Exhibit 10.31
MANAGEMENT
COMPENSATION AGREEMENT
between
NORTHWEST
AIRLINES, INC.
and
BARRY P.
SIMON
dated as
of
December 3,
2004
MANAGEMENT COMPENSATION
AGREEMENT
MANAGEMENT
COMPENSATION AGREEMENT made as of the 3 rd day of
December, 2004 between Northwest Airlines, Inc., a Minnesota
corporation (the “ Company ”) and Barry P. Simon
(the “ Executive ”).
PREAMBLE
The Company and
Executive hereby desire to enter into a Management Compensation
Agreement dated as of the date first above written.
1. Terms of
Employment .
1.1
Employment . The Company agrees to employ Executive,
and Executive agrees to be employed by the Company, on the terms
and conditions set forth herein.
1.2
Position and Duties . During the term of
Executive’s employment hereunder, Executive shall serve as
Executive Vice President & General Counsel of the Company and
shall have such powers and duties as may from time to time be
prescribed by the Company. Executive shall devote
substantially all his working time and effort to the business and
affairs of the Company and its affiliates.
2.
Compensation and Benefits .
2.1
Base Salary . Executive’s Base Salary as of the
Effective Date shall be $425,000. Executive’s Base
Salary in effect from time to time may only be reduced in
connection with a base wage reduction for salaried employees of the
Company, by an amount not to exceed $85,000.
Executive’s Base Salary shall be payable in accordance with
the Company’s payroll policies.
2.2
Incentive Compensation Programs . During the term of
Executive’s employment hereunder:
(a) Executive shall be entitled to
receive from the Company, within ten (10) days after the date of
this Agreement, a lump-sum cash payment in the amount of $240,000,
less all applicable withholding taxes (the “ Sign-on
Bonus ”); provided that, in the event Executive’s
employment with the Company terminates on or before the third (3
rd ) anniversary of the Effective Date, Executive shall
re-pay to the Company within three (3) business days after the
effective date of such termination a portion of the Sign-on Bonus
in an amount equal to $240,000 multiplied by the Proration
Fraction, and the Company shall have the right to offset any amount
required to be repaid by Executive pursuant to this
Section 2.2(a) against any other amounts payable to the
Executive at the time of such termination of employment.
(b) Executive shall be entitled to
participate in the Company’s Key Employee Annual Cash
Incentive Plan (the “ KEACIP ”) or any successor
annual bonus plan beginning with the 2005 plan year, the terms and
conditions of which shall be established
from time to time by the Compensation
Committee. For the 2005 plan year, Executive’s target
incentive percentage shall be 60% of Executive’s Base
Salary.
(c) Executive shall be entitled to
participate in the Company’s Long-Term Cash Incentive Plan
beginning with the two year performance period commencing
January 1, 2005, the terms and conditions of which shall be
established from time to time by the Compensation
Committee.
(d) Executive shall be entitled to
receive a restricted stock award for 75,000 shares of common stock
of Northwest Airlines Corporation, par value $.01 per share (the
“ Common Stock ”), such restricted stock to vest
in six equal installments of 12,500 shares each on each six month
anniversary of the date of grant until fully vested on the third
anniversary of the date of grant so long as Executive remains an
active full-time employee of the Company on such dates, the terms
and conditions of which award shall be set forth in a written
agreement or other documentation which shall be provided to
Executive by the Company’s Secretary.
2.3
Expenses . During the term of Executive’s
employment hereunder, Executive shall be entitled to receive prompt
reimbursements for all reasonable business expenses incurred in
performing services hereunder in accordance with the
Company’s business expense reimbursement policies in effect
from time to time.
2.4
Employee Benefit Programs of the Company . Except as
set forth below, Executive shall be entitled to participate while
employed hereunder in the Company’s employee benefit programs
at levels in effect on the Effective Date. Exceptions to the
preceding sentence are:
(a)
Amounts payable to Executive under the Company’s benefit
programs may be reduced to reflect a benefit reduction for salaried
employees of the Company, in the same manner that salaried
employees are generally affected by such reduction.
(b)
Executive shall not participate in any severance pay plan or annual
bonus plan maintained by the Company except to the extent necessary
to receive any severance or bonus payments specifically provided
for hereunder.
