Exhibit 10.16


 


DINEEQUITY, INC.


EXECUTIVE SEVERANCE AND


CHANGE IN CONTROL POLICY


 


1. Purpose. The DineEquity, Inc. Executive
Severance and Change in Control Policy (“the Policy”) is established effective October
13, 2008, to provide severance benefits under specified circumstances to
Executives (as defined below) of DineEquity, Inc. or its wholly-owned
subsidiaries (collectively the “Company”) who are in a position to contribute
materially to the success of the Company. 
As consideration for severance benefits under this Policy, the Executive
shall release the Company from any and all actions, suits, proceedings, claims
and demands related to employment with the Company and to the termination by
signing a waiver and release document in a form provided by the Company. Such
document shall include a statement that benefits under this Policy are
conditioned upon the Company’s receipt of a signed release.


 


2. Administration. This Policy is administered
by the Chief Executive Officer of the Company. The Chief Executive Officer has
discretion and authority with respect to the administration, interpretation and
application of the Policy, except as expressly limited by the terms of the
Policy. The Chief Executive Officer must receive approval from the Compensation
Committee of the Board of Directors (the “Committee”) in order to authorize
severance benefits outside of the terms of this Policy to the employees covered
by this Policy.


 


3. Participation. The Committee shall select
the Executives who are eligible for severance under this Policy (the “Participants”).  Executives who are eligible for Severance
under this Policy are listed by job title on Exhibit A, which is attached
hereto and incorporated by reference herein. 
Additions to or deletions from the list of Participants shall be
reflected in an amendment to Exhibit A to this Policy approved by the
Committee.  An Executive who is entitled
to severance benefits pursuant to a separate written agreement with the Company
shall not be eligible for severance benefits under this Policy whether or not
his or her position is listed on Exhibit A.


 


4. Definitions.


 


  a.  Base Salary.  “Base Salary” means the fixed annual
compensation (excluding bonuses and other benefits) paid to an employee
regularly each pay period for performing assigned job responsibilities.


 


 
b.  Cause.  “Cause” means, as determined by the Company,


 


(i)            The
willful failure by the Participant to substantially perform his or her duties
with the Company (other than any such failure resulting from the Participant’s
incapacity due to physical or mental illness);


 


(ii)           The
Participant’s willful misconduct that is demonstrably and materially injurious
to the Company, monetarily or otherwise;


 

















 


(iii)          The
Participant’s commission of such acts of dishonesty, fraud, misrepresentation
or other acts of moral turpitude as would prevent the effective performance of
the Participant’s duties; or


 


(iv)          The
Participant’s conviction or plea of no contest to a felony or a crime of moral
turpitude.


 


  c.  Change in Control.  A “Change in Control” shall be deemed to have
occurred if:


 


(i)            any “person,” as
such term is used in Sections 13(d) and 14(d) of the Securities and Exchange
Act of 1934, as amended, (the “Exchange Act”) (other than the Company; any
trustee or other fiduciary holding securities under an employee benefit plan of
the Company; or any company owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership of
Stock of the Company) is or becomes after the Effective Date the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company (not including in the securities
beneficially owned by such person any securities acquired directly from the
Company or its affiliates) representing 35% or more of the combined voting
power of the Company’s then outstanding securities;


 


(ii)           during any period
of two consecutive years (not including any period prior to the Effective
Date), individuals who at the beginning of such period constitute the Board,
and any new director (other than a director designated by a person who has
entered into an agreement with the Company to effect a transaction described in
subsections (i), (iii) or (iv) of this Section 4.c.) whose election by the
Board or nomination for election by the Company’s stockholders was approved by
a vote of at least two-thirds ( 2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute at least a majority thereof; or


 


(iii)          the consummation of
a merger or consolidation of the Company with any other corporation, other than
(A) a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities
of the surviving entity), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company, at least 75% of the combined voting power of the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no person
acquires more than 50% of the combined voting power of the Company’s then
outstanding securities; or


 


(iv).         the stockholders of
the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially
all of the Company’s assets.


 


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  d.  Executive.  “Executive” means an employee of the Company
with the title of vice president or higher.


 


  e. Good Reason.  A Participant shall have “Good Reason” to
effect a voluntary termination of his or her employment in the event that the
Company (i) breaches its obligations to pay any salary, benefit or bonus due to
him or her, (ii) requires the Executive to relocate more than 50 miles from the
Company’s headquarters, (iii) assigns to the Executive any duties inconsistent
with the Executive’s position with the Company or significantly and adversely
alters the nature or status of the Executive’s responsibilities or the
conditions of the Executive’s employment, or (iv) reduces the Executive’s base
salary and/or bonus opportunity, except for across-the-board reductions
similarly affecting all management personnel of the Company and all management
personnel of any corporation or other entity which is in control of the
Company; and in the event of any of (i), (ii), (iii) or (iv), the Executive has
given written notice to the Committee or the Board of Directors as to the
details of the basis for such Good Reason within thirty (30) days following the
date on which the Executive alleges the event giving rise to such Good Reason
occurred, the Company has failed to provide a reasonable cure within thirty
(30) days after its receipt of such notice and the effective date of the
termination for Good Reason occurs within 90 days after the initial existence
of the facts or circumstances constituting Good Reason.


