EMPLOYMENT AGREEMENT
AGREEMENT made by and between ConAgra Foods, Inc., a Delaware corporation
("Company"), and ▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Executive") dated August 31, 2005 (the
"Agreement Date").
The Board of Directors of the Company ("Board") has determined that it is
in the best interests of the Company to obtain and retain the services of
Executive. In order to accomplish this objective, the Board has caused the
Company to enter into this Agreement.
NOW, THEREFORE, it is agreed as follows:
1. Term of Employment. Executive's term of employment under this Agreement
shall commence on the Agreement Date and shall continue in accordance with
the terms hereof until a termination of Executive's employment.
2. Position and Duties.
2.1 Position. On October 1, the Executive will become President and Chief
Executive Officer of the Company and Executive shall have the
customary powers, responsibilities and authorities of presidents and
CEOs of corporations of the size, type and nature of the Company and
as provided in the Company's by-laws. Executive's office shall be at
the principal executive offices of the Company in Omaha, Nebraska.
2.2 Duties. Executive shall devote his full working time and efforts to
the performance of the duties outlined above. Executive may,
consistent with his duties hereunder, engage in charitable and
community affairs, manage his personal investments and (subject to the
prior approval of the Board) serve on the board of directors of other
companies.
3. Compensation.
3.1 Base Salary. The Company shall pay Executive a Base Salary ("Base
Salary") at the rate of $1,000,000 per annum. The Base Salary shall be
payable in accordance with the ordinary payroll practices of the
Company. Executive's rate of Base Salary shall be reviewed for
possible increases by the Board at least annually, and any such
increased amount shall become the Base Salary hereunder.
3.2 Annual Incentive Bonus. Executive shall be entitled to receive an
annual bonus under the Company's Executive Annual Incentive Plan
("Annual Bonus Plan"), or any successor plan subsequently available to
senior executive officers. Executive's target bonus opportunity under
the Annual Bonus Plan shall not be less than 200% of Executive's Base
Salary. The performance goals with respect to such target bonus
opportunity shall be established annually by the Human Resources
Committee of the Board on a basis consistent with the establishment of
such performance goals for other senior executive officers of the
Company. Executive's annual bonus for fiscal year 2006 shall be no
less than his target bonus.
3.3 Long Term Senior Management Incentive Plan.
(a) In lieu of participation in the Company's Long-Term Senior
Management Incentive Program ("LTSMIP") for fiscal year 2006, on
May 26, 2006, the Company will grant to Executive options to
acquire 480,000 shares of Company common stock. The exercise
price of such options shall be the closing price of the Company's
common stock on the New York Stock Exchange ("NYSE") on May 26,
2006. Subject to earlier vesting as may be provided herein or in
the award agreement, one hundred ninety-two thousand (192,000) of
such options shall vest and become exercisable on May 27, 2007;
144,000 of such options shall vest and become exercisable on May
25, 2008; and the balance of such options shall vest and become
exercisable on May 31, 2009, in all events subject to Executive's
continued employment on such dates. Such options shall be granted
pursuant to a stock option agreement in the form of the stock
option agreement referenced in Section 3.4.
(b) Beginning with fiscal year 2007, Executive shall participate in
the LTSMIP or any successor plan at levels determined by the
Human Resource Committee of the Board of Directors and
commensurate with Executive's position.
3.4 Stock Option Grant. Pursuant to the stock option agreement entered
into as of the Agreement Date, the Company will grant to Executive
upon execution of this Agreement options to acquire 1,000,000 shares
of Company common stock. The exercise price of such options will be
the closing price of the Company's common stock on the NYSE on the
date of grant. Subject to earlier vesting as may be provided herein or
in the award agreement, four hundred thousand (400,000) of such
options shall vest and become exercisable on May 27, 2007; 300,000 of
such options shall vest and become exercisable on May 25, 2008; and
the balance of such options shall vest and become exercisable on May
31, 2009, in all events subject to Executive's continued employment on
such dates.
