EX-10.1:



 





Exhibit 10.1




	 	 	 	 	 
	 

	 	
	 	 






October 30, 2005




Richard L. Clemmer

1110 American Parkway

Allentown, PA 18109




Dear Rick,



It gives me great pleasure to confirm your offer of employment with Agere Systems. The following
outlines the key features of your offer:




Assignment



Your position is President and Chief Executive Officer (CEO) of Agere Systems Inc., your work
location is Allentown, Pennsylvania and start date is October 25, 2005.




Compensation





Base Salary




Your starting base salary is $680,000 annually and paid monthly on or about the first of
each month. Your first paycheck will be December 1, 2005. Through our annual Board
Performance review at the end of the fiscal year you will receive a performance assessment
and we will approve the goals by which you will be evaluated for the new fiscal year. The
basis of the performance assessment will be revenue growth and absolute operating margin
income performance.




Short-Term Incentive Plan (STIP)




Agere’s Short-Term Incentive Plan (STIP) is a pay-for-performance bonus plan that is based
on company financial results and rewards individual performance in the form of an annual
bonus payout. The STIP target for the Chief Executive Officer is 125% of your annual base
salary or $850,000. Your bonus will be determined by company performance, as assessed
against the expectations set and approved by the Board. The Plan is designed to pay out
cash bonuses annually, after the close of the fiscal year, typically in December. For Fiscal
Year 2006 you will receive a minimum, guaranteed bonus of $425,000.




Long-Term Incentive Plan (LTIP)




You are eligible to participate in Agere’s New Hire Stock Option Plan. Your stock option
grant will be 500,000 shares. The grant will price 48 hours after your actual start date or
at such time the Compensation Committee approves the grant but in no case sooner than 48
hours after your start date. The option price will be equal to 100% of the average opening
and closing market price on that date.
The term of the option will be seven (7) years with equal annual vesting over a four (4)
year period from the date of the grant.




Restricted Stock Units 




You will be awarded 100,000 time-based restricted stock units with equal annual vesting over
a four year period. The grant will be made 48 hours after your actual start date or at such
time the Compensation Committee approves them but in no case sooner than 48 hours after your
start date.




Performance-Based Restricted Stock Units




You will be awarded 150,000 Performance Based restricted stock units. See the terms
outlined in the plan document attached to this letter.




Relocation/Commuting




Agere is providing you with a $100,000 one-time lump sum
allowance to cover housing and/or commuting expenses. Should you voluntarily resign, or be
terminated for cause, within one year from your date of hire, you agree by accepting this
employment offer to promptly repay the full amount of all commuting monies
paid to you by Agere. In addition, you will be eligible for
Agere’s standard relocation package.



Benefits



You are eligible for the benefit programs available to all U.S. employees. For many benefit plans,
if you enroll on time, you and your dependents will be covered retroactively to your start date.
Information about your




 









 







benefits is available on “My Agere View” at
http://www.myagereview.com. That’s where you will find the 2005 Benefits Summary, which
describes most plan options and includes the following:





Medical




Agere offers three medical options that are designed to assist employees with varied medical
and financial needs. All are described on pages 4 and 5 of the 2005 Benefits Summary, which
you find on My Agere View. You must enroll for medical benefits within 31 days of your start
date. Coverage is retroactive to the start date.




Dental, Vision and Flexible Spending Accounts




Agere offers dental and vision coverage to you and your eligible dependents. In addition,
you may also put aside pre-tax dollars for reimbursement for any out-of-pocket medical or
dependent-care costs throughout the year. For more information see the benefits summary. You
must enroll for each of these plans within 31 days of your start date.




401(k) Plan and Employee Stock Purchase Plan




Agere also offers a matching 401(k) Plan, and an Employee Stock Purchase Plan. You are
immediately eligible to participate in both programs. More information on these plans is
available through the benefits summary. You will also receive information on how to enroll
during your first week at Agere.




Paid Time Off




You are annually allotted 20 vacation days, 4 personal days, 7 company holidays, and 3
floating holidays, granted at the start of our fiscal year.




The following programs are offered to Agere Executives only and are not described in the
2005 Benefits Summary:




Executive Life Insurance




Agere Systems provides you with $1,000,000 term insurance. Agere will pay the entire
premium; therefore, you will be subject to imputed income annually. In addition, you may
purchase supplemental insurance coverage up to five times your total annual pay. Agere also
provides accidental loss insurance at one times your total annual pay. Additional coverage
of up to five times your total annual pay is available at your own expense. Upon offer
acceptance, you will receive two insurance beneficiary forms, which must be signed and
returned as soon as possible.




Automobile Allowance




You will be provided a car allowance of $1,400/month paid in the normal monthly payroll
cycle.




Financial Counseling




You are eligible for a $10,000 annual allowance (net of applicable taxes) to help cover the
cost of your financial planning. This amount will be paid annually in your May paycheck.




Executive Severance Benefits




The terms of the standard Executive separation plan are described in the attached
document. These terms will not be changed during the course of your employment without
your consent. You will be eligible for this plan beginning on the date of this letter.
In the event that before October 26, 2006, and in lieu of any
bonus payment for fiscal 2006 or any other payment on account of such termination, you
choose to terminate your employment with the company, you will receive one year base
salary and bonus at target in a lump sum. If you terminate your employment with the
company pursuant to the preceding sentence and you take a senior executive position at
another company within six months of the date of your termination, you must repay us a
maximum of the amount paid pursuant to the preceding sentence subject to a determination
of the Board of Directors that will take into account any detrimental
financial impact to you. As a condition of being eligible for Executive Severance
Benefits, you agree that, at the request of the Board of Directors, you will serve as
non-executive Chairman of the Board for up to two years after such time as you cease
being Chief Executive Officer.



 









 






Employment At Will



Please be aware that this document is not an employment contract and should not be construed or
interpreted as creating an implied or expressed guarantee of continued employment. This employment
relationship with Agere Systems is by mutual consent. This means that employees have the right to
terminate their employment at any time and for any reason. Likewise, Agere reserves the right to
terminate your employment on the same basis.




Employment Verification



U.S. law requires all companies to verify their employees’ authorization to work in the U.S. Within
your first month of employment you will need to bring the required documentation. See MyAgere View
at http://www.myagereview.com




Contingency of Offer



This offer of employment is contingent upon your signing the Employee Agreement Regarding
Intellectual Property.




Next Steps...



Once again, be sure to visit “My Agere View” at http://www.myagereview.com. In addition to
benefits information, this site provides instructions for things you need to know right away, most
forms you’ll need to complete before you start work, information about Agere, and items to bring
with you on your first day.




Acceptance



Please acknowledge your written acceptance of this offer by signing and returning to Kevin
Pennington, EVP-Human Resources.




In Summary



We are very excited about the contributions we believe you will make to Agere and look forward to
helping you extend your professional career in a very exciting, visible and rewarding environment.
Your interest in Agere Systems is genuinely appreciated, and we look forward to being on the team.




Sincerely,



/s/ H. A. Wagner







H. A. Wagner

Chairman, Board of Directors



Acknowledged and Agreed to:

/s/ Richard L. Clemmer







Richard L. Clemmer