2.5
Retirement Plans . Executive shall be entitled to
participate in the Northwest Airlines Supplemental Executive
Retirement Plan (the “ SERP ”) on the terms and
conditions set forth in an Ancillary Agreement to be provided to
Executive by the Company.
3. Airline
Pass .
In
the event Executive remains an active full-time employee of the
Company from the Effective Date through the third (3 rd
) anniversary thereof, Executive shall be entitled to receive, upon
termination of employment, lifetime airline pass privileges for the
personal use of Executive and his spouse or registered domestic
partner and dependent children so long as spouses, registered
domestic partners and dependent children of employees generally are
eligible for nonrevenue travel pursuant to the Company’s pass
policies (hereinafter, “ Eligible Individuals
”). Such airline pass privileges (the “
Airline Pass ”) shall entitle Executive and
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Eligible Individuals to travel on regularly
scheduled domestic and international flights operated by the
Company, subject to all charges and fees then applicable to active
management employees of the Company and their dependents and
pursuant to the Company’s pass policies in effect from time
to time, with boarding priority of F1-R. Executive shall be
responsible for any personal income tax liability arising from such
pass travel. Notwithstanding the foregoing, all benefits
under this Section 3 shall immediately and permanently cease
in the event Executive violates the Company’s pass policies
in connection with such travel and/or in the event that Executive
is or becomes, at any time thereafter, an employee of any of the
top five (5) airlines in the United States (other than the Company)
ranked by revenue passenger miles.
4. Termination of
Employment.
4.1
Upon Death . Executive’s employment hereunder
shall terminate upon his death.
4.2
By the Company . The Company may terminate
Executive’s employment hereunder at any time with or without
Cause.
4.3
By the
Executive. Executive may terminate his employment hereunder
at any time for any reason.
4.4
Notice of Termination. Any termination of Executive’s
employment hereunder (other than by death) shall be communicated by
thirty (30) days’ advance written Notice of Termination
by the terminating party to the other party to this Agreement;
provided that no advance Notice of Termination of Executive
for Cause by the Company is required.
5. Payments
in the Event of Termination of Employment .
5.1
Payments in the Event of Termination by the Company for Cause or
Voluntary Termination by Executive . If Executive’s
employment hereunder is terminated by the Company for Cause, as a
result of death or Disability or by Executive other than for Good
Reason, the Company shall pay Executive (a) his accrued and
unpaid Base Salary through the Date of Termination and (b) any
vested or accrued and unpaid payments, rights or benefits Executive
may be otherwise entitled to receive pursuant to the terms of any
written retirement, pension or other employee benefit or
compensation plan maintained by the Company at the time or times
provided therein.
5.2
Payments in the Event of Any Other Termination of Employment
. If Executive’s employment hereunder is terminated by
the Company other than for Cause, or by Executive for Good
Reason:
(a)
subject to Section 2.2(a) hereof, the Company shall pay
Executive (i) his accrued and unpaid Base Salary through the
Date of Termination, (ii) any bonus under the Key Employee
Cash Incentive Bonus Program, or any successor annual bonus plan,
(the “ Incentive Bonus ”) for any calendar year
ended before the Date of Termination, (iii) a pro rata share
(based on days employed during the applicable year) of the
Incentive Bonus Executive would otherwise have received with
respect to the year in which the Date of Termination occurs,
payable at the time the Incentive Bonus would otherwise be
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payable to Executive; provided ,
however , that 100% of the Incentive Bonus shall be
determined solely with reference to the financial performance of
the Company for the year (based on the goals previously established
with respect thereto) (rather than a portion of the Incentive Bonus
determined on the basis of individual performance); provided
, further , in the event that Company’s performance
exceeds 100% of the financial performance target for the year, that
portion of the Incentive Bonus that would have, but for this
Section 5.2(a), related to the achievement of the individual
performance target shall be 100% and (iv) any vested or
accrued and unpaid payments, rights or benefits Executive may be
otherwise entitled to receive pursuant to the terms of any written
retirement, pension or other employee benefit or compensation plan
maintained by the Company at the time or times provided
therein.
(b)
subject to Section 2.2(a) hereof, in addition to the
compensation and benefits described in Section 5.2(a):
(i)
The Company shall pay Executive, no later than thirty (30) days
following Executive’s termination of employment, a lump sum
cash payment equal to $680,000.