4. Other Benefits.
4.1 Employee Benefit Plans. The Company shall provide Executive and his
eligible dependents with coverage under all employee benefit programs,
plans and practices, in accordance with the terms thereof, which the
Company makes available to senior executive officers (including
qualified and non-qualified plans) in accordance with Company
policies. This will include vacation benefits pursuant to standard
Company vacation policy, but not less than four weeks per calendar
year.
4.2 Non-Qualified Plans. The Executive will participate in the Company's
Non-Qualified Pension Plan (the "Non-Qualified Plan") and
Non-Qualified CRISP Plan ("Non-Qualified CRISP Plan"). For purposes of
the Non-Qualified Plan, except as set forth below, (i) years of
service for purposes of calculating benefits will be credited at a
three-for-one rate until Executive has service credit of thirty years,
and (ii) annual pensionable earnings shall be no less than $3,000,000.
Notwithstanding the foregoing, (x) in the event of voluntary
termination or retirement prior to attainment of age 60, a crediting
rate of two-for-one shall apply in lieu of the three-for-one rate, (y)
the Board must approve a voluntary termination or retirement before
the fifth anniversary of the Agreement Date and, in the event of such
termination or retirement without approval by the Board, the Executive
will not be entitled to any benefits under the Non-Qualified Plan or
the Non-Qualified CRISP Plan, and (z) the amount of benefit payable
under the Non-Qualified Plan shall be subject to offset for benefits
paid or payable to Executive under any Pepsi supplemental pension
retirement plan. Such offset shall be determined by converting
benefits under both such plans to lump sum equivalent values which
shall be determined by applying the actuarial assumptions and methods
used by the Company for purposes for determining the lump sum benefit
payments under the Non-Qualified Plan. In the event of termination for
"Cause", the Executive will not be entitled to any benefits under the
Non-Qualified Plan or the Non-Qualified CRISP Plan.
4.3 Directors and Officers Liability Coverage. Executive shall be entitled
to the same coverage under the Company's directors and officers
liability insurance policies as is available to senior executive
officers and directors with the Company. In any event, the Company
shall indemnify and hold Executive harmless, to the fullest extent
permitted by the laws of the State of Delaware, from and against all
costs, charges and expenses (including reasonable attorneys' fees)
incurred or sustained in connection with any action, suit or
proceeding to which Executive or his legal representatives may be made
a party by reason of Executive's being or having been a director or
officer of the Company or any of its affiliates or employee benefit
plans. The provisions of this subparagraph shall not be deemed
exclusive of any other rights to which Executive seeking
indemnification may have under any by-law, agreement, vote of
stockholders or directors, or otherwise. The provisions of this
paragraph shall survive the termination of this Agreement for any
reason.
4.4 Expenses. Executive is authorized to incur reasonable expenses in
carrying out his duties under this Agreement, including expenses for
travel and similar items related to such duties. The Company shall
reimburse Executive for all such expenses upon presentation by
Executive from time to time of an itemized account of such
expenditures. The Company will pay all reasonable professional fees
and expenses incurred by Executive in connection with the negotiation
and preparation of this Agreement.
4.5 Relocation. Executive will be provided full relocation benefits in
accordance with the Company's policy, subject to the following:
(a) Executive will be provided temporary housing in Omaha at the
Company's expense in a corporate apartment (or equivalent monthly
housing allowance) for the lesser of two years or until Executive
purchases permanent housing in Omaha ("Interim Period");
(b) Executive will be provided commutation travel for Executive to
and from White Plains/Omaha during the Interim Period;
(c) To the extent that any benefit provided pursuant to this Section
4.5 is taxable to the Executive, the Company shall pay to the
Executive a full gross-up (except to the extent such expenditures
by the Executive may be deducted on the Executive's personal
income tax return and excluding gain on sale of home) so that the
amounts paid by the Company, net of the Executive's taxes, fully
cover the relevant expenses.