 


  f.  Severance Benefits.  “Severance Benefits” means the benefits set
forth in Section 5 of this Policy.


 


  g.  Severance Benefits
Subsequent to a Change in Control.  “Severance
Benefits Subsequent to a Change in Control” means the benefits set forth in Section
6 of this Policy.


 


  h.  Years of Service.  “Years of Service” means the total of all
full years of service beginning with the Participant’s first day of employment
with the Company.


 


5. Severance Benefits. (a) Any Participant
whose employment with the Company is involuntarily terminated by the Company
for reasons other than Cause shall be eligible for Severance Benefits hereunder
provided the Participant has returned a signed Release to the Committee within
the time period requested by the Committee and has not revoked the Release
within the time permitted under any applicable state and federal laws.  For purposes of this policy, involuntary
termination by the Company shall mean a separation of service within the
meaning of Section 409A of the Internal Revenue Code (the “Code”) and the
regulations thereunder, which separation is initiated by the Company.    The amount of Severance Pay for which a
Participant is eligible hereunder shall be determined in accordance with his or
her length of service with the Company, as follows:


 


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  Years
  of Service

  	
   

  	
  Severance Pay Amount

  
	
  Less than Five Years

  	
   

  	
  Six (6) months Base Salary plus prorated bonus under Executive
  Incentive Plan (based on months of total performance period completed prior
  to termination)

  
	
  Five Years or More

  	
   

  	
  Twelve (12) months Base Salary plus prorated bonus under Executive
  Incentive Plan (based on months of total performance period completed prior
  to termination)

  



 


  b.  Method of Payment. Severance Pay shall be
paid to an eligible Participant in a lump sum by check issued within 5 business
days following the expiration of any applicable revocation period contained in
the release or permitted under any applicable state and federal laws or the
business day following the Participant’s last day of employment, whichever is
later.  Notwithstanding the foregoing, in
the event the amount of Severance Pay to which an eligible Participant is
entitled under this Plan exceeds the limit described in Code Section 401(a)(17),
the amount within that limit will be paid in an initial lump sum in the time
period described above and the remainder will be paid on the first payroll date
following the date that is six months after the Participant’s termination of
employment.


 


  c.  Death of Participant. If a Participant dies
after signing the release and prior to receiving Severance Pay to which he or
she is entitled pursuant to the Policy, payment shall be made to the
beneficiary designated by the Participant to the Company or, in the event of no
designation of beneficiary, then to the estate of the deceased Participant.


 


  d. The Company shall provide
standard outplacement services at the expense of the Company, but not to exceed
in total an amount equal to $5,000, from an outplacement firm selected by the
Company. In order to receive outplacement services, the Participant must begin
utilizing the services within 90 days of his or her date of termination.


 


6.  Severance Benefits Subsequent to a Change in Control. (a) Any
Participant whose employment with the Company is involuntarily terminated by
the Company for reasons other than Cause within 18 months following a Change in
Control or whose employment is voluntarily terminated by the Participant for
Good Reason within 18 months following a Change in Control shall be eligible
for Severance Benefits hereunder provided the Participant has returned a signed
Release to the Committee within the time period requested by the Committee and
has not revoked the Release within the time permitted under any applicable
state and federal laws.  The amount of
Severance Pay for which a Participant is eligible hereunder shall be twenty
four (24) months Base Salary plus a sum equal to the greater of the Participant’s
target bonus for the year in which the termination takes place or the average
of the bonuses received by the Participant pursuant to the Company’s Executive
Incentive Plan or other similar bonus plan relating to the prior three fiscal
years.  In addition, any unvested stock
options, restricted stock or other unvested equity awards or grants shall fully
vest as of the day prior to the date of the 


 


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Participant’s termination. 
Severance Benefits Subsequent to a Change in Control shall be in lieu of
any Severance Benefits which accrue under Section 5 of this Policy.


 


  b.  Method of Payment. Severance Pay shall be
paid to an eligible Participant in a lump sum by check issued within 5 business
days following the expiration of any applicable revocation period contained in
the release or permitted under any applicable state and federal laws or the
business day following the Participant’s last day of employment, whichever is
later.  Notwithstanding the foregoing, in
the event the amount of Severance Pay to which an eligible Participant is
entitled under this Plan exceeds the limit described in Code Section 401(a)(17),
the amount within that limit will be paid in an initial lump sum in the time
period described above and the remainder will be paid on the first payroll date
following the date that is six months after the Participant’s termination of
employment.


 


  c.  Death of Participant. If a Participant dies
after signing the release and prior to receiving Severance Pay to which he or
she is entitled pursuant to the Policy, payment shall be made to the
beneficiary designated by the Participant to the Company or, in the event of no
designation of beneficiary, then to the estate of the deceased Participant.


