Exhibit 10.1
EXECUTIVE EMPLOYMENT
AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT (this
“Agreement”) is made and entered into October 15, 2008
by and between VAIL RESORTS, INC., a Delaware corporation (the
“Company”) and Robert A. Katz
(“Executive”).
Whereas the parties had previously entered into
that certain Employment Agreement, dated February 28, 2006 (the
“Original Agreement”), but now desire to make certain
updates to the terms contained in that Original Agreement as
required to comply with law and as otherwise agreed herein and in
order to accomplish the foregoing to enter into this replacement
Agreement.
The parties hereto agree as follows:
(a) The
Company hereby employs Executive to serve as the Chief Executive
Officer of the Company on the terms and conditions set forth
herein. In such capacity, Executive shall have the responsibilities
normally associated with such position, subject to the direction
and supervision of the Board of Directors of the Company (the
“Board”). Executive shall also serve as a
member of the Board and the Executive Committee of the
Board.
(b) Executive
accepts employment hereunder and agrees that, during the term of
Executive’s employment, Executive will observe and comply
with the policies and rules of the Company and devote substantially
all Executive’s time during normal business hours and best
efforts to the performance of Executive’s duties hereunder,
which duties shall be performed in an efficient and competent
manner and to the best of Executive’s
ability. Executive further agrees that, during the term
of this Agreement, Executive will not, without the prior written
consent of the Board, directly or indirectly engage in any manner
in any business or other endeavor, either as an owner, employee,
officer, director, independent contractor, agent, partner, advisor,
or in any other capacity calling for the rendition of
Executive’s personal services. This restriction
shall not preclude Executive from having passive investments, and
devoting reasonable time to the supervision thereof (so long as
such does not create a conflict of interest or interfere with
Executive’s obligations hereunder), in any business or
enterprise that is not in competition with any business or
enterprise of the Company or any of its parents, subsidiaries or
affiliates (collectively, the
“Companies”). This Agreement shall not limit
Executive’s community or charitable activities so long as
such activities do not impair or interfere with Executive’s
performance of the services contemplated by this
Agreement.
For all services rendered by Executive to or on
behalf of the Companies, the Company shall provide or cause to be
provided to Executive, subject to making any and all withholdings
and deductions required of the Company or its affiliates by law
with all other income tax consequences being borne by Executive,
the following:
(a)
Base Salary . Executive shall receive a base
salary of Eight Hundred and Forty-Three Thousand Five Hundred
Dollars ($843,500.00) per year (the “Base Salary”),
payable in accordance with the normal payroll practices of the
Company, and net of mandatory time off deductions and other
applicable withholding and deductions. Executive’s
Base Salary shall be reviewed annually by the Compensation
Committee of the Board (the “Compensation
Committee”). Any increases in such Base Salary
shall be at the discretion of the Compensation Committee, and
Executive acknowledges that the Compensation Committee is not
obligated to grant any increases. The Base Salary shall
not be lowered during the term of this Agreement without
Executive’s written consent.
(b)
Vail Resorts Management Incentive Plan for Corporate
Executives . Executive shall be entitled to
participate in the Management Incentive Plan for Corporate
Executives (the “MIP”) on the same terms as may be
applicable to other senior executives of the Company and subject to
the terms of the MIP. Under the MIP, Executive’s
target annual bonus award will be One Hundred Percent (100%) of
Executive’s Base Salary based upon Executive’s
performance in light of objectives established by the Board and
assessed by the Compensation Committee. The value of any
award under the MIP (“MIP Award”) made to Executive
shall be payable in the form of cash as to Fifty Percent
(50%) of the MIP Award and in the form of Restricted Stock Units
(“RSUs”) with a value equal to the remaining Fifty
Percent (50%) of the MIP Award. The RSUs shall be issued
subject to the terms of the VRI Amended and Restated 2002 Long Term
Incentive and Share Award Plan (the “Equity Compensation
Plan”) and the agreement provided pursuant thereto, using the
Company’s standard valuation methodology and vesting in
increments of 1/3 per year over a three year period, such vesting
to commence on the first anniversary of the grant date of such
RSUs. Any awards under the MIP are at the discretion of
the Compensation Committee.
(c)
Benefits; Paid Time Off . Executive shall be
eligible to participate in the benefit plans and perks and on the
same terms as may be extended generally to other senior executives
of the Companies and to the extent Executive is eligible under the
terms of the applicable plan. Executive shall also
receive two hundred sixteen (216) hours of paid time off, which
amount shall include hours for paid holidays, as well as be
required to take such hours of mandatory-time-off in accordance
with the Company’s policies and procedures.
