Employment Agreement - CBS Inc. and Peter Lund
AGREEMENT made as of the 28th day of November, 1995, by and between
CBS Inc. ("CBS"), a New York corporation, having its principal office at
51 West 52 Street, New York, New York 10019, and PETER LUND ("Executive").
W I T N E S S E T H:
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WHEREAS, Executive has been performing services as President of the
CBS Broadcast Group of CBS pursuant to an agreement between Executive and CBS,
made as of February 23, 1995 (the "Existing Agreement"); and
WHEREAS, CBS desires to secure the services of Executive as President
and Chief Executive Officer of CBS and Executive is willing to perform such
services, upon the terms, provisions and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants hereinafter contained, it is agreed upon between CBS and Executive as
follows:
1. This Agreement supersedes, cancels and replaces the Existing
Agreement between CBS and Executive in all respects as of the date hereof,
except that the compensation arrangement set forth in the Existing Agreement
shall be superseded by the compensation arrangements set herein as of January
1, 1996, provided that the bonus payment of $350,000 due Executive in respect
of "the first contract year" under paragraph 3(b) of the Existing Agreement
shall be paid to Executive in February, 1996.
2. (a) CBS hereby employs Executive, and Executive hereby
accepts employment as President and Chief Executive Officer of CBS for a term
cornmencing as of the date hereof and ending December 31, 1999 (the "Employment
Term").
(b) Executive shall be based in New York City and report
directly and only to the
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highest executive officer of Westinghouse Electric Corporation ("Westinghouse")
(currently, Michael H. Jordan) and the Board of Directors of Westinghouse and
will act in accordance with the requirement of Law with respect to all CBS and
all applicable CBS and Westinghouse subsidiaries engaged in the Broadcasting
business. Executive's authority shall include the right to hire and fire all
persons employed by CBS and to approve any and all employment and similar
agreements relating to such persons in accordance with CBS and Westinghouse
personnel policies and practices, including the Westinghouse Compensation
Committee Charter.
(c) All officers, employees and other personnel of CBS
shall report only to Executive either directly or through such channels as
Executive in his discretion shall specify. Executive shall have full authority
to manage CBS, including its personnel, business and operations in accordance
with applicable policies and procedures, including those of the Westinghouse
Board.
(d) All entities which conduct activities or operations
described below and which are owned, operated or controlled in whole or part by
Westinghouse or in which Westinghouse has a direct or indirect interest will be
treated as if they were part of CBS, and the presidents or other chief
executive officers, as applicable, of such entities will report solely to
Executive. Without limitation, the foregoing shall apply to any such domestic
United States entity, regardless of where it conducts business and any foreign
entity which conducts business in the United States, which Westinghouse owns,
operates, controls or in which it acquires a direct or indirect interest
following the date hereof, and which is engaged, directly or indirectly, in any
activity or operation which the CBS Broadcast Group operated or controlled or
in which it or any entity related to it had an interest on November 24, 1995.
Such activities and operations include, or are deemed to include, with
limitation, the following, anywhere throughout the world: (A) television
network broadcast
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operations and activities; (B) ownership, management and/or operation of
television stations; (C) development, production, co-production, financing,
distribution and exploitation of audiovisual works and any elements thereof and
derivatives therefrom; (D) the ownership, management and/or operation of radio
stations and/or radio networks; and, (E) commercial tie-ups and merchandising.
3. (a) CBS agrees to pay Executive, and Executive agrees to
accept from CBS for his services hereunder, a base salary of $1,700,000 per
annum for the first contract year (effective January 1, 1996), $1,950,000 for
the second contract year (effective January 1, 1997), $2,200,000 for the third
contract year (effective January 1, 1998), and $2,450,000 for the fourth
contract year (effective January 1, 1999). Executive's base salary shall be
paid bi-weekly or in such other manner as CBS may designate for employees
generally.
