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.”


 

















 


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.


 

















 


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