EXHIBIT
10.7
EMPLOYMENT
AGREEMENT
This EMPLOYMENT AGREEMENT
(“Agreement”) is made as of January 1, 2006, by and
between PICO Holdings, Inc., a diversified investment company
formed under the laws of the state of California
(“Company”), and Ronald Langley
(“Employee”).
RECITALS
1
. The Company believes it is prudent and
appropriate to attempt to increase shareholder value through
strategic investments, acquisitions, business combinations,
realization of market value of existing assets and acquisitions of
assets or companies below market value and in certain
circumstances, below book value.
2.
The Company believes that Employee
possesses unique skills, knowledge, and experience and has
demonstrated such skills, knowledge and experience in pursuing the
Company’s goals.
3.
The Company believes that it is
imperative that it be able to rely upon Employee’s skills and
services for a reasonable time in the future.
4.
Employee has been Chairman and a
Director of the Company since November 20, 1996, a Director of its
predecessor company since December 10, 1993, and Chairman of its
predecessor since July 15, 1995.
5.
Employee has been instrumental in
reorganizing the Company’s Board of Directors, management,
and corporate structure.
6.
Employee entered into a four-year
Employment Agreement with the Company effective December 31, 1997.
A further Employment Agreement was entered into for the period of
January 1, 2002 through December 31, 2005. The Employment Agreement
contained herein shall take effect on January 1, 2006.
AGREEMENT
In
consideration of the foregoing, and of their mutual promises
contained herein, the parties agree and intend to be legally bound
as follows:
The Company hereby engages Employee, and
Employee hereby accepts such engagement, on the terms and
conditions set forth herein, for a five-year period commencing on
January 1, 2006.
Employee is engaged in the position of Chairman.
Employee shall perform faithfully and diligently the duties
customarily performed by persons in the position for which Employee
is engaged, and such other similar and related duties as the Board
of Directors of the Company shall reasonably assign to Employee
from time to time. The duties of Employee shall encompass but not
necessarily be limited to the following areas and
activities:
A.
To analyze the activities and
operations of the Company and its subsidiaries and affiliates and
make recommendations to achieve greater operating
efficiencies.
B.
To conduct activities on behalf of
the Company and its subsidiaries and affiliates including but not
limited to investigating opportunities for consolidation, making
recommendations for internal financial restructuring, and searching
for potential merger and acquisition candidates.
C.
To analyze the investment
portfolios of the Company and its subsidiaries and affiliates and
make recommendations to achieve higher yield and a greater overall
return.
D.
To fulfill the duties of the
Company’s Chairman as defined by the Company’s
By-Laws.
E.
To strictly comply with the
Company’s Code of Ethics as adopted by the Board of Directors
of the Company on October 17, 2003.
Employee will
devote such time and efforts to completing his duties as is
reasonably necessary to maximize the success of the Company’s
business.
A. Base Salary . During the term of this Agreement, as
compensation for the proper and satisfactory performance of all
duties to be performed by Employee hereunder, Company shall pay to
Employee a base salary of $1,075,000.00 per year, payable in
accordance with the normal payroll practices of the Company, less
required deductions for state and federal income tax withholding,
social security and other required payroll taxes. The base salary
shall be revised annually with the first adjustment occurring on
January 1, 2006, in the same percentage applicable to the
Company’s other staff members, in an amount deemed adequate
to provide for cost of living, subject to Committee approval, based
on several major compensation indices.
B. Incentive Award . In addition, Employee shall be eligible to
receive an annual incentive award based on the growth of the
Company’s book value per share (adjusted for any book value
impact by ⅞ of all stock appreciation rights--related
expenses net of tax) during the fiscal year, above a threshold. The
threshold above which incentives are earned is 80% of the S&P
500 annualized total return for the five previous years, (but no
less than 0). If the increase in book value per share exceeds this
threshold, the incentive award shall be equal to 5% of such excess
multiplied by the number of shares outstanding at the beginning of
the fiscal year. The incentive award shall be paid in cash, less
applicable tax withholdings.
C. Employee Benefits . Employee shall be entitled to the standard
employee benefit package made available to employees of the
Company, subject to the terms, conditions and restrictions stated
in that package and the applicable benefit plan documents.
Notwithstanding the preceding sentence, the termination payments
available under this Agreement shall be in lieu of any standard
severance benefits payable to Employee under the severance program
available generally to employees of Company. Company shall have the
right at any time to prospectively amend, modify or eliminate
employee benefits, which changes sha