(b) CBS agrees that Executive's Annual Incentive target
for each of 1996, 1997, 1998, and 1999 shall be $1,000,000 (100 percent of
target), but that Executive shall receive no les than $1,000,000 as his Annual
Incentive payment with respect to 1996 (payable in February, 1997) and no less
than $600,000 (60 percent of target) as his Annual Incentive payment with
respect to each of 1997, 1998, and 1999 (payable in February of 1998, 1999, and
2000, respectively). The precise amount of such payments in respect of 1996,
1997, 1998, and 1999 shall be determined on an annual basis at the sole
discretion of the Compensation Committee of the Board of Directors of
Westinghouse within the award range of 60% to 200% of target, subject to the
foregoing guaranteed minimum payments. The full amount of the Annual Incentive
payments may be deferred in accordance with the terms of the Westinghouse
Deferred Incentive Compensation Program as in effect from time to time.
(c) Executive shall be granted 500,000 options on
December 6, 1995 at that day's
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fair market value. The options will be under and subject to the terms of
Westinghouse's 1993 Long-Term Incentive Plan and the non-qualified option
agreement between Executive and Westinghouse, a copy of which is annexed hereto,
except to the extent that any of the terms otherwise provided in this
subparagraph (c) are more favorable to Executive, in which case such more
favorable terms will apply to Executive: 250,000 of the options shall vest after
one year from the date of the grant, and 250,000 of the options shall vest after
two years from the date of the grant. In the event of Executive's death,
however, all previously granted unvested options shall vest effective on the
date of Executive's death. An additional 100,000 options will be granted in
December, 1998, and shall vest one year from the date of the grant so that said
shares shall vest no later than the last business day of December, 1999 pursuant
to the non-qualified option agreement with the same terms as the option
agreement which is annexed hereto. All of the options granted shall expire ten
years from the date of the grant, or upon the termination of Executive's
employment with CBS, whichever occurs first, except that in the event of a
change in control of Westinghouse, or in the event Executive is terminated
without Cause, for disability, or resigns for Good Reason, all unvested options
shall vest immediately and all options shall expire two years from the date of
termination or ten (10) years from the date of grant, if earlier; if Executive
retires, he shall have three years from the date of retirement in which to
exercise outstanding vested options or ten (10) years from the date of grant,
whichever occurs earlier. Notwithstanding the foregoing, or any other provision
in agreement, or the stock option agreements, in the event that Executive should
become engaged in a conflict of interest with CBS following the termination of
Executive's employment because of retirement, all options shall terminate
immediately upon Executive's failure to cure such conflict within fifteen (15)
days after receipt of written notice specifying the alleged breach in detail. A
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conflict of interest for the purpose of this paragraph shall be defined by the
same standards as a conflict of interest that arises during the course of
Executive's employment.
(d) In no event will Executive be deemed to be disabled
until he has been unable to render all or substantially all of his material
duties for a period of twelve (12) consecutive weeks and CBS shall have given
him written notice that it considers him contractually disabled. If Executive
is given such notice, Executive shall continue to receive as long as he remains
so disabled up to December 31, 1999 an amount equal to his base salary (in
effect at the time of such notice), reduced by the maximum amount of salary
which is insured and paid under the CBS Long Term Disability ("LTD") Plan (or
any successor plan thereto). In addition, with respect to the year in which
Executive is given such notice, he shall receive a pro rated portion of his
minimum Guarantee Annual Incentive payment to the date of such notice, but no
further Annual Incentive payments.
(e) In the event of the death of Executive, salary
payments and Annual Incentive payments to be paid pursuant to this Agreement
shall cease immediately. Notwithstanding the foregoing, the estate of
Executive, or his designated beneficiary in the case of insurance proceeds,
shall receive all salary payments due through the date of Executive's death, a
pro rated portion of his minimum guaranteed Annual Incentive payment with
respect to the year of death pro rated to the date of death, and all of the
proceeds under all insurance plans covering Executive pursuant to Paragraph 4
or successor plans thereto as designated by Executive on an appropriate
beneficiary form.
