Employment Agreement - Smith Barney Inc. and Joseph J. Plumeri II
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 30th day of December, 1994, by and among
Smith Barney Inc., a Delaware corporation (the "Company"), and
Joseph J. Plumeri II (the "Executive").
The Board of Directors of the Company desires that the Company
continue to employ the Executive, and the Executive is willing to
serve the Company, on the terms and conditions herein provided.
In order to effect the foregoing, the parties hereto wish to
enter into an employment agreement on the terms and conditions
set forth below. Accordingly, in consideration of the premises
and the respective covenants and agreements of the parties herein
contained, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. Employment. The Company hereby agrees to employ the
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Executive, and the Executive hereby agrees to serve the
Company, on the terms and conditions set forth herein.
2. Term. The employment term of this Agreement commenced on
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July 30, 1994 (the "Commencement Date") and, subject to the
provisions of Section 10, will end on the third anniversary
of the Commencement Date unless further extended or sooner
terminated as hereinafter provided.
3. Position and Duties. The Executive shall serve as Vice
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Chairman of The Travelers Inc. (or if there shall be a
corporate reorganization such that The Travelers Inc. is
replaced by a different ultimate parent company, then of
that other company("Travelers"), the indirect parent of the
Company and shall report only to the Chairman of the Board
of Directors, a Vice Chairman, the Chief Executive Officer
or the Chief Operating Officer of Travelers. The Executive
shall have such responsibilities, duties and authorities
commensurate with his position as may from time to time be
assigned to the Executive by the individual to whom the
Executive shall then report. During the term of this
Agreement, the Executive shall devote substantially all his
time and best efforts during normal business hours to the
business and affairs of Travelers (including the Company and
other Travelers' subsidiaries) except for vacations, illness
or incapacity. Nothing in this Agreement shall preclude the
Executive, subject to compliance with such other policies
and procedures that may be in effect at the Travelers, from
devoting reasonable periods required for (i) serving as a
director or member of a committee of any organization
involving no conflict of interest with the Company, (ii)
delivering lectures and fulfilling speaking engagements, and
(iii) engaging in charitable and community activities
provided that such activities do not materially interfere
with the performance of his duties hereunder.
4. Place of Performance. In connection with the Executive's
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employment by the Company, the Executive shall be based at
the principal executive offices of Travelers in the City of
New York, except for required travel on business.
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5. Compensation and Related Matters.
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(a) Compensation. During the period of the Executive's
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employment hereunder, the Company shall pay to the
Executive a base salary (i) during the period from the
Commencement Date through July 30, 1996 at a rate of
$950,000 per year and (ii) thereafter during the
employment term at a rate to be determined within the
discretion of the Company. In addition, the Executive
shall be entitled to consideration for an annual
discretionary bonus under the Travelers Inc. Executive
Performance Compensation Plan. Notwithstanding the
foregoing, in the event Sanford I. Weill is, at any
time during the employment term, no longer the Chief
Executive Officer of Travelers, then, during any
remaining portion of the employment term, the
compensation payable to the Executive, in addition to
the other items specified herein, shall be, as
specified on Attachment A hereto (or, in the event of a
termination of employment, in accordance with the
provisions of Section 7), including without limitation,
the payment of any Additional Payments specified in
Attachments A or B hereto for the calendar year in
which such event occurs or the prior calendar year if
discretionary bonuses for senior executives of
Travelers for the applicable calendar year in question
have not been determined as of the date that Mr. Weill
is no longer the Chief Executive Officer of Travelers.
The compensation shall be paid in accordance with the
Company's normal payroll practices, as in effect from
time to time and any bonus for 1997 shall, subject to
the other provisions of this Agreement, be paid when
1997 bonuses are generally paid by the Company
notwithstanding whether or not Executive is then
employed by the Company.
(b) Expenses. During the period of the Executive's
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employment hereunder, the Executive shall be entitled
to receive prompt reimbursement for all reasonable and
customary expenses incurred by the Executive in
performing services hereunder, including all expenses
of travel and living expenses while away from home on
business, provided that such expenses are incurred and
accounted for in accordance with the policies and
procedures established by the Company.
