Exhibit 10.16
Execution Copy
MANAGEMENT
COMPENSATION AGREEMENT
between
NORTHWEST
AIRLINES, INC.
and
DAVID M.
DAVIS
dated as
of
April 14,
2008
MANAGEMENT COMPENSATION
AGREEMENT
MANAGEMENT
COMPENSATION AGREEMENT made as of the 14 th day of
April, 2008 between Northwest Airlines, Inc., a Minnesota
corporation (the “ Company ”) and David M. Davis
(the “ Executive ”).
WITNESSETH:
WHEREAS, Executive
and the Company are parties to a Management Compensation Agreement
dated as of September 13, 2005 (the “Prior
Agreement”);
WHEREAS, since the
execution of the Prior Agreement, Executive has been promoted to
the position of Executive Vice President and Chief Financial
Officer of the Company;
WHEREAS, Executive
and the Company desire to enter into a new Management Compensation
Agreement to reflect certain changes applicable to Executive in his
new position.
NOW, THEREFORE, as
of the date hereof, the Company and Executive have agreed to
terminate the Prior Agreement as of the date hereof and replace the
Prior Agreement with this Agreement, which shall supersede the
Prior Agreement in all respects.
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 an Executive Vice
President 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 . During the term of Executive’s
employment hereunder, Executive shall receive the compensation and
benefits set forth in this Section 2.
2.1 Base
Salary . Executive’s Base Salary shall be his base
salary in effect on the Effective Date, as may be increased from
time to time thereafter by the Company, provided that
Executive’s Base Salary may be reduced in connection with one
or more base wage reductions generally applicable to salaried
employees of the Company. Executive’s Base Salary shall
be payable in accordance with the Company’s payroll
policies.
2.2 Incentive
Compensation . Executive shall be entitled to participate
in the Company’s Key Employee Annual Cash Incentive Plan (the
“KEACIP”) and the Company’s Long-Term Cash
Incentive Plan (“LTIP”), to the extent such plans
continue in effect, or any successor incentive compensation plans
on the terms and conditions to be established from time to time by
the Board of Directors or a committee thereof.
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 . Executive shall be
entitled to participate while employed hereunder in the
Company’s employee benefit programs at levels in effect from
time to time for salaried employees at a level comparable to
Executive, provided that Executive shall not participate in any
severance pay plan maintained by the Company except to the extent
necessary to receive any severance payments specifically provided
for hereunder.
3.
Other
Benefits.
3.1 Airline
Pass . In the event (A) Executive remains an active
full-time employee of the Company continuously from the Effective
Date through August 16, 2009 or (B) Executive’s
employment with the Company is terminated by the Company other than
for Cause or by Executive for Good Reason on or before
August 16, 2009, then 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 non-revenue travel pursuant to the
Company’s pass policies (hereinafter, “ Eligible
Individuals ”). Such airline pass privileges (the
“ Airline Pass ”) shall entitle Executive and
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 F-1 or the equivalent thereof for a period of
ten (10) years from and after the date such pass is
issued and F-1R thereafter. Executive shall be responsible
for any personal income tax liability arising from such pass
travel. Notwithstanding the foregoing, all benefits under
this Section 3.1 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 air carrier
that competes with the Company (or any of its
affiliates).
3.2
Medical and Dental Benefits . In the event
(A) Executive remains an active full-time employee of the
Company continuously from the Effective Date through June 1,
2011 or (B) Executive’s employment with the Company is
terminated by the Company other than for Cause or by Executive for
Good Reason on or before June 1, 2011, then, following
Executive’s termination of employment and thereafter during
the Executive’s lifetime, Executive and his eligible
dependents shall be entitled to participate in the Company’s
group medical and dental plans generally applicable to salaried
employees of the Company under the same terms and conditions as
shall apply to such salaried employees; provided, however, that
such coverage shall be secondary to Medicare or any other
government insurance program in which Executive may be entitled to
participate, and provided further, if Executive becomes employed by
another employer, such coverage shall become secondary to any
coverage provided by such employer for the period in which
Executive is entitled to such coverage. In addition, while
employed by the Company hereunder and so long as such program
continues in effect, Executive shall be entitled
2
to participate in the
Company’s Medical Expense Reimbursement Program on the same
terms and conditions generally applicable to other executives of
the Company.
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 by Executive (other than by death or
Disability) shall be communicated by thirty (30) days’
advance written notice of termination to the Company.
4.5
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 (and any committees thereof) and 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 governing body Executive serves as the
Company’s or such affiliate’s designee or other
representative.
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) The Company shall pay
Executive (i) his accrued and unpaid Base Salary through the
Date of Termination, (ii) any incentive payment under the Key
Employee Annual Cash Incentive Program, or any successor annual
incentive plan, (the “ Incentive Payment ”) 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 Payment Executive would otherwise
have received with respect to the year in which the Date of
3
Termination occurs, payable at the time the
Incentive Payment would otherwise be payable to Executive;
provided , however , that 100% of the Incentive
Payment 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 Payment 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
Payment 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) In addition to the
compensation and benefits described in Section 5.2(a), the
Company shall pay Executive, no later than thirty (30) days
following the Date of Termination, a lump sum amount e
| 