4. (a) Executive shall be included in all plans now existing
or hereafter adopted for the general benefit of CBS Employees, such as
investment funds and group medical, disability or other insurance plans and
benefits, subject to the provisions of such plans as the same may be in
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effect from time to time. With respect to pension benefits, Executive is a
vested participant in the CBS Pension Plan and shall be entitled to the same
benefit accruals as are provided under the CBS Pension Plan (and related
supplemental and excess retirement plans) as of November 24, 1995 (including all
provisions relating to the calculation and payment of, and eligibility to
receive, benefits, with the understanding that the actuarial assumptions for the
calculation of the lump sum benefit, may be modified in accordance with
applicable law); provided, to the extent that the foregoing pension benefits and
any other benefits to which Executive was entitled on November 28, 1995, exceed
the benefits payable to Executive under any plan or plans in effect at the time
Executive is to receive benefit thereunder, CBS will pay Executive in each
instance on a supplemental basis the excess of the benefits to which Executive
was entitled on November 28, 1995, over the benefits to which Executive then is
entitled. Executive will also participate in other CBS benefit plans in which
participation is limited to CBS executives in positions comparable to or lesser
than Executive's, and in any Westinghouse benefit plans for which a similar type
of CBS plan does not exist or does exist but with benefits that are less than
the Westinghouse plan and in which participation is limited to executives in
positions comparable to Executive's. To the extent Executive participates in any
benefit plan, such participation shall be based upon Executive's base salary and
minimum Annual Incentive payment, unless otherwise indicated in the plan
document, as in the case of the Supplemental Executive Retirement Plan.
(b) At all times during the Term, Executive will be
covered under the Universal Life Insurance and disability policies which
presently cover Executive.
5. Executive shall be entitled to four weeks vacation with pay,
and vacation shall be governed in accordance with CBS policy.
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6. Executive agrees to devote all customary business time and
attention to the affairs of CBS, except during vacation periods and reasonable
periods of illness or other incapacity consistent with the practices of CBS for
executives in comparable positions, and agrees that his services shall be
completely exclusive to CBS during the term hereof
7. Executive acknowledges that he has been furnished a copy of
the "Policy Notes from the President" concerning conflicts of interest
("Conflicts Policy"), dated December 13, 1989, and a copy of the "CBS Policy
Summary." Executive further acknowledges that he has read and understands all
the requirements thereof, and acknowledges that at all times during the
Employment Period he shall perform his services hereunder in full compliance
with the Conflicts Policy and the CBS Policy Summary and with any revisions
thereof or additions thereto.
8. (a) If, during the term of this Agreement, CBS properly
terminates the employment of Executive for Cause, then CBS's obligations
hereunder, except pursuant to paragraph 10 (provided that the exception for
paragraph 10 shall not apply to any claim, loss, liability, judgment or expense
resulting from the Cause for which Executive has been terminated), shall
terminate immediately. Nothing herein shall be deemed to affect Executive's
entitlement under benefit or other plans in which he participates, it being
understood that the construction or termination of such entitlement shall be as
provided for in the relevant plan documents. For all purposes of Agreement,
"Cause" shall mean on the part of Executive any of the following: (i) rendering
business-related services for others, if such violative act is not cured within
fifteen (15) days after written notice specifying the alleged breach in detail;
(ii) misappropriating or embezzling assets of CBS or committing an act of fraud
or other dishonesty as to CBS, (iii) being convicted in a court of law of
committing any other act of misappropriation, embezzlement, fraud or
dishonesty; (iv) failure to render material services under this Agreement
other than by reason of disability, unless
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such failure is cured within fifteen (15) days after written notice
specifying the alleged breach in detail; or (v) intentionally violating
material policies and procedures of CBS, which are consistently applied to
other executives of CBS and are not inconsistent with this Agreement, after
Executive has received written notice that continued violation of such policies
could result in his termination.