(c) Other Benefits. The Executive shall be entitled to
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participate in all of the employee benefit plans and
arrangements generally available to senior executives
of Travelers (including without limitation each
retirement plan, supplemental and excess retirement
plans, annual and long-term incentive compensation
plans, stock option and purchase plans, group life
insurance (presently group universal life insurance)
and accident plan, medical and dental insurance plans,
financial planning and disability plan). The Executive
shall participate in the Travelers Supplemental
Retirement Plan through maintenance of the existing
frozen benefit and, if and to the extent that it shall
be reopened to participation generally by senior
officers of the Company or of Travelers, accrual of
future benefits, all in accordance with the plan
provisions as in effect from time to time except that
the Executive's service at Shearson will be counted for
the purpose of vesting only. During the period of the
Executive's employment hereunder, the Company will
reimburse the Executive for annual premium to purchase
a term life insurance policy from Primerica Financial
Services ("PFS") carrying a death benefit of up to
$1,500,000.
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(d) Capital Accumulation Plan. The Executive shall
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participate in the Travelers Capital Accumulation Plan
("CAP"), and any successor or replacement plan
generally applicable to senior executives of the
Company (provided that (i) the deferred compensation
specified in Section 5 (i) hereof and (ii) any amounts
payable under Section 7 at or following a termination
of employment, shall not be subject to CAP). The
provisions of such plan, as in effect from time to
time, shall govern the participation by the Executive
except as provided in Attachment C hereto.
(e) Vacations. The Executive shall be entitled to no less
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than the number of vacation days in each calendar year
determined in accordance with the Company's vacation
policy. The Executive shall also be entitled to all
paid holidays and personal days given by the Company to
its executives.
(f) Services Furnished. The Company shall cause Travelers
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to furnish the Executive with office space, secretarial
assistance and such other facilities and services as
shall be suitable to the Executive's position and
adequate for the performance of his duties as set forth
in Section 3 hereof.
(g) Stock Option. As of the date hereof, the Executive
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holds options to purchase 300,000 shares of common
stock of Travelers pursuant to the provisions of the
Travelers Stock Option Plan, including 100,00 shares
granted on September 28, 1994 (the 200,000 shares
granted prior to September 28, 1994 being referred to
herein as the "Original Grant"). In the event of (i)
the termination of this Agreement on account of the
death or disability of the Executive or by the Company
without Cause or by the Executive for Good Reason, the
Executive shall be entitled to two (2) years of
additional vesting and exercise of all such stock
options, or any longer periods of vesting and exercise
provided for in the Stock Option Plan, or (ii) the
termination of this Agreement by the Executive but
without Good Reason, the Executive shall be entitled to
the remainder (if any) of a two (2) year period of
vesting and exercise for the Original Grant ending on
July 30, 1996, in both cases subject to the other
provisions of the Stock Option Plan.
(h) The Executive shall be entitled to have, at the
Company's expense, a car and driver at the level
similar to other senior executives of Travelers.
(i) Deferred Compensation
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(A) The Executive shall receive a deferred compensation
payment hereunder in the amount set forth in (B) below.
Such payment shall be made in a lump sum thirty (30)
days after the Executive ceases to be employed by the
Company or its affiliates for any reason whatsoever,
including death, disability, termination by the Company
with or without Cause or termination by the Executive
with or without Good Reason (but each portion of such
lump sum shall not be payable earlier than the date
from which "earnings" are to be measured). Such
payments shall be made without counterclaims, offset or
setoff (other than legally required withholding).
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(B) The deferred compensation amount shall be the sum
of the following amounts:
(I) $2,000,000 with "earnings" from July 30, 1996;
(ii) $2,000,000 with "earnings" from July 30,
1997; and
(iii) provided the Executive has not voluntarily
terminated employment prior to March 1, 1996
(other than for Good Reason or death) and
provided the Executive has not been
involuntarily terminated for Cause prior to
March 1, 1996, $1,400,000 with "earnings"
from July 30, 1997.
(C) Earnings shall be measured by the published ninety
(90) day T bill rate as in effect at the beginning
of each calendar quarter during the relevant period
and shall be compounded quarterly.
6. Termination. The Executive's employment hereunder may be
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terminated under the following circumstances:
a) Death. The Executive's employment hereunder shall
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terminate upon his death.
b) Disability. If, as a result of the Executive's
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incapacity due to physical or mental illness, the
Executive shall have been absent from his duties
hereunder on a full-time basis for the entire period of
six (6) consecutive months, and within thirty (30) days
after written notice of termination is given (which may
occur before or after the end of such six (6) months
period) shall not have returned to the performance of
his duties hereunder on a full-time basis, the Company
may terminate the Executive's employment hereunder.
