Company’s short-term and
long-term disability plan(s), except to the extent such disability
plan(s) provide greater benefits than the disability benefits
provided under this Agreement, in which case the applicable
disability plan(s) would supersede the applicable provisions of
this Agreement. In the event Lacy is determined to be
permanently disabled (as determined under Section 9.2), the
provisions of Section 9.2 shall apply.
7.
Employee Benefit Plans .
7.1 During
the Term of this Agreement and subject to all eligibility
requirements, and to the extent permitted by law, Lacy will have
the opportunity to participate in all employee benefit plans and
programs generally available to the Company's employees in
accordance with the provisions thereof as in effect from time to
time, including, without limitation, medical coverage, group life
insurance, holidays and vacations, Meredith Savings and Investment
Plan (401k) and the Meredith Employees' Retirement Income Plan, but
not including the Company's short-term and long-term disability
plans, except to the extent that such disability plans provide
greater benefits than the disability benefits provided under this
Agreement, in which case the applicable disability plan would
supersede the applicable provisions of this Agreement.
7.2 In
addition to benefits described in Section 7.1 during the Term of
this Agreement, Lacy shall also receive or participate in, to the
extent permitted by law, the various perquisites and plans
generally available to officers of the Company in accordance with
the provisions thereof as in effect from time to time including,
without limitation, the following perquisites to the extent the
Company continues to offer them: an automobile or automobile
allowance, country club dues, dining club dues, tax and estate
planning, supplemental medical plan and executive life insurance
(if insurable). All such reimbursements or in-kind benefits shall
be payable by the Company on or before the last day of Lacy’s
taxable year following the taxable year in which the expense was
incurred. The expenses paid or in-kind benefits provided by the
Company during any taxable year of Lacy will not affect the
expenses paid or in-kind benefits provided by the Company in
another taxable year. This right to reimbursement or in-kind
benefits is not subject to liquidation or exchange for another
benefit. In addition, Lacy shall participate in the Meredith
Replacement Benefit Plan and the Meredith Supplemental Benefit
Plan.
8.
Expense Reimbursements .
During Lacy's employment with the Company, Lacy
will be entitled to receive reimbursement by the Company for all
reasonable, out-of-pocket expenses incurred by him (in accordance
with policies and procedures established by the Company), in
connection with his performing services hereunder, provided Lacy
properly accounts therefor. All such reimbursements shall be
payable by the Company on or before the last day of Lacy’s
taxable year following the taxable year in which the expense was
incurred. The expenses paid by the Company during any taxable year
of Lacy will not affect the expenses paid by the Company in another
taxable year. This right to reimbursement is not subject
to liquidation or exchange for another benefit.
9.
Consequences of Termination of Employment .
9.1
Death . In the event of the death of Lacy during the Term of
this Agreement or during the period when payments are being made
pursuant to Sections 6 or 9.2, this Agreement shall terminate and
all obligations to Lacy shall cease as of the date of death except
that, (a) the Company will pay to the legal representative of his
estate in substantially equal installments the Base Salary until
the end of the month of the first anniversary of Lacy's death with
each installment treated as a separate “payment” for
purposes of Section 409A of the Code, such that any payment that
would otherwise be payable within 2 ½ months after
Lacy’s taxable year in which his employment with the Company
is terminated or, if later, within 2 ½ months after the end
of the Company’s taxable year in which Lacy’s
employment with the Company is terminated (the “Short Term
Deferral Period”) is exempt from Section 409A of the Code,
and (b) all rights and benefits of Lacy under the benefit plans and
programs of the Company in which Lacy is a participant, will be
provided as determined in accordance with the terms and provisions
of such plans and programs. Any bonus (or amounts in lieu thereof)
pursuant to Section 5, payable for the fiscal year in which Lacy's
death occurs, shall be determined by the Compensation Committee at
its meeting following the end of such fiscal year pro rata to the
date of death and promptly paid to Lacy's estate. All awards of
restricted stock, stock options and any other benefits under the
Long-Term Incentive Plans shall be handled in accordance with the
terms of the relevant plan and agreements entered into between Lacy
and the Company with respect to such awards.
