Employment Agreement - KFC USA Inc. and Cheryl Bachelder
December 12, 2000
Ms. Cheryl Bachelder
1029 Andover Drive
Northville, MI 48167
Dear Cheryl,
I am pleased to confirm our offer to you for the position of President and Chief Concept Officer of KFC USA, Inc. ("KFC"), a subsidiary of Tricon Global Restaurants, Inc. ("Tricon"), reporting to Tricon's CEO and President, David Novak.
The conditions of the offer are as follows:
| Start Date | For compensation purposes, your start date will be mutually agreed upon, but not later than [April 1, 2001] ("Start Date"). |
| Title and Duties | Title: President and Chief Concept Officer of KFC reporting to the Chief Executive Officer and /or President of Tricon. Duties: Authority, duties and responsibilities customarily exercised by an individual serving in those positions in a corporation of the size and nature of KFC. |
| Principal Place of Employment | Initial principal place of employment will be KFC corporate headquarters, Louisville, Kentucky. |
| Base Salary | You will be paid $400,000 (gross before taxes) annually or $15,384.62 per pay period. This salary is guaranteed for 6 months from the Start Date. |
| 2000 Incentive Buy-Out | You will receive a one-time payment of $430,000 (gross before taxes) to compensate you for the forfeiture of your 2000 incentive from Domino's. This will be paid to you within approximately 30 days following the Start Date. |
| 2001 Incentive | This position carries a target bonus of 75% of base salary. For 2001, you are guaranteed a minimum of 100% of target. In the event you voluntarily resign within twelve months of your start date, you agree that you will not be entitled to any 2001 incentive payment and if it is paid, you agree to return it immediately. The 2001 bonus is payable in early 2002 during the normal bonus process. Additionally, you are eligible to receive any upside earned as a result of individual and KFC performance for the period of time from commencement of your employment to the end of the year, in accordance with the provisions of our annual incentive program. |
| Relocation | You are eligible to participate in Tricon's relocation program which will include one month's salary (after taxes), a full home sale package, buyout on your home, house hunting trips, temporary living, and shipment of household goods. We will arrange for Sue Newton, Manager Relocation, at (502) 874-2858 to contact you and discuss your relocation needs. |
| Hiring Bonus | We will pay you a hiring bonus in the amount of $75,000 (after taxes). This hiring bonus is payable within two (2) weeks of the Start Date. You may elect to defer this bonus into Tricon stock in our Executive Income Deferral program, provided you notify us before or at the time you accept this offer. In the event that you voluntarily resign without Good Reason within twelve months of the Start Date, you agree to repay this hiring bonus immediately. Otherwise, this hiring bonus is not subject to any repayment requirement. |
| Stock Option Program | You will be eligible for the Tricon Stock Option Grant Program in 2001. Your 2001 face value award amount is $2,000,000 and will be granted on the executive grant date of January 25, 2001, provided your commencement of employment is on or before that date, and otherwise will be granted as soon as practical thereafter. This first grant will have 25% per year vesting and an exercise price equal to the date-of-grant market price. You will also receive a grant of 31,250 stock options on the grant date described above. This grant will vest 100% four (4) years from the date of grant and have an exercise price equal to the fair market value on the date of grant. Future grants will be awarded on the executive grant schedule. Your 2002 grant will be a minimum of $2,000,000 face value with 25% per year vesting and with an exercise price equal to the date-of-grant market price. |
| Stock Ownership | Executives of this company are encouraged to meet their stock ownership guideline. Your stock ownership guideline will be 24,000 shares. You have five years to achieve this guideline and need to reach an annual 20% commitment to be eligible for our ownership stock option grants. You are not required to meet the guideline trend for the first stock option grant in 2001, but will be required to be 20% on trend for the 2002 grant. |
| Income Deferral | You will be eligible to participate in Tricon's Executive Income Deferral (EID) Plan. Under EID, you may voluntarily elect to defer up to 100% of salary and/or annual incentive. For your incentive deferrals, Tricon stock is offered at a 25% discount to fair market value, subject to a risk of forfeiture should you voluntarily leave KFC or Tricon within two years of your deferral. This program can be utilized to meet your ownership requirements. |
| Change in Control Agreement | You will receive a change in control agreement similar to other Tricon Executives. Your payment under the agreement in case of termination on account of a change in control will be calculated based on two times base salary plus greater of target bonus or prior year bonus. |
| Definitions | Definitions of Cause, Good Reason and Disability are contained in Attachment A of this letter. |
| Involuntary Termination or Good Reason Termination | If you are involuntarily terminated other than for Cause or you terminate for Good Reason, you will receive salary continuation (including medical coverage for one year or until your new employer provides coverage if sooner) for one year plus target bonus. In addition, if you are involuntarily terminated prior to January 1, 2002, you will receive additional months of salary equal to the number of full calendar months remaining in 2001 less any months of salary guarantee that remain to be paid pursuant to the base salary section above. You will also receive a pro-rata bonus for the year of termination (based on your target bonus.) If an executive severance program is adopted for executives at your level with a higher payment than the payments described in the previous two sentences, you will receive that payment. In addition, you will also be entitled to reimbursement for expenses incurred to relocate you and your family back to Michigan. Expenses eligible for reimbursement are the sales commission on the sale of your Louisville residence, loss on the sale of your Louisville residence up to $150,000, shipping, and unloading of ordinary household goods, and one-way airfare (business class) for you and your family. |
| Termination for Cause or Voluntary Termination | If you are terminated for cause or leave voluntarily (without Good Reason), you will only be entitled to salary up to the date of termination and any other accrued benefits accrued up to the date of termination. |