(c) Cause. The Company may terminate the Executive's
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employment hereunder for Cause. For purposes of this
Agreement, the Company shall have "Cause" to terminate
the Executive's employment hereunder upon the
Executive's willful refusal to perform his properly
assigned duties, or if the Executive shall be convicted
of or plead guilty or nolo contendre to conduct
constituting a felony, or in the event of a material
violation of Section 10(a) of this Agreement. Such
termination for reason of the Executive's willful
refusal to perform his duties shall only be effective
upon the Company's written notice of termination to the
Executive and the Executive's failure within ten (10)
days following such notice to cure the breach specified
in such notice.
(d) Any termination of the Executive's employment by the
Company or by the Executive (other than termination
pursuant to subsection (a) hereof) shall be
communicated by written Notice of Termination to the
other party hereto in accordance with Section 12. For
purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for
termination of the Executive's employment under the
provision so indicated.
(e) "Date of Termination" shall mean (i) if the Executive's
employment is terminated by his death, the date of his
death, (ii) if the Executive's employment is terminated
pursuant to subsection
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(b) above, the later to expire of thirty (30) days
after Notice of Termination is given pursuant to
subsection (b) above or the six (6) month disability
period (provided that the Executive shall not have
returned to the performance of his duties on a full-
time basis prior to expiration of the thirty (30) day
notice period or the six (6) month disability period,
whichever shall expire later) (iii) if the Executive's
employment is terminated pursuant to subsection (c)
above, the date specified in the Notice of Termination,
and (iv) if the Executive's employment is terminated
for any other reason, the date specified in the Notice
of Termination (or, if no date is so specified, on the
date on which a Notice of Termination is given).
(f) Good Reason. The Executive may terminate his
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employment hereunder for Good Reason. For purposes of
this Agreement, the Executive shall have "Good Reason"
to terminate his employment if the Company shall
materially breach its obligations under this Agreement
as to position, reporting relationship,
responsibilities, duties, authority or place of
performance, as specified in Sections 3 and 4. Such
termination for Good Reason shall only be effective
upon the Executive's written notice of termination to
the Company and the Company's failure within ten (10)
days following such notice to cure the breach specified
in such notice.
(g) The Executive may terminate his employment hereunder
without Good Reason. Such termination shall only be
effective upon receipt of Executive's written notice of
termination to the Company. In such event, the
Company's obligations with regard to compensation shall
be as provided in Section 7. Except as otherwise
provided for herein, the provisions of the Stock Option
Plan, the Capital Accumulation Plan and other employee
plans will govern as to participation in such plans.
Such a termination shall not affect the Executive's
other obligations under this Agreement, including
without limitation Section 10.
(h) In the event the Executive shall terminate his
employment with or without Good Reason or if the
Company shall terminate the Executive's employment
other than for Cause, the Company shall furnish to the
Executive appropriate office space, his then
administrative assistant (if employed by the Company or
Travelers or, if not, other appropriate secretarial
assistance) and his existing car and driver until the
earlier of his commencing other employment or six (6)
months after such date of termination.
7. Severance Payments Upon Termination.
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(a) During any period that the Executive fails to perform
his duties hereunder as a result of incapacity due to
physical or mental illness ("disability period"), the
Executive shall continue to receive his full base
salary at the rate then in effect until his employment
is terminated pursuant to Section 6(b) hereof (provided
that payments so made to the Executive during the
disability period shall be reduced by the sum of the
amounts, if any, payable to the Executive at or prior
to the time of any such payment under disability
benefit plans of the Company and which amounts were not
previously applied to reduce any such payment).
If the Executive's employment is terminated (i) by the
Executive but not for Good Reason and with an effective
date on or prior to February 29, 1996, or (ii) by the
Company for
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Cause, the Company shall pay to the Executive the
amounts, if any, to be paid following such date of
termination, as set forth in Attachment B, including,
without limitation, the payment of any Additional
Payments specified therein for the calendar year in
which such date of termination occurs or the prior
calendar year if discretionary bonuses for senior
executives of Travelers for the applicable calendar
year in question have not been determined as of such
date of termination. In addition, Executive shall
retain his rights, if any, under any deferred
compensation (including under Section 5 (i) hereof )or
other benefit plans in which he participates as
specifically provided herein, or, if not otherwise
specifically provided for in this Agreement, as
provided in such plan and any other unpaid amounts
required to be paid hereunder and the Company shall
have no further obligations to the Executive under this
Agreement.