4.6 Security Policy. The Company's senior executive security policy will
apply to Executive, including use of corporate aircraft and
appropriate home security in Omaha.
4.7 Change of Control Benefits. The Executive will participate in the
Company's change of control benefits programs and agreements
applicable to the Company's executive officers, as modified from time
to time; provided that (i) the severance benefit which may become
payable to Executive upon or after a change of control as defined
under such program shall be no less than 2.99 times the sum of
Executive's Base Salary plus target annual bonus as provided under in
Section 3.1 and 3.2 hereof, and (ii) Executive will be entitled to
full tax gross up (including all taxes imposed on such gross up
payment) with respect to excise taxes (including interest and
penalties related thereto) imposed under Section 4999 of the Internal
Revenue Code with respect to any payments, distributions or benefits
paid or payable to or for the benefit of Executive pursuant to the
terms of this Agreement or otherwise; provided further, if the
benefits payable under such change of control benefits programs are
duplicative of benefits provided under this Agreement, the Executive
shall receive only the most favorable benefits (determined on a
benefit by benefit basis) under one such program.
4.8 Stock Ownership. The Executive acknowledges and agrees to comply with
the Company's executive stock ownership guidelines as existing from
time to time, and which currently prohibit Executive from selling any
shares of Company common stock except (i) shares, the proceeds of
which are used to pay taxes resulting from the vesting or exercise of
options, and (ii) sales, so long as, immediately following such sale,
Executive owns shares of Company common stock (as determined under the
Company's share ownership guidelines, as modified from time to time)
with a value (as determined under the Company's share ownership
guidelines, as modified from time to time) in excess of six times
Executive's annual Base Salary.
4.9 Post-Retirement Benefits.
(a) Upon termination of employment following the fifth anniversary of
the Agreement Date, or, if earlier, due to death or disability,
or involuntary termination without Cause or resignation for Good
Reason, Executive will be deemed retiree eligible ("Retiree
Eligible") under all pension (other than qualified pension
plans), welfare benefit and equity incentive plans and programs
applicable to senior executives.
(b) So long as Executive is Retiree Eligible, Executive (his wife and
other covered dependents) shall be provided post-employment
COBRA-equivalent medical coverage, at Executive's expense, until
each of Executive and his wife, respectively, attain age 65 (and
other covered dependents otherwise would cease to be eligible for
coverage). This benefit would follow any health benefit
continuation coverage occurring in connection with
severance-related benefits continuation described in Section 5.2
and would fill gaps in Company-provided retiree plan coverage.
5. Termination of Employment. The Company may terminate Executive's employment
at any time for any reason, and Executive may terminate his employment at
any time with or without Good Reason, subject to the terms of this Section
5. For purposes of this Section 5, the following terms shall have the
following meanings:
(a) "Cause" shall be limited to (i) action by Executive involving
willful malfeasance in connection with his employment having a
material adverse effect on the Company, (ii) substantial and
continuing refusal by Executive in willful breach of this
Agreement to perform the duties ordinarily performed by an
executive occupying his position, which refusal has a material
adverse effect on the Company, or (iii) Executive being convicted
of a felony involving moral turpitude under the laws of the
United States or any state.
(b) "Good Reason" shall mean (i) the assignment to Executive of
duties materially inconsistent with Executive's position or any
removal of Executive from, or failure to elect or reelect
Executive to, the position of President and CEO of the Company
(or other position as may be agreed to by Executive), except in
any case in connection with the termination of Executive's
employment for Cause, Permanent Disability, death, or voluntary
termination by Executive without Good Reason, (ii) failure of the
Board to nominate Executive for election to the Company's Board,
except in connection with termination for Cause, Permanent
Disability, death, or voluntary termination by Executive without
Good Reason, (iii) a reduction of Executive's Base Salary or of
the annual target bonus opportunity as in effect on the Agreement
Date, (iv) any material breach by the Company of any provision of
this Agreement, or (v) a requirement that Executive be based at
any office or location other than Omaha, Nebraska.