 


  d. The Company shall provide
standard outplacement services at the expense of the Company, but not to exceed
in total an amount equal to $5,000, from an outplacement firm selected by the
Company. In order to receive outplacement services, the Participant must begin
utilizing the services within 90 days of his or her date of termination.


 


7. Funding. The Policy shall at all times be
entirely unfunded and no provision shall at any time be made with respect to
segregating assets of the Company for payment of any Severance Pay or Severance
Benefits hereunder. No Participant or other person shall have any interest in
any particular assets of the Company by reason of the right to receive
Severance Pay or Severance Benefits under the Policy and any such Participant
or any other person shall have only the rights of a general unsecured creditor
of the Company with respect to any rights under the Policy.


 


8. Taxation. All Severance Pay and Severance
Benefits shall be subject to federal, state and local tax deductions and
withholding for the same.


 


9. Non-Exclusivity of Rights. The terms of the
Policy shall not prevent or limit the right of a Participant to receive any
base annual salary, pension or welfare benefit, perquisite, bonus or other
payment provided by the Company to the Participant, except for such rights as
the Participant may have specifically waived in writing. Amounts that are
vested benefits or which the Participant is otherwise entitled to receive under
any benefit policy or program provided by the Company shall be payable in
accordance with the terms of such policy or program.


 


10. Amendment and Termination. This Policy may
be amended or terminated by the Committee acting in its sole discretion at any
time. In addition, Participants may be added and deleted by the Committee
acting in its sole discretion at any time. No such 


 


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termination or amendment shall affect the rights of any individual who
is then entitled to receive Severance Pay at the time of such amendment or
termination. Severance Pay is not intended to be a vested right. The Chief
Executive Officer shall have the right in his sole discretion to interpret the
Policy and make all other determinations he or she deems necessary or advisable
for the administration of the Policy.


 


11. Non-Assignability. Severance Benefits
pursuant to the Policy shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or charge prior to
actual receipt thereof by a Participant; and any attempt to so anticipate,
alienate, sell, transfer, assign, pledge, encumber or charge prior to such
receipt shall be void; and the Company shall not be liable in any manner for,
or subject to, the debts, contracts, liabilities, engagements or torts of any
person entitled to any Severance Benefits under this Policy.


 


12. Termination of Employment. Nothing in the
Policy shall be deemed to entitle a Participant to continued employment with
the Company, and the rights of the Company to terminate the employment of a
Participant shall continue as though the Policy were not in effect.


 


13. Confidential Information. As a condition
of receiving Severance Pay, Participants shall agree to hold, in a fiduciary
capacity for the benefit of the Company, all confidential information regarding
the Company acquired by the Participant while employed by the Company. This
confidential information may include, but is not limited to, information
regarding the Company’s business practices, trade secrets, policies, customer
lists, contracts, financial and market data, marketing reports, pricing,
business opportunities and other information of a confidential nature. In
consideration of the Severance Benefits received by a Participant pursuant to
this Policy, Participant shall agree and covenant that he or she (i) shall not
use to the Company’s detriment and (ii) shall not divulge, publicly or
privately, any specified or other such confidential information regarding any
aspect of the Company’s business acquired during or as a result of his or her
employment with the Company. Furthermore, to the extent that disclosure of any
such information is controlled by statute, regulation or other law, Participant
shall agree that he or she is bound by such laws and that this Policy does not
operate as a waiver of any such non-disclosure requirement. In the event of any
breach of confidentiality, the Company shall be entitled to injunctive relief,
in addition to all other rights it may have at law or in equity.


 


14. Governing Law. The terms of the Policy
shall be governed by and construed and enforced in accordance with the laws of
the State of California including all matters of construction, validity and
performance.


 


15. Arbitration.  Any
dispute or claim arising out of or relating to this Policy shall be settled by
final and binding arbitration in accordance with the Commercial Arbitration rules
of the American Arbitration Association, and judgment upon the award rendered
by the arbitrators may be entered in any court having jurisdiction
thereof.  The fees and expenses of the
arbitration panel shall be shared equally by the Participant and the 


 


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Company.  The prevailing party in any arbitration
brought hereunder shall be entitled to an award of costs (including expenses
and attorneys’ fees) incurred in such arbitration.


 


IN WITNESS WHEREOF, the Company has caused this Policy to be executed
in its name by its duly authorized officer as of the 13th day of  October, 2008.


 


 


DineEquity, Inc.


 


 


	
  By:

  	
   

  	
   

  



 


Chairman and Chief Executive Officer


 


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EXHIBIT A


 


DineEquity, Inc.


 


Senior Vice President, Human Resources


Vice President, Legal, Secretary and General counsel


Vice President, Corporate Controller


 


IHOP Business Unit


 


Senior Vice President, Marketing


Vice President, Finance


Vice President, Franchise & Development


Vice President, Operations Services


 


Applebee’s Business Unit


 


Senior Vice President, Operations


President, International Division


Senior Vice President, Franchise & Development


Senior Vice President, Finance


Vice President, Operations Excellence


Vice President, HR


Senior Vice President, Marketing


 


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