(b) If the Executive's employment is terminated on account
of disability or by his death, the Company shall pay to
the Executive or his estate or as may be directed by
the legal representatives of such estate, the amounts,
if any, to be paid following such date of termination,
as set forth in Attachment A, including, without
limitation, the payment of any Additional Payments
specified therein for the calendar year in which such
date of termination occurs or the prior calendar year
if discretionary bonuses for senior executives of
Travelers for the applicable calendar year in question
have not been determined as of such date of
termination. In addition, the Executive shall retain
his rights, if any, under any deferred compensation
(including under Section 5 (i) hereof) or other
benefit plans in which he participates as specifically
provided herein or, if not otherwise specifically
provided for in this Agreement, as provided in such
plan and any other unpaid amounts required to be paid
hereunder and the Company shall have no further
commitments under this Agreement.
(c) [Intentionally Omitted].
(d) If the Executive's employment is terminated (i) by the
Company other than for Cause (ii) by the Executive for
Good Reason, or (iii) by the Executive but not for Good
Reason and with an effective date after February 29,
1996 then the Company shall pay the Executive the
amounts, if any, to be paid following such date of
termination, as set forth in Attachment A (provided,
that in the event of a termination under clause (iii)
of this sentence, the payment of base salary shall be
made for the remaining employment term in accordance
with Attachment B rather than in accordance with
Attachment A or Section 5(a)), including, without
limitation, the payment of any Additional Payments
specified therein for the calendar year in which such
date of termination occurs or the prior calendar year
if discretionary bonuses for senior executives of
Travelers for the applicable calendar year in question
have not been determined as of such date of
termination. In addition, the Executive shall retain
his rights, if any, under any deferred compensation
(including under Section 5 (i) hereof) or other benefit
plans in which he participates as specifically provided
herein or, if not otherwise specifically provided for
in this Agreement, as provided in such plan and any
other unpaid amounts required to be paid hereunder and
the Company shall have no further obligations to the
Executive under this Agreement.
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(e) The provisions of this Section 7 (together with (i) the
provisions of any vacation, deferred compensation or
other benefit plans in which he participates and which
are not otherwise specifically provided for in this
Agreement, (ii) the provisions of the CAP and Stock
Option Plans as in effect from time to time and as
specifically provided for in this Agreement in the
event of a termination and (iii) the continuation of
services provision set forth in Section 6(h)) are the
exclusive rights of the Executive regarding a severance
or termination occurring prior to expiration of the
employment term. The rights of the Executive regarding
a severance or termination occurring after expiration
of the employment term shall be governed exclusively by
the Company's regular severance policies as in effect
at such time, except as otherwise specifically provided
for herein.
8. Mitigation. The Executive shall not be required to mitigate
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amounts payable pursuant to Section 7 hereof by seeking
other employment or otherwise and any amounts received from
other employment shall not reduce any amounts due under
Section 7.
9. [Intentionally Omitted]
10. Confidentiality and Non-Solicitation.
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(a) Confidentiality. During the employment term of this
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Agreement and thereafter, the Executive will not,
without the written consent of the Company, make use of
or divulge to any person, firm or corporation, any
trade or business secret which may be disclosed to him
by the Company or Travelers or as a result of his
employment with the Company hereunder or his position
with Travelers excepting only such information which
shall be made public without the fault of the Executive
and such information as the Executive shall be
obligated to disclose pursuant to legal process. In
addition, the foregoing provision shall not impair the
ability of the Executive to exercise his good faith
judgment as to disclosures in connection with his
duties hereunder.
(b) Non-Solicitation. In the event the Executive's
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employment hereunder is terminated for any reason the
Executive (i) shall not be personally involved,
directly or indirectly, in hiring any employee of the
Company or Travelers or any of their subsidiaries who
either is a financial consultant (or similar position)
for the Company or whose annual compensation is in
excess of $100,000 or any independent representative of
the Company or Travelers or any of its subsidiaries who
is intended to act as a full-time representative (e.g.,
at Primerica Financial Services, a sales force
designation of RVP or higher ) (any of the foregoing
being a "Protected Person") unless the Company or
Travelers shall agree in writing to such hiring, and
(ii) shall not be personally involved, directly or
indirectly, in soliciting any Protected Person to leave
their employment or terminate their relationship (it
being agreed that simply responding to a request for a
reference will not be deemed direct or indirect
solicitation), in either case until the latest to occur
of the following:
_ one year after termination of employment (but not
longer than July 30, 1998).