(c) "Permanent Disability" shall mean the permanent disability of
Executive as determined under the Company's Long-Term Disability
Plan.
5.1 Termination Upon Death or Permanent Disability. In the event
Executive's employment with the Company is terminated by reason of
Executive's death or Permanent Disability (i) all restrictions on
previously granted restricted stock awards shall lapse and such shares
shall become fully vested, (ii) all options previously granted to
Executive, and all awards in connection with the LTSMIP, shall become
fully vested, and all options will be exercisable during the remainder
of the term of such options, (iii) all deferred compensation (not
including retirement benefits) shall be promptly paid to Executive's
estate or designated beneficiary in accordance with the terms of such
deferred compensation (the items in (i), (ii) and (iii) above and (v)
below are collectively referred to as the "Accrued Benefits"), (iv)
Executive and his dependents shall continue to participate in the
Company's employee benefit plans to the extent provided in such plans
with respect to the death or Permanent Disability of senior executive
officers of the Company, (v) Executive's Base Salary shall be paid
through the month of death or Permanent Disability, together with any
accrued, but unused, vacation pay, and (vi) Executive shall receive a
benefit under the Annual Bonus Plan and the LTSMIP prorated for the
fiscal year during which Executive died or became Permanently
Disabled.
5.2 Termination Without Cause or for Good Reason. If the Company
terminates the employment of Executive without Cause, or if Executive
voluntarily terminates employment with Good Reason, (i) Executive
shall receive all Accrued Benefits, (ii) Executive's pension benefit
under the Non-Qualified Plan shall be based on the amount accrued to
the date of termination, plus the additional amount that would have
accrued during the next two years if Executive would have remained
employed and received compensation described in clause (iii) below,
such pension benefit to be paid in accordance with the Non-Qualified
Plan, (iii) Executive's Base Salary and target bonus under the Annual
Bonus Plan shall continue for a period of 24 months following such
termination, (iv) Executive will be entitled to a pro rata annual
bonus under the Annual Bonus Plan for the year of termination, based
on actual performance and payable when bonuses are paid to other
senior executives; and (vi) Executive and his dependents shall be
entitled to continued participation in all health and welfare plans or
programs in which Executive and such dependents were participating on
the date of the termination until the earlier of (a) the second
anniversary of termination of employment, and (b) the date, or dates,
Executive receives equivalent coverage and benefits under the plans
and programs of a subsequent employer (such coverages and benefits to
be determined on a coverage-by-coverage, or benefit-by-benefit basis);
provided that, to the extent Executive is precluded from continuing
participation in any such plan or program as provided in this Section,
the Company shall pay to Executive an amount equal to the sum of (x)
with respect to insured benefits, the present value (discounted using
the then published 2-year Treasury rate) of the premiums expected for
coverage less any active employee portion of the premiums for the
2-year period, plus (y) with respect to benefits not insured, the
present value (discounted using the then published 2-year Treasury
rate) of the expected gross cost per employee to the Company to
provide such benefits less active employee contributions.
5.3 Termination With Cause or Without Good Reason. If the Company
terminates the employment of Executive with Cause, or if Executive
voluntarily terminates employment with the Company without Good
Reason, then (i) Executive shall be paid the Base Salary through the
month of termination, and (ii) Executive shall receive benefits, if
any, under Company plans in accordance with the terms of such plans.
5.4 Timing of Payments. Subject to Section 5.5 below, all cash payments
required hereunder following the termination of Executive's employment
shall be made within fifteen days following such termination;
provided, that payments under the Annual Bonus Plan or the LTSMIP
shall be made following the end of the applicable fiscal year at the
same time as such payments are made to the Company's other senior
executive officers participating in such plans and payments under the
non-qualified retirement or deferred compensation plans shall be made
in accordance with the provisions of such plans.