| Termination due to Death or Permanent Disability | If your employment is terminated due to your Death or Disability, you will receive a pro-rata bonus for the year of termination (based on your target bonus). In addition, your Stock Options will vest and remain exercisable in accordance with terms of stock option plan. |
| Vacation | You will be entitled to five (5) weeks' vacation annually per full calendar year. |
| Benefits | You will be eligible to participate in the Tricon benefits plan on the same basis as other senior executives, including the pension program (including, but not limited to, the Tricon Salaried Employees Retirement Plan and the Tricon Pension Equalization Plan), 60 days after your commencement of employment. We will reimburse you for COBRA costs until you are eligible to participate in our medical plans. You will be covered under Tricon's group life insurance policy from your first date of employment at one times annual base and target bonus. Should you have any questions regarding your benefits, please call 1-888-372-5313. |
| Annual Physical | You will be eligible for an annual executive physical that can be taken at the Cooper Clinic in Dallas in accordance with Tricon's standard tests. |
| Exec. Auto Allowance | A car allowance of $27,500 (gross before taxes) will be provided annually. |
| Perquisites Allowance | A perquisites allowance of $5,000 (after taxes) will be provided annually. |
| Country Club Membership | You will be eligible for a country club membership with dues paid by KFC at Valhalla Golf Club as previously discussed. |
| Expenses | You will be entitled to reimbursement for all appropriate business expenses in accordance with the Company travel and entertainment policy. |
| Confidential Information | KFC is not interested in any confidential information or trade secrets belonging to any other parties, including any of your prior employers. The offer in this letter is contingent upon our understanding, based on your representation, that you have not disclosed to Tricon or KFC, and you will not use or disclose as a Tricon or KFC employee, any confidential information or trade secrets of any other party. |
| Indemnification/D&O Insurance | a. Tricon and KFC will indemnify you on a current basis against any and all attorneys' fees and expenses reasonably incurred by you in connection with any actual or anticipated claim, action, suit or proceeding by Domino's (or any negotiation in connection therewith) based on your acceptance of this offer or your services for KFC. This indemnification is based on your representation that you have not taken or used, without authorization and will not take or use without authorization, any trade secrets or confidential information belonging to Domino's in connection with your employment with KFC. In the event that a Court determines in a final and non-appealable judgement, that you have taken without authorization or misused trade secrets or confidential information belonging to Domino's in connection with your employment with KFC, then this indemnification will be null and void and you will refund to KFC (on an after-tax basis) any sums previously paid to you, or on your behalf, in connection with this indemnification. This indemnification is also based on your acknowledgment and agreement that KFC may, in its sole discretion, control the defense in any lawsuit against you and/or Tricon or KFC and that you will cooperate with Tricon and KFC in such defense at their sole expense. b. KFC (Tricon) will indemnify you as provided and to the extent permitted in its Articles of Incorporation and/or By-laws, in the event you are made a party to any action, suit or proceeding or are threatened to by made a party to any action, suit or proceeding. This indemnification does not apply to any action, suit or proceeding, or threatened action, suit, or proceeding, covered by subparagraph a. above. c. Tricon will keep in place directors and officers' liability insurance policy (or policies) providing comprehensive coverage to you to the same extent as provided by Tricon for any other present or former senior executive or director of Tricon. |
| Resolution of Disputes | Arbitration (American Arbitration Association ("AAA") in Louisville, KY, expedited employment arbitration rules of the AAA. Expenses, including legal fees, to be paid by each party. |
| Legal Fees | We will pay up to $15,000 of your legal fees incurred with respect to the negotiation of this offer letter. (Any amounts in excess of this must be approved in advance by me.) |
| No Mitigation/ No Offset | In the event of any termination of employment, you will be under no obligation to seek other employment and there will be no offset against amounts due you under this Agreement on account of any remuneration attributable to any subsequent employment that you may obtain. |
| Notices | All notices must be in writing. If addressed to Tricon, the notice will be sent to the Corporate Secretary at Tricon's corporate headquarters. If addressed to you, the notice will be sent to your last known address. |
| Nonassignability | Neither you nor Tricon and/or KFC may assign the rights and/or obligations under this Agreement without the other party's written consent. |
| Applicable Law | The State of Kentucky [without regard to its conflicts of laws]. |
Please see the enclosed program overview for more information. Feel free to contact Jack LeVier, Sr. Director, People Services at (502) 874-2794 to discuss this and other compensation questions.
This offer of employment is contingent upon your successfully meeting Tricon employment eligibility requirements, which include a background check and establishment of your status as either a United States Citizen or an authorized alien worker prior to the commencement of your employment. By your acceptance of this offer, you acknowledge and agree that your employment will be employment at-will and not for a specified duration, that either you or Tricon can end your employment and compensation, with or without cause, with or without notice, at any time in accordance with the terms of this letter. Please acknowledge acceptance of this offer by signing the space provided and returning the enclosed copy of this letter to me at your convenience.
We are looking forward to working with you and are confident you will add significant value to our Tricon team.
Sincerely,
Anne P. Byerlein
KFC CPO and
Vice President Tricon Human Resources
| Enclosures: | 1. | Copy of this letter |
| 2. | Benefits Book | |
| 3. | Stock Option Brochure | |
| 4. | Relocation Policy | |
| 5. | Executive Income Deferral Prospectus |
APB:sm
cc: David Novak
Gregg Dedrick
Sue Newton
Jack LeVier
I accept and agree that the above accurately reflects the terms of my employment.
| Signature | Date | ||