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_ the date the last payment of base salary or bonus
actually payable to the Executive is due and
payable under the provisions of Section 7.
_ the later of the date the last payment actually
payable to the Executive is due and payable under
Attachment B and July 30, 1997.
_ in the event the Executive shall voluntarily
terminate his employment but without Good Reason,
July 30, 1996 (notwithstanding the fact that such
date may be more than one year after such
termination of employment).
(c) The provisions of this Section 10 shall survive the
termination, for any reason, or expiration of this
Agreement.
11. Indemnification. Both during and after the employment term,
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the Company shall indemnify the Executive to the full extent
permitted by law for all expenses, costs, liabilities and
legal fees which the Executive may incur by reason of
entering into this Agreement and in the discharge of all his
duties hereunder, other than for any such expenses, costs,
liabilities or legal fees incurred resulting from the
Executive's bad faith or gross negligence. The provisions
of this Section shall be in addition to, and not in lieu of,
any other rights of indemnification available to the
Executive and shall apply to the Executive when serving in
other capacities at the written request of the Company.
Legal fees covered by this indemnification shall be advanced
as incurred. The provisions of this Section 11 shall
survive the termination, for any reason, or expiration of
this Agreement.
12. Notice. For the purposes of this Agreement, notices,
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demands and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have
been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered
mail, return receipt requested, postage prepaid, addressed
as follows:
If to the Executive:
Joseph J. Plumeri II
1461 Martine Avenue
Scotch Plains, New Jersey 07076
With a copy to:
Michael S. Sirkin, Esq.
Proskauer Rose Goetz & Mendelsohn
1585 Broadway
New York, New York 10036
If to the Company:
333 West 34th Street
New York, New York 10001
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Attention: General Counsel
with a copy to:
The Travelers Inc.
65 East 55th Street
New York, New York 10022
Attention: General Counsel
or to such other address either party may have furnished to
the other in writing in accordance herewith, except that
notices of change of address shall be effective only upon
receipt.
13. Miscellaneous. No provision of this Agreement may be
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modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and
signed by the Executive and a duly authorized officer of the
Company. No waiver by either party hereto at any time of
any breach of the other party hereto of, or compliance with,
any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any
prior or subsequent time. This Agreement shall not be
assignable by the Executive. This Agreement shall not be
assignable by the Company except in connection with the sale
of all or substantially all of the retail brokerage
business of the Company, in which case it shall be assumed
by Travelers, all references to the Company shall be deemed
thereafter to be references to Travelers and the obligations
of the Company hereunder shall cease; thereafter it shall
not be assignable by Travelers except in connection with the
sale of all or substantially all of the assets of Travelers.
This Agreement shall be binding on the successors and
permitted assigns of the Company. The validity,
interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of
Delaware without regard to its conflicts of law principles.
In the event the Company breaches this Agreement by non-
payment of any amounts due to the Executive hereunder, the
Executive shall be entitled to recover his costs of
collection. Whenever in this Agreement reference is made to
a pro rata portion of an amount, it shall be calculated by
multiplying an annual amount by a fraction, the numerator of
which is the number of elapsed days in a period (e.g., the
number of days in a calendar year prior to a termination of
employment) and the denominator of which is 365.
14. Validity. The invalidity or unenforceability of any
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provision or provisions of this Agreement shall not affect
the validity or enforceability of any other provision of
this Agreement, which shall remain in full force and effect.
15. Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and
the same instrument.
16. Arbitration. Any controversy or claim arising out of or
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relating to this Agreement, whether arising before or after
the expiration or other termination of this Agreement, shall
be settled by arbitration in New York City in accordance
with the commercial rules of the American Arbitration
Association, except to the extent specifically described in
a document signed by both of the parties hereto and
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which specifically refers to this Section. Any decision by
the arbitrators shall be final and binding on the parties
and may be entered into in any court of competent
jurisdiction.
17. Entire Agreement. This Agreement sets forth the entire
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agreement of the parties hereto in respect of the subject
matter contained herein and supersedes all prior agreements,
promises, covenants, arrangements, communications,
representations or warranties, whether oral or written,
express or implied, by any officer, employee or
representative of either party hereto, including without
limitation the prior employment agreements between the
parties dated as of July 30, 1993 and July 30, 1994, except
to the extent specifically described in a document signed by
both of the parties hereto and which specifically refers to
this Section.
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