9.2
Disability . If Lacy shall become permanently incapacitated
by reasons of sickness, accident or other physical or mental
disability, as such incapacitation is certified by a physician
chosen by the Company and reasonably acceptable to Lacy (if he is
then able to exercise sound judgment), and shall therefore be
unable to perform any substantial gainful activity, then the
employment of Lacy hereunder and this Agreement may be terminated
by Lacy or the Company upon thirty (30) days' written notice to the
other party following such certification. Should Lacy not acquiesce
(or should he be unable to acquiesce) in the selection of the
certifying doctor, a doctor chosen by Lacy (or if he is not then
able to exercise sound judgment, by his spouse or personal
representative) and reasonably acceptable to the Company shall be
required to concur in the medical determination of incapacitation,
failing which the two doctors shall designate a third doctor whose
decision shall be determinative as of the end of the calendar month
in which such concurrence or third-doctor decision, as the case may
be, is made. After the final certification is made and the 30-day
written notice is provided, the Company shall pay to Lacy, at such
times as Base Salary provided for in Section 3 of this Agreement
would normally be paid, 100% of Base Salary for the first twelve
months following such termination, 75% of Base Salary for the next
twelve-month period and 50% of Base Salary for the remaining period
of what would have constituted the current Term of employment but
for termination by reason of disability with each installment
treated as a separate “payment” for purposes of Section
409A of the Code, such that any payment that would otherwise be
payable during the Short Term Deferral Period is exempt from
Section 409A of the Code. Following the termination pursuant to
this Section 9.2, the Company shall pay or provide to Lacy such
other rights and benefits of participation under the employee
benefit plans and programs of the Company to the extent that such
continued participation is not otherwise prohibited by applicable
law or by the express terms and provisions of such plans and
programs. Furthermore, nothing contained in this Section
9.2 shall preclude Lacy from receiving the benefit of his target
MIP bonus for the initial year in which a short-term disability
occurs pursuant to the provisions of Section 6. All
benefits provided under this Section 9.2 shall be in replacement of
and not in addition to benefits payable under the Company's
short-term and long-term disability plans, except to the extent
such disability plans provide greater benefits than the disability
benefits provided under this Agreement, in which case the
applicable disability plan(s) would supersede the applicable
provisions of this Agreement. All awards of restricted
stock, stock options and any other benefits under the Long-Term
Incentive Plans shall be handled in accordance with the terms of
the relevant plan and agreements entered into between Lacy and the
Company with respect to such awards.
9.3
Due Cause . The Company may terminate Lacy's
employment, remove him as an officer and director of the Company
and terminate this Agreement at any time for Due
Cause. In the event of such termination for Due Cause,
Lacy shall continue to receive Base Salary payments provided for in
this Agreement only through the date of such termination for Due
Cause. Any bonus (or amounts in lieu thereof) pursuant
to Section 5, payable for the fiscal year in which a Due Cause
termination occurs, shall be determined by the Compensation
Committee at its meeting following the end of such fiscal year pro
rata to the date of termination and promptly paid to Lacy, and Lacy
shall be entitled to no further benefits under this Agreement,
except that any rights and benefits Lacy may have under the
employee benefit plans and programs of the Company, in which Lacy
is a participant, shall be determined in accordance with the terms
and provisions of such plans and programs. Lacy
understands and agrees that in the event of the termination of
employment, removal as an officer and director and termination of
this Agreement pursuant to this Section 9.3: (a) All awards of
restricted stock, stock options and any other benefits under the
Long-Term Incentive Plans shall be handled in accordance with the
terms of the relevant plan and agreements entered into between Lacy
and the Company with respect to such awards and (b) except as
otherwise provided in this Section 9.3, the Company shall have no
further obligation to pay any bonus to Lacy under the terms of the
MIP or this Agreement, but that the obligations of Lacy under
Section 10 shall remain in full force and effect. The
term “Due Cause” shall mean (i) the willful and
continued failure of Lacy to attempt to perform substantially his
duties with the Company (other than any such failure resulting from
Disability), after a demand for substantial performance is
delivered to Lacy by the Board, which specifically identifies the
manner in which Lacy has not attempted to substantially perform his
duties, or (ii) the engaging by Lacy in willful misconduct which is
materially injurious to the Company, monetarily or
otherwise. For purposes of this definition, no act, or
failure to act, on the part of Lacy shall be considered
“willful” unless it is done, or omitted to be done, by
Lacy in bad faith and withou
