Exhibit 10.1

 

AMENDMENT NO. 3 TO EMPLOYMENT AGREEMENT

 

This Amendment No. 3 to Employment Agreement (this “Amendment”) attaches to and
forms part of that certain Employment Agreement, effective as of January 1,
2001, as amended September 24, 2004 and May 18, 2006 (the “Agreement”), between
Aon Corporation (the “Company”) and Michael D. O’Halleran (the “Executive”).

 

WHEREAS, the Company and the Executive mutually desire to further amend the
Agreement, as provided in this Amendment;

 

NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, the parties hereby agree as follows:

 

1.             Subsection 2(a), “Position and Duties,” is hereby deleted in its
entirety and replaced with the following:

 

                “(a) Position and Duties.  From September 1, 2007 through the
end of the Employment Period, the Executive shall be employed as Senior
Executive Vice President and Executive Chairman of Aon Re Global, or in such
other role or capacity as the Executive and the Chief Executive Officer of Aon
Corporation (“CEO”) mutually agree, and shall report directly to Aon
Corporation’s CEO.  During the Employment Period the Executive shall perform
faithfully and loyally and to the best of his abilities the duties assigned to
him hereunder and shall devote his full business time, attention and effort to
the affairs of the Company and its subsidiaries and shall use his best efforts
to promote the interests of the Company and its subsidiaries.  The Executive may
engage in charitable, civic or community activities and, with the prior approval
of the Board, may serve as a director of any other business corporation,
provided that (i) such activities or service do not interfere with his duties
hereunder or violate the terms of any of the covenants contained in Section 6, 7
or 8 hereof and (ii) such other business corporation provides the Executive with
director and officer insurance coverage which, in the opinion of the Board, is
adequate under the circumstances.

 

2.             Each reference in the Agreement to the Company’s “Chairman and
CEO” shall be replaced with a reference to the Company’s “CEO,” (i.e. Aon
Corporation’s Chief Executive Officer) as defined in Subsection 2(a) as amended
herein.

 

3.             Subsection 3(a), “Base Salary,” is hereby deleted in its entirety
and replaced with the following:

 

                “(a) Base Salary.  From September1, 2007 through the end of the
Employment Period, the Company shall pay to the Executive a base salary at a
rate of $2,000,000 per annum (“Base Salary”), payable in accordance with the
Company’s executive payroll policy.  Such Base Salary shall be subject to
increase (but not decrease) at the discretion of the Company’s Chief Executive
Officer and the Organization and Compensation Committee of the Board.”

 

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4.             The following provision is hereby added at the end of Subsection
3(b), “Annual Bonus”:

 

                “Notwithstanding the foregoing, for each calendar year of the
Employment Period beginning with 2008, the Executive’s annual bonus shall be
determined in the sole discretion of the Organization and Compensation Committee
of the Board (the “Committee”); provided, however, that although the bonus shall
remain discretionary the Chief Executive Officer of the Company shall establish
in writing no later than March 31st of each such year the performance criteria
relative to Aon Corporation, Aon Re Global, and the individual performance
metrics applicable to the Executive that will be considered in the determination
of the Executive’s annual bonus.”

 

5.             The following paragraph shall be added at the end of Subsection
3(c), “Stock Awards:”

 

                “Notwithstanding the foregoing, subject to the approval of the
Committee no later than March 31, 2009, the Executive shall be granted an award
of performance share units under the Aon Stock Incentive Plan (or successor plan
or sub-plan) based on the achievement of specified pre-tax net income targets
for the Global Reinsurance Segment for the performance period beginning on
January 1, 2009 and ending on December 31, 2011.  The value of the performance
share units at the target level shall be $3 million and the maximum value of the
award shall be $6 million.  Performance shall be measured on a cumulative basis
during the performance period such that, to the extent that any such targets are
not satisfied for any year, the Executive may make up such shortfall in
subsequent years during the performance period.  In addition to the achievement
of the specified pre-tax net income targets, the award shall be contingent upon
achievement of a specified margin target for the three-year period.  For
purposes of the award, “margin” means the segment pre-tax income divided by
total revenue, stated as a percentage.  Segment pre-tax income is defined as
total revenue less operating expenses and non-operating items charged to the
unit.  Total revenue is defined as operating revenue plus investment income. 
The earned performance share units shall be settled and paid in fully vested
shares of common stock of the Company as soon as is practicable after the last
day of the performance period, but not later than March 31, 2012, or such
earlier date as is necessary to comply with Section 409A of the Code, provided
that the Executive is employed by the Company on December 31, 2011 (except as
provided below). The unearned performance share units shall be forfeited at such
time.  In the event of the Executive’s termination of employment for any reason
other than “cause” (as such term shall be defined in the Company’s 2008
Leadership Performance Program document, a copy of which will be furnished to
the Executive), the performance share units shall vest and be payable on a pro
rata basis equal to (x) the number of performance share units earned over the
full performance period (based on the achievement of the performance targets
under the award) multiplied by (y) the fraction the numerator of which is the
number of days employed during the performance period and the denominator of
which is 1,095.  The calculation of the achievement of the performance targets,
vesting and settlement shall be completed after the end of the performance
period.

 

                The Executive shall be eligible to receive awards from time to
time under the Aon Stock Incentive Plan (or a successor plan or sub-plan) for
future performance periods in the sole discretion of the Committee.”

 

6.             The Company will pay the Executive’s professional expenses
incurred to prepare this Amendment.

 

7.             This Amendment is effective as of September 1, 2007.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 3 to the
Employment Agreement as of December 15, 2007.

 

AON CORPORATION

 

 

 

EXECUTIVE:

 

 

 

 

 

 

 

 

 

 

By:

/s/ Jeremy G.O. Farmer  

 

 

 

 

/s/ Michael D. O’Halleran

 

 

 

 

 

 

Michael D. O’Halleran

Title:

Senior Vice President

 

 

 

 

 

 

 

 

 

 

 

 

 

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