(d)
Clubs and Other Privileges . Executive shall,
subject to applicable rules in effect from time to time, be
entitled during the term of employment to the benefits of
membership in all of the private clubs owned and operated by the
Company from time to time (collectively
“Clubs”) as part of the Company’s quality
evaluation program and subject to completion of bi-annual feedback
surveys; provided that Executive shall not actually be a member of
such Clubs and in no event shall Executive be entitled to any claim
of reimbursement for any initiation or similar
fees. Executive shall be solely responsible for the
payment of any and all charges incurred at such Clubs, but may
utilize Executive’s annual allowance provided pursuant to
Executive Perquisite Fund (as may be in effect from time to time)
to pay such charges, excepting only the payment of regular dues,
which Executive shall not be obligated to pay. In
addition, Executive shall receive all other benefits and
perquisites on the same terms afforded from time to time to senior
executives generally or as specifically approved by the
Compensation Committee. Executive shall participate in
the Executive Perquisite Fund (under the terms as of the date
hereof) in the amount of $70,000 per annum.
(e)
Expense Reimbursement . Executive shall have a
travel and entertainment budget that is reasonable in light of
Executive’s position and responsibilities and shall be
reimbursed for all reasonable business-related travel and
entertainment expenses incurred by Executive thereunder upon
submission of appropriate documentation thereof in compliance with
applicable Company policies.
(f)
Legal Expenses . The Company shall reimburse
Executive’s reasonable documented legal fees and expenses
(not to exceed $10,000) incurred in the review and negotiation of
this Agreement.
(g)
LTI Grant . So long as Executive shall be
employed by the Company on March 1, 2009 (and has not received any
notice of termination for any reason as of or prior to that date),
Executive shall be granted (the “March 2009 Grant”) a
long term incentive award having a grant value of $4,800,000, of
which (1) $1,000,000 (using the Company’s standard valuation
methodology) shall be pursuant to a grant of Restricted Stock Units
(“RSUs”), and (2) $3,800,000 (using the Company’s
standard valuation methodology) shall be pursuant to a grant of
Share Appreciation Rights (“SARs”), each of which (x)
shall be subject to the terms of the VRI Amended and Restated 2002
Long Term Incentive and Share Award Plan (or such successor equity
compensation plan) and the agreements provided pursuant thereto,
and (y) shall vest in full on September 30, 2011; provided ,
however , that this provision shall be of no effect in the
event that a Change in Control, as defined below, has been
completed on or before March 1, 2009, and only if the effect of
such Change in Control is to extinguish, exchange or convert the
common stock of the Company concurrent with the Change in Control
being effected. Notwithstanding the terms of any other
agreement or plan, none of the vesting of the RSUs or SARs issued
pursuant to the March 2009 Grant shall accelerate in the event of a
duly completed Change in Control which has been publicly announced
or completed prior to September 1, 2009 but rather shall vest
pursuant to (y) above.
(a)
Term . The effective date of this Agreement shall
be October 15, 2008 (“Employment Commencement
Date”). Unless terminated earlier, the term of
this Agreement shall be for the period commencing with the
Employment Commencement Date and continuing through October 15,
2011 and shall thereafter be automatically renewed for successive
one-year periods unless, no later than 60 days before the
expiration of the then-current term, either Executive or the
Company gives the other written notice of non-renewal, in which
case this Agreement shall expire upon the conclusion of the
then-current initial or renewal term.
(b)
Termination for Cause . The Company may terminate
this Agreement at any time for “Cause”. For
purposes of this Agreement, “Cause” shall mean (i) any
conduct related to the Company involving gross negligence, gross
mismanagement, or the unauthorized disclosure of confidential
information or trade secrets; (ii) dishonesty or a violation of the
Company’s Code of Ethics and Business Conduct that has or
reasonably could be expected to result in a detrimental impact on
the reputation, goodwill or business position of any of the
Companies; (iii) gross obstruction of business operations or
illegal or disreputable conduct by Executive that impairs or
reasonably could be expected to impair the reputation, goodwill or
business position of any of the Companies, and any acts that
violate any policy of the Company relating to discrimination or
harassment; (iv) commission of a felony or a crime involving moral
turpitude or the entrance of a plea of guilty or nolo contedere to
a felony or a crime involving moral turpitude; or (v) any action
involving a material breach of the terms of the Agreement including
material inattention to or material neglect of duties and Executive
shall not have remedied such breach within 30 days after receiving
written notice from the Board specifying the details
thereof. In the event of a termination for Cause,
Executive shall be entitled to receive only Executive’s
then-current Base Salary through the date of such
termination. Further, Executive acknowledges that in the
event of such a termination for Cause, Executive shall not be
entitled to receive any bonus payment for the year of termination
or subsequent years under the MIP or any other incentive
compensation plan in which Executive is then
participating.