5.5 Code Section 409A. It is intended that any amounts payable under this
Agreement and the Company's and Executive's exercise of authority or
discretion hereunder shall comply with the provisions of Section 409A
of the Internal Revenue Code and the treasury regulations relating
thereto so as not to subject Executive to the payment of interest and
tax penalty which may be imposed under Section 409A. In furtherance of
this intent, to the extent that any regulations or other guidance
issued under Section 409A after the date of this Agreement would
result in the Executive being subject to the payment of such interest
or tax penalty, the Company and Executive agree to amend this
Agreement in order to bring this Agreement into compliance with
Section 409A.
6. Nondisclosure of Confidential Information. Executive shall not, without the
prior written consent of the Company, disclose any Company Confidential
Information except (i) in the business of and for the benefit of the
Company, while employed by the Company, or (ii) when required to do so by a
court of competent jurisdiction, by any administrative body or legislative
body. "Confidential Information" shall mean non-public information
concerning the Company's financial data, strategic business plans, product
development and other proprietary information, except for items which have
become publicly available information or are otherwise known to the public.
Confidential Information does not include information the disclosure of
which could not reasonably be expected to adversely affect the business of
the Company.
7. Noncompetition/Non-Solicitation.
(a) From the Agreement Date through a period ending one year
following the termination of the employment of Executive with the
Company for any reason (the "Restricted Period"), Executive shall
not be an executive officer, board member, 5% or greater owner or
partner, or employee of a food company with revenues over $1
billion.
(b) During the Restricted Period, Executive will not directly or
through others, without the prior written consent of the Board
(i) directly or indirectly recruit, hire, solicit or induce, or
attempt to induce, any employee of the Company or its associated
companies to terminate their employment with or otherwise cease
their relationship with the Company or its associated companies,
or (ii) solicit business or customers of the Company.
(c) Executive agrees that any breach of the covenants contained in
this Section 7, and the covenants contained in the preceding
Section 6, will irreparably injure the Company, and accordingly
the Company may, in addition to pursing any other remedies
available at law or in equity, obtain an injunction against
Executive from any court having jurisdiction over the matter,
restraining any further violation of such provisions by
Executive.
Executive acknowledges and agrees that the provisions of this Section 7 are
reasonable and valid in duration and scope and in all other respects. If
any court determines that any provision of this Section is unenforceable
because of duration or scope of such provision, such court shall have the
power to reduce the scope or duration of such provision, as the case may
be, and, in its reduced form, such provision shall then be enforceable.
8. Offsets. In the event of a termination of Executive's employment pursuant
to Section 5.2 above or a Company breach of this Agreement, Executive shall
not be required to mitigate damages nor shall the payments due Executive
hereunder be reduced or offset by reason of any payments Executive may
receive from any other source (except for the offset described in Section
4.2 relating to benefits under the Non-Qualified Plan and except for the
offset described in Section 5.2 with respect to health and welfare plans
and programs) or by any amounts owing by Executive to the Company.
9. Separability; Legal Fees. If any provision of this Agreement shall be
declared to be invalid or unenforceable, in whole or in part, such
invalidity or unenforceability shall not affect the remaining provisions
hereof which shall remain in full force and effect. In addition, the
Company shall pay to Executive as incurred all legal and accounting fees
and expenses incurred by Executive in seeking to obtain or enforce any
right or benefit provided by this Agreement or any other
compensation-related plan, agreement or arrangement of the Company, unless
Executive's claim is found by a court of competent jurisdiction to have
been frivolous.
10. Assignment. This Agreement shall be binding upon and inure to the benefit
of the heirs and representatives of Executive and the assigns and
successors of the Company, but neither this Agreement nor any rights
hereunder shall be assignable or otherwise subject to hypothecation by
Executive (except by will or by operation of the laws of intestate
succession) or the Company, except that the Company shall assign this
Agreement to any successor (whether by merger, purchase or otherwise) to
all or substantially of the stock, assets or businesses of the Company.
