Employment Agreement [Amendment No. 1] - NASDAQ Stock Market Inc. and John Hilley
EXECUTION COPY
AMENDMENT ONE TO THE
EMPLOYMENT AGREEMENT
This Amendment is hereby entered into effective as of February 1,
2002, by and between The Nasdaq Stock Market, Inc. (the "Company") and John
Hilley (the "Executive").
W I T N E S S E T H
WHEREAS, the Company and the Executive entered into on December 29,
2000, an Employment Agreement (the "Employment Agreement"), providing for the
Executive's continued employment with the Company; and
WHEREAS, the Company and the Executive desire to amend the Employment
Agreement.
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Section 3 of the Employment Agreement is hereby amended in its
entirety to contain two subsections (a) and (b) each of which shall read in
their entirety as follows:
(a) ANNUAL SALARY. During the Employment Term, the Company shall
pay the Executive salary (the "Annual Salary") at the annual rate of
not less than $500,000. Annual Salary shall be payable in regular
installments in accordance with the Company's usual payroll practices.
The Management Compensation Committee of the Board (the "Compensation
Committee") shall review Annual Salary for the purpose of increasing
it in accordance with its normal review procedures.
(b) INCENTIVE COMPENSATION/BONUS. With respect to each calendar
year during the Employment Term, the Company shall award the Executive
such incentive compensation (hereinafter "Incentive Compensation") as
the Compensation Committee may determine in its discretion; provided
that in no event may the sum of Incentive Compensation to be awarded
and the Executive's Annual Salary be less than $1.2 million. Incentive
Compensation for each calendar year shall be paid at the same time as
the Company pays Incentive Compensation awards to other executives,
but in no event later than the March 1st following the calendar year
with respect to which such Incentive Compensation relates.
Notwithstanding the foregoing, twenty percent (20%) of the Incentive
Compensation awarded and otherwise due and payable with respect to
each calendar year (the "Retained Amount"), shall be retained by the
Company in accordance with the terms of the Company's Retention
Component of the Incentive Compensation Program, as adopted by the
Compensation Committee on January 23, 2002 (the "Retention Policy").
The Retained Amount shall be credited with interest at the rate set
forth in the Retention Policy and shall be due and payable pursuant to
the terms of the Retention Policy, and to the extent applicable, as
modified by this Section 3(b). In the event the Executive's employment
is terminated on or after December 31, 2003, other than pursuant to
Section 8(a) of the Employment Agreement (for Cause), the
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Company shall pay the Executive the Retained Amount plus interest at
the rate set forth in the Retention Policy.
2. Section 4(b)(ii) of the Employment Agreement is hereby amended such
that it reflects that the cross-referenced sections for the definitions of
(x) Disability and (y) Cause and Good Reason shall be to Sections 8(b) and
8(c) respectively.
3. The first sentence of Section 7 of the Employment Agreement is
hereby amended to read as follows:
Subject to the Executive's employment with the Company on August
9, 2002 (the "Stay Pay Date"), the Company shall pay the Executive an
additional bonus equal to not less than $2.4 million (the "Stay Pay
Bonus"); PROVIDED, HOWEVER, that the Executive's earlier death or
Disability (as defined in Section 8(b) hereof) while employed or
termination pursuant to Section 8(c) hereof shall also be a Stay Pay
Date.
4. The second paragraph of Section 8(b) of the Employment Agreement is
hereby amended such that the phrase "and Incentive Compensation" appears
immediately following the phrase "all unpaid Annual Salary" in clause (ii)
of such paragraph.
5. The second paragraph of Section 8(c) of the Employment Agreement is
hereby amended to read in its entirety as follows:
If the Executive's employment is terminated by the Company
without Cause (other than by reason of his Disability or death) or the
Executive terminates this Agreement for Good Reason, the Executive
shall be entitled to receive: (i) any accrued but unpaid Annual Salary
through the date of such termination, (ii) the Stay Pay Bonus provided
by Section 7 hereof if not already paid and (iii) all other current
cash obligations of the Company to the Executive (e.g. unused
vacation). In addition, the Executive shall be entitled to receive:
(x) his Annual Salary through the later of (i) the balance of the Term
or (ii) twenty-four months from the date of such termination (the
"Severance Period") and (y) any Incentive Compensation (including any
Retained Amount pursuant to Section 3(b) hereof) and assuming the
awarding of the minimum guaranteed amount of such Incentive
Compensation as set forth in Section 3(b)) hereof, that would have
been paid or earned by the Executive through the Severance Period.
Such severance shall be paid in a lump sum within thirty (30) days
following the termination date. The Company shall provide continued
health coverage at its expense for the Severance Period. All other
benefits, if any, due the Executive following termination pursuant to
this Section 8(c) shall be determined in accordance with the plans,
policies and practices of the Company; PROVIDED, HOWEVER, that the
Executive shall not participate in any severance plan, policy or
program of the Company.
6. This Amendment shall in no way reduce or otherwise negatively
impact the calculation of the SERP benefits due the Executive pursuant to
Section 4(b) of the
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Employment Agreement and accordingly, subsection (vi) of Section 4(b) is
hereby amended to read in its entirety as follows:
For purposes of determining the Executive's Final Average
Compensation, the Executive's "Compensation" shall be deemed to be the
sum of (x) one-half of the sum of his Annual Salary and Incentive
Compensation and (y) one-third of one-half of the sum of his Annual
Salary and Incentive Compensation.
Except as specifically set forth herein, all other provisions of
the Employment Agreement shall remain unchanged and in full force effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be executed March 1, 2002.
By: /s/ John Hilley
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John Hilley
THE NASDAQ STOCK MARKET, INC.
By: /s/ H. Furlong Baldwin
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H. Furlong Baldwin, Chairman of
The Nasdaq Stock Market, Inc.
Management Compensation Committee
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