(c)
Termination Without Cause . The Company may
terminate this Agreement at any time without Cause, by giving
Executive written notice specifying the effective date of such
termination. In the event of a termination without Cause
and provided that Executive and the Company execute (and, if
applicable, thereafter not revoke) a written release in connection
with such termination substantially in the form attached hereto as
Annex I (the “Mutual Release”), Executive shall be
entitled to receive (i) Executive’s then-current Base Salary
through the effective date of such termination, (ii) a pro-rated
bonus for the portion of the Company’s fiscal year through
the effective date of such termination, which pro-rated bonus shall
be based on applying the level of achievement of the performance
targets (with respect to both Executive and the Companies) to
Executive’s target bonus for the year of such termination
payable in a lump sum at the same time as bonuses are paid to the
Company’s senior executives generally (the “Pro-Rated
Bonus”), and (iii) twenty-four (24) months of
Executive’s then current Base Salary payable in a lump
sum. For the purposes of this section, any written
notice of non-renewal given by the Company pursuant to Section 3(a)
of this Agreement shall be deemed termination without Cause.
Any payment to Executive made pursuant hereto shall
be paid to Executive no later than the date that is two and a half
months following the calendar year in which such termination
without Cause occurs. In addition, provided that the
Mutual Release has been executed, all unvested shares or portions
of any equity grant not yet vested (including RSUs, SARs, stock
options or any other form of equity or long-term incentive) made by
the Company to Executive concurrent with or subsequent to the
execution of the Original Agreement under any equity compensation
plan of the Company (“Unvested Equity Grants”) shall
automatically become fully vested upon termination pursuant to this
Section 3(c).
(d)
Termination By Executive For Good Reason
. Executive shall be entitled to terminate this
Agreement at any time for “Good Reason” by giving the
Company written notice of such termination. For purposes
of this Agreement, “Good Reason” shall mean (i) the
Company has breached its obligations hereunder in any material
respect, (ii) the Company has decreased Executive’s then
current Base Salary, (iii) Executive is directed to relocate
Executive’s principal office more than 30 miles from
Interlocken Business Park without Executive’s consent, (iv)
the Company has effected a material diminution in Executive’s
reporting responsibilities, authority, or duties as in effect
immediately prior to such change, and/or (v) the occurrence of a
Change in Control (as defined below); provided ,
however , that Executive shall not have the right to
terminate this Agreement for Good Reason unless: (A) Executive has
provided notice to the Company of any of the foregoing conditions
within 90 days of the initial existence of the condition; (B) the
Company has been given at least 30 days after receiving such notice
to cure such condition (other than if Good Reason is due to a
Change in Control); and (C) Executive actually terminates
employment within six months following the initial existence of the
condition. In such event, provided that Executive and
the Company have executed (and, if applicable, thereafter not
revoked) the Mutual Release, Executive shall be entitled to receive
(w) Executive’s then current Base Salary through the
effective date of such termination, (x) a Pro-Rated Bonus,
(y) Twenty-Four (24) months of Executive’s then current
Base Salary payable in a lump sum. Any payment to
Executive made pursuant hereto shall be paid to Executive no later
than the date that is two and a half months following the calendar
year in which such termination for Good Reason
occurs. In addition, provided that the Mutual Release
has been executed, all Unvested Equity Grants shall automatically
become fully vested upon termination pursuant to this Section
3(d).
(e)
Termination By Executive Without Good Reason
. Executive may also terminate this Agreement at any
time without Good Reason by giving the Company at least thirty (30)
days’ prior written notice. In such event,
Executive shall be entitled to receive only Executive’s
then-current Base Salary through the date of
termination. Further, Executive acknowledges that in the
event of such a termination without Good Reason, Executive shall
not be entitled to receive any bonus payment for the year of
termination or subsequent years under the MIP or any other
incentive compensation plan in which Executive is then
participating.
