Exhibit 10.1

 

November 16, 2005

 

Richard K. Reece

21 Ballas Court

St. Louis, MO 63131-3000

 

Dear Ricky:

 

I am pleased to confirm our offer to you of the position of Senior Vice
President and Chief Financial Officer for Acuity Brands, Inc. (“Acuity” or
“Acuity Brands”). This letter confirms the details of our offer, which are
subject to formal approval by the Board of Directors of Acuity Brands.

 

EFFECTIVE DATE

 

You will assume the duties of your new position effective as of December 1, 2005
(the “Effective Date”).

 

DUTIES

 

You will be employed on a full-time basis as the Senior Vice President and Chief
Financial Officer for Acuity Brands and will report to the Chairman, President,
and Chief Executive Officer. In that capacity, you will perform the duties and
responsibilities normally associated with that position, including those
described on Exhibit “A” attached hereto.

 

COMPENSATION

 

Base Salary

 

Your starting base salary will be $33,333 per month, paid on a monthly basis in
arrears and based on an annual salary of $400,000. Your salary will be reviewed
annually beginning October 2007.

 

Sign-On Bonus

 

You will receive a sign-on bonus of $325,000, which will include amounts paid in
lieu of relocation expenses (other than temporary housing and travel, addressed
below). Should you voluntarily terminate your employment with Acuity Brands,
Inc. within three years of the Effective Date, you will be required to repay the
sign-on bonus on a pro rata, after tax basis, assuming a tax rate of 41%.

 

Annual Incentive Plan

 

You will participate in the Acuity Brands, Inc. Management Compensation and
Incentive Plan, currently providing an annual bonus opportunity of 55% of salary
at target performance, with a maximum opportunity of 110% of salary. Your fiscal
year 2006 bonus will be calculated based on the full fiscal year ending
August 31, 2006.

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Richard Reece   Page 2

 

Long-Term Incentive Plan

 

You will participate in the Acuity Brands, Inc. Long-Term Incentive Plan (the
“Plan”). Under the term of the Plan you will have the opportunity for awards
calculated as a percentage of your base salary and determined by your position
in Tier 1 of the award structure, by the performance of Acuity Brands, and by
your contribution to that performance. Your base salary multiplied by 120% will
be used as the starting point for any annual award that may be granted beginning
in fiscal year 2007, adjusted for the performance of Acuity Brands for the
fiscal year ended August 31, 2006 and your individual performance for the
portion of the year you are employed.

 

You will receive a one-time initial award under the Plan of 25,000 time-vesting
restricted shares, which will vest in four equal annual installments beginning
one year from the Effective Date, and a stock option for 50,000 shares, which
will vest in three equal installments beginning one year from the Effective Date
and will have an exercise price equal to the fair market value (closing price)
of Acuity Brands common stock on the Effective Date.

 

You will be subject to the share ownership guidelines and share retention
requirements applicable to other senior vice presidents of Acuity Brands.

 

Retirement Plans

 

You will be eligible to participate in the Acuity Brands, Inc. 401(k) Plan,
which currently includes a company match of 60% of deferrals up to 6% of salary,
subject to applicable federal limitations.

 

You will be eligible to participate in the Acuity Brands, Inc. 2002 Supplemental
Executive Retirement Plan (the “SERP”), as it may be revised or replaced to
comply with §409A of the Internal Revenue Code. Your benefits under the SERP
will be determined pursuant to the standard provisions of the SERP in accordance
with the effective date of your eligibility.

 

Deferred Compensation Plan

 

You will be eligible to participate in the Acuity Brands, Inc. Supplemental
Deferred Savings Plan (the “SDSP” or “Plan”) under the standard provisions of
the Plan or such subsequent deferred compensation plan that may be adopted to
comply with §409A of the Internal Revenue Code. Under the current provisions of
the SDSP, you may defer up to 50% of your annual cash compensation (base salary
and bonus), which earns interest at the prime rate. (As an executive officer
with eligibility for the SERP, you will not be eligible to receive the company
contribution or match under the SDSP.)

 

Medical, Life Insurance, and Other Employee Benefits

 

You will be eligible to participate in the medical, dental, life insurance,
disability, and other benefit programs generally made available to employees of
Acuity Brands, which include:

 

Medical

Prescription Drug Plan

Life Insurance

Short-Term Disability

Long-Term Disability

Flex Benefit Program

Voluntary Dental Program

Voluntary EyeMed Program

 

Vacation

 

You will be entitled to four (4) weeks vacation per fiscal year.

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Richard Reece   Page 3

 

Temporary Housing and Travel

 

You will be entitled to a temporary housing allowance for up to six (6) months
beginning on the Effective Date, not to exceed $3,500 per month, to provide
accommodations for you and your family in Atlanta pending the sale of your
current home in St. Louis. In addition, Acuity Brands will pay reasonable
expenses of travel to and from St. Louis until such sale.

 

Employment at Will/Severance Payments/Change in Control

 

Your employment will be at will and may be terminated by either Acuity Brands,
Inc. or by you at any time for any reason, with or without notice. Except in the
event of a termination in connection with a Change in Control of Acuity Brands,
Inc. (as defined in the Severance Protection Agreement that will cover you), you
will be covered by a Severance Agreement consistent with those provided other
senior vice presidents of the Corporation, which provides you a severance
benefit in the event your employment in this position is terminated for any
reason other than voluntary termination (including early or normal retirement),
termination upon death or Disability, or termination by Acuity Brands for Cause.
The terms Cause and Disability used in this paragraph will be defined in the
Severance Agreement.

 

With respect to Change in Control situations, you will be covered by a Severance
Protection Agreement with the same provisions as are generally applicable to
other senior vice president of Acuity Brands. In the event of your termination
in connection with a Change in Control that entitles you to benefits under the
Severance Protection Agreement, you will receive the greater of the payments and
benefits provided under the Severance Protection Agreement or the severance
payment described above.

 

Other

 

The base salary, annual incentive, long-term incentive, nonqualified retirement
benefits, and any severance payment will be structured to provide the tax
deductibility to Acuity Brands, Inc. of the payments and benefits under the
Internal Revenue Code of 1986.

 

We look forward to your joining Acuity Brands and to a long and mutually
satisfactory relationship. This letter outlines your employment relationship
with Acuity Brands; if you agree with the employment terms as outlined above,
please sign and date both copies of this letter agreement and return one copy to
me at your earliest convenience.

 

Sincerely,

 

/s/ Vernon J. Nagel

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Vernon J. Nagel

Chairman, President, and

Chief Executive Officer

 

ACCEPTED AND AGREED TO THIS

16th DAY OF NOVEMBER, 2005.

/s/ Richard K. Reece

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Richard K. Reece