11. Amendment. This Agreement may only be amended by mutual written agreement
between the Company and Executive.
12. Notices. All notices or communications hereunder shall be in writing,
addressed as follows:
To the Company: ConAgra Foods, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Secretary
To Executive: At the address shown on the records of the Company
Any such notice or communication shall be sent certified or registered
mail, return receipt requested, postage prepaid, addressed as above (or to
such other address as such party may designate in a notice duly delivered
as described above), and the actual date of mailing shall determine the
date at which notice was given.
13. Governing Law. This Agreement shall be construed, interpreted and governed
in accordance with the laws of Delaware without reference to such state's
rules relating to conflicts of law.
14. Arbitration. Any controversy or claim arising out of this Agreement or any
breach shall be resolved by arbitration pursuant to this Section and the
then current rules of the American Arbitration Association. The arbitration
shall be held in Omaha, Nebraska before three arbitrators who are
knowledgeable of employment law. If the parties cannot agree on the
appointment, one arbitrator shall be appointed by the Company, one by the
Executive, and the third shall be appointed by the first two arbitrators.
The arbitrator's decision and award shall be final and binding and may be
entered in any court having jurisdiction thereof. The arbitrator shall not
have the power to award punitive or exemplary damages. Each party shall
bear its own attorneys' fees associated with the arbitration and other
costs and expenses of the arbitration shall be borne as provided by the
rules of the American Arbitration Association; provided, however, that,
unless the arbitrators determine the position of the Executive was
frivolous, Executive shall be entitled to reimbursement for reasonable
attorneys' fees and expenses and arbitration expenses incurred in
connection with the dispute. If any portion of this paragraph is held to be
unenforceable, it shall be severed and shall not affect either the duty to
arbitrate or any other part of this paragraph. The Company may seek interim
injunctive relief to enforce restrictive covenants pending resolution of
any arbitration.
15. Company Representation. The Company represents to Executive that, as of the
date hereof, all financial statements, after any amendments thereto, filed
through the Agreement Date for each quarter and fiscal year since the
beginning of fiscal year 2003 fairly present in all material respects the
financial position and results of operations of the Company in conformity
with general accepted accounting principles (except as stated in the
footnotes to such financial statements) as of, and for the period ended on,
the applicable reporting date.
16. Executive Representation. The Executive represents and warrants to the
Company that the Executive is not a party to or bound by, and the
employment of the Executive by the Company or the Executive's disclosure of
any information to the Company or its use of such information will not
violate or breach any employment, retainer, consulting, license,
non-competition, non-disclosure, trade secrets or other agreement between
the Executive and any other person, partnership, corporation, joint
venture, association or other entity.
17. Entire Agreement. This Agreement supersedes all prior agreements and
understandings by and between the Executive and the Company and any of its
Affiliates or their respective directors, officers, shareholders,
employees, attorneys, agents, or representatives, and constitutes the
entire agreement between the parties, respecting the subject matter hereof
and there are no representations, warranties or other commitments other
than those expressed herein. If there is a conflict between any provision
of this Agreement and any provision of any Company plan or agreement
pursuant to which employee benefits are provided to Executive, including
any stock option or other award agreement, the provision most favorable to
Executive will control. Executive acknowledges that certain plans
maintained by the Company must comply with ERISA, the Internal Revenue Code
and the terms and conditions of the plans ("Qualified Plans"). Nothing
contained in this Agreement will require the Company to provide any benefit
contrary to the terms and conditions of the Qualified Plans or in violation
of ERISA or the Internal Revenue Code. To the extent any benefit to be
provided hereunder to the Executive cannot be provided through a Qualified
Plan, the Company will provide the benefit on a non-qualified basis.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
CONAGRA FOODS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Chairman, Human Resources Committee
of the Board of Directors
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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