(f)
Termination Due To Disability . In the event that
Executive becomes “Totally and Permanently Disabled”
(as reasonably determined by the Board acting in good faith), the
Company shall have the right to terminate this Agreement upon
written notice to Executive; provided, however, that in the event
that Executive and the Company execute (and, if applicable,
thereafter not revoke) the Mutual Release, Executive
shall be entitled to receive (i) Executive’s then-current
Base Salary through the date of such termination, (ii) a Pro-Rated
Bonus, and (iii) Executive’s then-current Base Salary, net of
short term disability payments remitted to Executive by the Company
pursuant to the Company’s Short-Term Disability Plan, through
the earlier of (y) the scheduled expiration date of this Agreement
(but in no event less than twelve (12) months from the date of
disability) or (z) the date on which Executive’s long-term
disability insurance payments commence. In addition,
provided that the Mutual Release has been executed, all Unvested
Equity Grants shall automatically become fully vested upon
termination pursuant to this Section 3(f).
(g)
Termination Due To Death . This Agreement shall
be deemed automatically terminated upon the death of
Executive. In such event, provided Executive’s
personal representative and the Company execute a release
substantially in the form of the Mutual Release, Executive’s
personal representative shall be entitled to receive (i)
Executive’s then-current Base Salary through such date of
termination, and (ii) a Pro-Rated Bonus. In addition,
provided that the Mutual Release has been executed, all Unvested
Equity Grants shall automatically become fully vested upon
termination pursuant to this Section 3(g).
(h)
Other Benefits . Upon Executive’s
termination pursuant to Sections 3(c) or (d), and, in the event
that Executive and the Company execute (and, if applicable,
thereafter not revoke) the Mutual Release, the Company agrees to
pay Executive, in lump sum, one year’s COBRA premiums for
continuation of health and dental coverage in existence at the time
of such termination, as determined as of Executive’s date of
termination . This payment will be remitted to Executive at
the same time that Executive is paid pursuant to Sections 3(c) and
(d). Except as expressly set forth in this Section 3,
Executive shall not be entitled to receive any compensation or
other benefits in connection with the termination of
Executive’s employment.
(i)
Termination in Connection with a Change in Contro
l. In the event of a termination of Executive’s
employment by the Company without Cause or by Executive for Good
Reason or notice by the Company of non-renewal of this Agreement,
all within 365 days of a consummation of a Change in Control of the
Company and provided that Executive and the Company execute (and,
if applicable, thereafter not revoke) the Mutual Release, Executive
shall be entitled to receive (i) Executive’s then-current
Base Salary through the effective date of such termination or
non-renewal, (ii) a Pro-Rated Bonus, (iii) a lump sum payment equal
to twenty-four (24) months of Executive’s then current
Base Salary plus an amount equal to the cash bonus paid to
Executive in the prior calendar year, payable no later than the
date that is two and a half months following the calendar year in
which such termination or non-renewal occurs, and (iv) to the
extent not already vested, full vesting of all Unvested Equity
Grants. For purposes of this Agreement, “Change in
Control” shall mean an event or series of events by
which: (A) any “person” or
“group” (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), but excluding any employee benefit
plan of such person or its subsidiaries, and any person or entity
acting in its capacity as trustee, agent, or other fiduciary or
administrator of any such plan) becomes the “beneficial
owner” (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act), directly or indirectly, of 35% or more of the equity
securities of the Company entitled to vote for members of the Board
or equivalent governing body of the Company on a fully-diluted
basis; or (B) during any period of twenty four (24) consecutive
months, a majority of the members of the Board or other equivalent
governing body of the Company cease to be composed of individuals
(1) who were members of that Board or equivalent governing body on
the first day of such period, (2) whose election or nomination to
that Board or equivalent governing body was approved by individuals
referred to in clause (1) above constituting at the time of such
election or nomination at least a majority of that Board or
equivalent governing body, or (3) whose election or nomination to
that Board or other equivalent governing body was approved by
individuals referred to in clauses (1) and (2) above constituting
at the time of such election or nomination at least a majority of
that Board or equivalent governing body (excluding, in the case of
both clause (2) and clause (3), any individual whose initial
nomination for, or assumption of office as, a member of that Board
or equivalent governing body occurs as a result of an actual or
threatened solicitation of proxies or consents for the election or
removal of one or more directors by any person or group other than
a solicitation for the election of one or more directors by or on
behalf of the Board); or (C) any person or two or more persons
acting in concert shall have acquired, by contract or otherwise,
control over the equity securities of the Company entitled to vote
for members of the Board or equivalent governing body of the
Company on a fully-diluted basis (and taking into account all such
securities that such person or group has the right to acquire
pursuant to any option right) representing 51% or more of the
combined voting power of such securities; or (D)the Company sells
or transfers (other than by mortgage or pledge) all or
substantially all of its properties and assets to, another
“person” or “group” (as such terms are used
in Sections 13(d) and 14(d) of the Exchange Act).
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