(b) If, during the term of this Agreement, the employment
of Executive by CBS should be terminated by CBS other than for Cause (as
defined above) or it is terminated by Executive for Good Reason (as hereafter
defined) Executive shall immediately receive a lump sum payment in an amount
equal to the balance of all base salary payments and minimum Annual Incentive
payments called for by this Agreement for the balance of the Employment Term or
severance pay in accordance with CBS's present policy, whichever is greater
(and in no event shall the amount of such lump-sum payment be less than the sum
of one (1) year of base salary at Executive's then-existing rates and the
amount of the minimum Annual Incentive payment for the year in which the
termination occurs). Notwithstanding the above, if the employment of Executive
is terminated by CBS for Cause or by reason of disability or death, this
paragraph 8(b) shall not be applicable. The provisions of this paragraph 8(b)
shall not affect the right of Executive to receive all base salary payments and
a prorated portion of the minimum Annual Incentive payment called for by this
Agreement through the date of termination, irrespective of the reason for
termination. If the employment of Executive is terminated by CBS for Cause,
the provisions of this paragraph 8(b) shall not affect the right of Executive
to receive all base salary payments called for by this Agreement through the
date of termination.
(c) "Good Reason" shall mean a change in control of
Westinghouse or any of the following (without the Executive's prior express
written consent) which, on written notice received from the Executive, CBS
shall not have cured within fifteen (15) days; (A) the repeated failure of
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CBS to pay Executive any compensation or benefits due and owing hereunder (it
being agreed that written notice in respect of a repeated failure need be given
oly one time); (B) removing the Executive from his title or position as
President and Chief Executive Officer of CBS; (C) inserting any other person in
the chain of authority between the Executive and the highest executive officer
of Westinghouse Electric Corporation, (D) diminishing the Executive's authority
for the management and operation of CBS, or (E) diminishing in any substantial
way the functions of CBS, provided that this provision shall not be deemed to
alter the terms of paragraph 2(d).
9. CBS and Executive agree that, beginning not later than April
1, 1999, if this Agreement is then in effect, and if both parties desire to
continue their relationship, they will engage in good faith discussions looking
to an extension of this Agreement, or to a successor employment agreement, to
become effective on or before the expiration of this Agreement.
10. To the fullest extent permitted by the laws of the State of
New York, CBS shall protect, indemnify and hold harmless Executive and any
entity claiming under or through him from and against any claim, loss,
liability, judgment and expense (including reasonable attorneys' fees) arising
from or relating to Executive's employment by CBS.
11. Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled by arbitration held in New
York City and administered by the American Arbitration Association in
accordance with its Commercial Arbitration Rules, and judgment on the award
rendered by the arbitrator(s) may be entered in any court having jurisdiction
thereof.
12. This Agreement contains the entire understanding of the
parties with respect to the subject matter thereof, supersedes any and all
prior agreements of the parties with respect to the subject matter thereof and
cannot be changed or extended except by a writing signed by both parties
hereto. This Agreement shall be binding upon and inure to the benefit of the
parties and their
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respective legal representatives, executors, heirs,
administrators, successors and assigns. This Agreement and all matters and
issues collateral thereto shall be governed by the laws of the State of New
York applicable to contracts performed entirely therein. If any provision of
this Agreement, as applied to either party or to any circumstance, shall be
adjudged by a court to be void and unenforceable, the same shall in no way
affect any other provision of this Agreement or the validity or enforceability
thereof.
13. All notices or other communications hereunder shall be given
in writing and shall be deemed given if served personally or mailed by
registered or certified mail, return receipt requested, to the parties at their
respective addresses above indicated, or at such other address or address they
may hereafter designate in writing. Any notice to CBS shall be sent to the
attention of the Senior Vice President, Human Resources, with a copy to the
General Counsel of CBS. Any notice to Executive also shall be sent in the same
manner to:
Franklin, Weinrib, Rudell & Vassallo, P.C.
488 Madison Avenue
New York, New York 10022
Attn: Michael I. Rudell, Esq.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
November 28, 1995.
CBS INC.
By MICHAEL H. JORDAN
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PETER A. LUND
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Executive
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