(ii)
With regard to group life insurance and group medical and dental
insurance, until the earlier of the second anniversary of
Executive’s Date of Termination or the date Executive is
employed by a new employer, Executive, his dependents,
beneficiaries and estate shall be entitled to all benefits under
such group life insurance and group medical and dental insurance as
if Executive were still employed by the Company hereunder during
such period.
(c)
Executive shall not be required to mitigate the amount of any
payment provided for in this Section 5.2 by seeking other
employment or otherwise, and no such payment shall be offset or
reduced as a result of Executive’s obtaining new
employment.
(d)
notwithstanding anything else to the contrary in this Agreement,
the Company’s obligation regarding the payments and insurance
continuation provided for in Sections 5.2(a)(iii) and
5.2(b)(i) and (ii) is expressly conditioned upon the execution,
delivery and non-revocation of a general release in the form
attached hereto as Attachment A .
5.3
Compliance with Tax Regulations . All payments
pursuant to this Section 5 shall be made in compliance with
all applicable laws, rules and regulations, including without
limitation the provisions of the American Jobs Creation Act of 2004
and all rules and regulations promulgated thereunder.
5.4
Board/Committee Resignation . Executive’s termination of
employment for any reason, shall constitute, as of the date of such
termination and to the extent applicable, a resignation as an
officer of the Company and a resignation from the board of
directors (and any committees thereof) of any of the
Company’s affiliates and from the board of directors or
similar governing body of any corporation, limited liability
company or other entity in which the Company or any affiliate holds
an equity interest and with respect to which board or
similar
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governing body Executive
serves as the Company’s or such affiliate’s designee or
other representative.
6.
Confidentiality; Non-Compete; Non-Solicitation;
Non-disparagement .
While employed by
the Company and thereafter, Executive shall not disclose any
Confidential Information either directly or indirectly, to anyone
(other than appropriate Company employees and advisors), or use
such information for his own account, or for the account of any
other person or entity, without the prior written consent of the
Company or except as required by law. This confidentiality
covenant has no temporal or geographical restriction. For
purposes of this Agreement, “ Confidential Information
” shall mean all non-public information respecting the
Company’s business, including, but not limited to, its
services, pricing, scheduling, products, research and development,
processes, customer lists, marketing plans and strategies,
financing plans and the terms and provisions of this Agreement, but
excluding information that is, or becomes, available to the public
(unless such availability occurs through an unauthorized act on the
part of the Executive). Upon termination of this Agreement,
Executive shall promptly supply to the Company all property and any
other tangible product or document that has been produced by,
received by or otherwise submitted to Executive during or prior to
his term of employment, and shall not retain any copies
thereof.
Executive
acknowledges that his services are of special, unique and
extraordinary value to the Company. Accordingly, Executive
shall not, without the consent of the Company, at any time prior to
the first anniversary of the Date of Termination (i) become an
employee, consultant, officer, partner or director of any air
carrier which competes (other than to an insignificant extent) with
the Company (or any of its affiliates) or (ii) whether on
Executive’s own behalf or on behalf of or in conjunction with
any person, company, business entity or other organization
whatsoever, directly or indirectly solicit or encourage any
employee of the Company or its affiliates to leave the employment
of the Company or its affiliates. Upon Executive’s
termination of employment, Executive may request that the Company
consent to Executive’s serving in a position that would
otherwise be in violation of the foregoing sentence, and the
Company in its sole discretion may elect to provide its written
consent to any such service.
While employed by
the Company and thereafter, Executive agrees not to make any
untruthful or disparaging statements, written or oral, about the
Company, its affiliates, their predecessors or successors or any of
their past and present officers, directors, stockholders, partners,
members, agents and employees or the Company’s business
practices, operations or personnel policies and practices to any of
the Company’s customers, clients, competitors, suppliers,
investors, directors, consultants, employees, former employees, or
the press or other media in any country.
Executive agrees
that any breach of the terms of this Section 6 would result in
irreparable injury and damage for which there would be no adequate
remedy at law, and that, in the event of said breach or any threat
of breach, the Company shall be entitled to an immediate injunction
and restraining order to prevent such breach or threatened breach,
without having to prove damages, in addition to any other remedies
to which the Company may be entitled at law or in equity. Executive
further agrees that the provisions of the covenant not to compete
are
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