Exhibit 10.1
(DEAN FOODS LOGO) [d35856d3585600.gif]
April 7, 2006
Mr. Jack F. Callahan, Jr.
89 Logan Road
New Canaan, CT 06840
Dear Jack:
I am pleased to offer you the position of Executive Vice President and Chief
Financial Officer for Dean Foods Company. This position will report directly to
me. We look forward to having you join our team as soon as possible after you
complete your existing commitments.
Here are the specifics of your offer:
Base Salary
You will be paid $19,166.66 on a semi-monthly basis, which equates to an annual
salary of $460,000. Your salary will be reviewed annually by our Compensation
Committee.
Signing Bonus
You will receive a one-time signing bonus of $100,000.00, less payroll taxes,
within 30 days of employment.
Annual Bonus Opportunity
As Executive Vice President and Chief Financial Officer of Dean Foods, you will
be eligible to earn an annual bonus with a target amount equal to 70% of your
annualized base salary, subject to the achievement of certain operating targets
for the group and certain individual targets. You can earn up to 200% of your
targeted bonus if operating targets are exceeded.
Annual Long Term Incentive Compensation
Upon commencement of your employment, you will be granted options to purchase
shares of Dean Foods common stock having a Black Scholes value, as determined by
Mercer Consulting, of $549,000 (representing approximately 45,000 options based
on current valuation). 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 will vest in equal installments over a period of three years,
beginning on the first anniversary of the date of the grant. You will also be
awarded restricted shares having a value (based on the fair market value of Dean
Foods shares) of $646,000 (representing 17,000 shares based on current
valuation). These restricted shares will vest in equal installments over a
five-year period, beginning on the first anniversary of the date of grant, or
earlier if certain financial performance targets are met. You will be eligible
for future equity grants under the Dean Foods Long Term Incentive Program in the
future,

 

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Mr. Jack Callahan
April 7, 2006
Page 2 of 4
commencing in January 2007. The amount and nature of future long-term incentive
awards will be determined by the Board of Directors.
Additional “Sign On” Long Term Incentive Awards
Upon commencement of your employment, you will be granted an additional number
of options to purchase shares of Dean Foods common stock having a Black Scholes
value, as determined by Mercer Consulting, of $793,000 (representing
approximately 65,000 options based on current valuation). These options will
have the same terms and conditions as your annual stock option awards referenced
above. In addition, you will be granted restricted shares having a value of
$855,000 (representing approximately 22,500 restricted shares based on current
valuation). These shares will vest in equal installments over a three year
period beginning on the first anniversary of the date of grant.
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. You will receive general information and enrollment materials at your
home address approximately 30-45 days after your start date.
Vacation Benefits
You will be granted four (4) weeks vacation. Unused vacation is not carried
forward from year to year.
COBRA Support
Should you elect COBRA (health insurance) coverage from your previous employer,
Dean Foods will pay your COBRA premiums (minus your normal Dean Foods
contribution) until you become eligible for Dean Foods benefits (approximately
60 days following hire).
Benefits Plan Reference
Attached to this letter is an overview of Dean Foods’ Health Benefits, savings
and 401k programs, and all other benefits. If you have questions regarding these
programs or eligibility, please call Robby Dunn at 214-303-3557.
Relocation Benefits
Dean Foods wants your move to Dallas 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.
If you have questions regarding these programs or eligibility, please call Robby
Dunn at 214-303-3557.
Insider Trading
As an executive officer, you will have access to sensitive business and
financial information. Accordingly, you will be prohibited from trading Dean
Foods securities (or, in some circumstances, the securities of companies doing
business with Dean Foods) from time to time in accordance with the company’s
Insider Trading Policy.

 

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Mr. Jack Callahan
April 7, 2006
Page 3 of 4
Severance
If your employment is terminated at any time as a result of a “qualifying
termination,” meaning any termination as a result of death, disability, your
voluntary termination for good reason, or your involuntary termination without
cause (as defined below), you will receive payment of all base salary accrued
through the date of termination, prior year’s bonus to the extent earned but not
paid, target bonus through the date of termination and all unused vacation. In
addition, you will receive a lump sum severance payment equivalent to two years
of your base salary and target bonuses, less lawful deductions. 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.
The term “cause” shall mean: (a) your conviction of any crime deemed by the
company to make your continued employment untenable; (b) any act of gross
negligence or willful misconduct in the conduct of your employment; (c) your
committing any act of dishonesty whether relating to the company or any of its
affiliates, its employees, agents or otherwise; or (d) your failure to comply
with the Company’s Code of Ethics, or any conduct which brings the Company or
any of its affiliates into disrepute, in each case as determined by the Board of
Directors.
The term “good reason” shall have the meaning given in the Change in Control
Agreement referenced below.
Non-Qualifying Termination
In the event that your employment with Dean Foods is terminated either for cause
or by you voluntarily and without good reason, no severance payment will be
made. If your employment is terminated either for cause or by you voluntarily
and without good reason, all unvested stock option and other equity grants made
to you and your rights thereunder will be automatically terminated.
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. 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.
New Hire Processes
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 begins and periodically
thereafter.

 

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Mr. Jack Callahan
April 7, 2006
Page 4 of 4
Your position also requires that you sign a Non-Compete Agreement substantially
in the form enclosed.
Conclusion
Jack, I am very excited about the opportunities at Dean Foods and very excited
to have you be a part of our team. I am confident that with your experience,
skills, vision and standards, you will make significant contributions to our
company in the years to come.
Best regards,
-s- Gregg L. Engles [d35856d3585601.gif]
Gregg L. Engles

     
Agreed and accepted:
   
 
   
/s/ Jack F. Callahan, Jr. 
   
 
   
 
   
Jack F. Callahan, Jr.
   
 
   
April 27, 2006 
   
 
   
 
   
Date