Exhibit 10.1
September 7, 2005
Mr. Alan Bernon
209 Cliff Road
Wellesley Hills MA 02481
Dear Alan:
I am pleased to offer you the position of President of Dean Foods Dairy Group
(the “Dairy Group”), effective January 1, 2006. This position will report
directly to me. We are delighted that you are willing to accept this new
responsibility and I look forward to having you join our team in Dallas in
September 2005.
Here are the specifics of your offer:
Term/Base Salary
We contemplate an initial term of employment through January 31, 2009. You will
be paid an annual base salary at the rate of $600,000 for the last four months
of 2005 and for all of 2006, $650,000 for 2007, and $700,000 for 2008.
Annual Bonus Opportunity
Effective September 1, 2005, your annual bonus target will be increased to 70%
of your annualized salary, subject to the achievement of pre-established
operating targets for the Northeast Region. Effective January 1, 2006, when you
assume the role of President of the Dairy Group, you will be eligible to earn an
annual bonus with a target amount equal to 80% of your annualized salary,
subject to the achievement of certain operating targets for the group. You can
earn up to 200% of your targeted bonus if operating targets are exceeded.
Stock Options and Restricted Stock
In September 2005, you will be granted 20,000 restricted stock units (RSUs) as a
signing bonus. In January 2006, you will be granted (i) options to purchase
276,000 shares of Dean Foods common stock and (ii) 75,000 RSUs. This award
reflects an “upfront” three-year grant. The exercise price of the options will
be the closing price of a share of Dean Foods stock on the date preceding the
date of grant. The options and RSUs will vest in equal installments over a
period of three (3) years, beginning on the first anniversary date of the grant
and fully vesting by the third anniversary of the date of grant. Any stock
options which are or which become vested on or prior to your termination of
employment shall remain exercisable for a period of no less than twelve
(12) months following your termination of employment. Commencing January 2009,
your eligibility to participate in the long term incentive program and the
amount and nature of any future long term incentive awards will be determined by
the Board of Directors.

 

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Mr. Alan Bernon
September 7, 2005
Page 2 of 4
Management Deferred Compensation Plan

You will be eligible to participate in the Deferred Compensation Plan. The plan
provides eligible executives with the opportunity to save on a tax-deferred
basis.
Vacation Benefits
You will be granted five (5) weeks vacation. Unused vacation is not carried
forward from year to year.
Relocation Benefits

We want your move to Texas to be a positive one. The relocation benefits
provided to you include: household goods move; temporary housing; home visits;
in-transit expenses; home sale assistance; duplicate housing costs; and, new
home closing assistance. The policy describing these benefits is enclosed. In
addition, you will be entitled to comparable relocation benefits on termination
of your employment, at any time and for any reason, other than termination by
the company for cause (as defined below).
Other Benefit Plans

You will also be eligible to participate in all employee benefit plans,
programs, and arrangements made available to our senior-level executives or our
employees generally on the same terms and conditions as other senior-level
executives.
Severance

If your employment is terminated (whether during the initial term or any time
thereafter) as a result of a “qualifying termination,” meaning any termination
other than a termination (i) for cause (as defined below), or (ii) voluntarily
by you without good reason (as defined below), you will receive a lump sum
severance payment equivalent to two years of your base salary and target
bonuses, less lawful deductions. If any such qualifying termination occurs prior
to January 31, 2009, all unvested stock options, RSUs or other equity grants
made to you will vest in full upon such qualifying termination. You will be
required to execute a release of all claims and such other agreements as the
company may deem necessary or appropriate in order to receive such severance pay
and accelerated vesting.
For purposes of this letter agreement, the term “good reason” shall have the
same meaning given such term under the Change in Control Agreement referenced
below.
Termination for Cause

In the event that a termination of your employment with Dean Foods occurs for
cause, no severance payment will be made. If your employment is terminated for
cause, all unvested stock option and other equity grants made to you and your
rights thereunder will be automatically terminated.
The term “cause” shall mean: (a) your conviction of any crime deemed by Dean
Foods to make your continued employment untenable; (b) you commit an act of
gross negligence or willful misconduct in connection with your employment with
Dean Foods or any of its affiliates; (c) you

 

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Mr. Alan Bernon
September 7, 2005
Page 3 of 4
commit any act of dishonesty relating to Dean Foods or any of its affiliates,
its employees, agents or other representatives; or (d) you fail to comply with
the Dean Foods Code of Ethics, or engage in any similar conduct which brings
Dean Foods or any of its affiliates into disrepute. In each case, any
termination for cause will not be effective unless the Board of Directors of
Dean Foods has provided you with (i) written notice of the Board’s intention to
terminate you for cause, and (ii) an opportunity for you to appear before the
Board to discuss any such termination. No act or omission shall constitute the
basis of a termination for cause if such act or omission is taken or omitted at
the request of the Board or another senior officer of Dean Foods, or is based
upon the advice of counsel to Dean Foods.
Change-In-Control Provisions

You will be provided a Change in Control agreement comparable to that currently
provided to other Dean Foods executive officers. In general, this agreement
provides benefits of three times your annual salary and target bonus, plus
vesting of all equity awards and continued health coverage for a two-year period
in certain circumstances following a Change in Control. Such benefits would be
in lieu of, and not in addition to, any severance payments under this agreement.
As stated in the Change in Control Agreement, in order to receive these
benefits, your employment must be terminated, either by the company within two
years after a Change in Control, or by you for good reason within such two-year
period, or by you for any reason during the 13th month after a Change in
Control. The details of these provisions are set forth more fully in the
enclosed Change of Control Agreement.
Other Matters

As you know, you are required to comply with the Dean Foods Code of Ethics as a
condition of employment. You are required to sign the Compliance Certificate
contained within the Code of Ethics at the time your employment in your new
position begins and periodically thereafter.
Your new position also requires that you sign a Non-Competition Agreement.
Enclosed are two copies.
The Compensation Committee will review your base salary, bonus opportunities,
and other components of your compensation for possible upward adjustment if the
Compensation Committee materially increases the compensation levels of other
senior-level executives.
In light of your new role as President of the Dairy Group, I believe it is
appropriate for you to continue to serve on the Board of Directors. Accordingly,
I intend to recommend that the Governance Committee nominate you for reelection
to the Board of Directors when your current term expires. However, all decisions
as to nominations to the Board are and will continue to be made by the
Governance Committee of the Board.

 

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Mr. Alan Bernon
September 7, 2005
Page 4 of 4
Conclusion

Alan, I am very confident you will make lasting contributions to the company. I
look forward to working with you as we continue to build for the future. We are
delighted to have you join us in Dallas and look forward to your arrival.

     
 
  Best regards,
 
   
 
  /s/ Gregg L. Engles
 
   
 
  Gregg L. Engles

     
Agreed and accepted:
   
 
   
/s/ Alan J. Bernon
   
 
   
Alan J. Bernon
   
 
   
/s/ September 7, 2005
   
 
   
Date
   
 
   
Enclosures