exv10w1



 





Exhibit 10.1




September 7, 2005




Mr. Alan Bernon

209 Cliff Road

Wellesley Hills MA 02481



Dear Alan:



I am pleased to offer you the position of President of Dean Foods Dairy Group (the “Dairy Group”),
effective January 1, 2006. This position will report directly to me. We are delighted that you are
willing to accept this new responsibility and I look forward to having you join our team in Dallas
in September 2005.



Here are the specifics of your offer:



Term/Base Salary



We contemplate an initial term of employment through January 31, 2009. You will be paid an annual
base salary at the rate of $600,000 for the last four months of 2005 and for all of 2006, $650,000
for 2007, and $700,000 for 2008.



Annual Bonus Opportunity



Effective September 1, 2005, your annual bonus target will be increased to 70% of your annualized
salary, subject to the achievement of pre-established operating targets for the Northeast Region.
Effective January 1, 2006, when you assume the role of President of the Dairy Group, you will be
eligible to earn an annual bonus with a target amount equal to 80% of your annualized salary,
subject to the achievement of certain operating targets for the group. You can earn up to 200% of
your targeted bonus if operating targets are exceeded.



Stock Options and Restricted Stock



In September 2005, you will be granted 20,000 restricted stock units (RSUs) as a signing bonus. In
January 2006, you will be granted (i) options to purchase 276,000 shares of Dean Foods common stock
and (ii) 75,000 RSUs. This award reflects an “upfront” three-year grant. 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 and RSUs will vest in equal installments over a period of three (3) years,
beginning on the first anniversary date of the grant and fully vesting by the third anniversary of
the date of grant. Any stock options which are or which become vested on or prior to your
termination of employment shall remain exercisable for a period of no less than twelve (12) months
following your termination of employment. Commencing January 2009, your eligibility to participate
in the long term incentive program and the amount and nature of any future long term incentive
awards will be determined by the Board of Directors.




 









 








Mr. Alan Bernon

September 7, 2005

Page 2 of 4



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.



Vacation Benefits



You will be granted five (5) weeks vacation. Unused vacation is not carried forward from year to
year.



Relocation Benefits




We want your move to Texas 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. In addition, you will be entitled to comparable relocation benefits on termination of
your employment, at any time and for any reason, other than termination by the company for cause
(as defined below).



Other Benefit Plans


You will also be eligible to participate in all employee benefit plans, programs, and arrangements
made available to our senior-level executives or our employees generally on the same terms and
conditions as other senior-level executives.



Severance


If your employment is terminated (whether during the initial term or any time thereafter) as a
result of a “qualifying termination,” meaning any termination other than a termination (i) for
cause (as defined below), or (ii) voluntarily by you without good reason (as defined below), you
will receive a lump sum severance payment equivalent to two years of your base salary and target
bonuses, less lawful deductions. If any such qualifying termination occurs prior to January 31,
2009, all unvested stock options, RSUs or other equity grants made to you will vest in full upon
such qualifying termination. 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 and accelerated vesting.



For purposes of this letter agreement, the term “good reason” shall have the same meaning given
such term under the Change in Control Agreement referenced below.



Termination for Cause


In the event that a termination of your employment with Dean Foods occurs for cause, no severance
payment will be made. If your employment is terminated for cause, all unvested stock option and
other equity grants made to you and your rights thereunder will be automatically terminated.



The term “cause” shall mean: (a) your conviction of any crime deemed by Dean Foods to make your
continued employment untenable; (b) you commit an act of gross negligence or willful misconduct in
connection with your employment with Dean Foods or any of its affiliates; (c) you




 









 








Mr. Alan Bernon

September 7, 2005

Page 3 of 4



commit any act of dishonesty relating to Dean Foods or any of its affiliates, its employees, agents
or other representatives; or (d) you fail to comply with the Dean Foods Code of Ethics, or engage
in any similar conduct which brings Dean Foods or any of its affiliates into disrepute. In each
case, any termination for cause will not be effective unless the Board of Directors of Dean Foods
has provided you with (i) written notice of the Board’s intention to terminate you for cause, and
(ii) an opportunity for you to appear before the Board to discuss any such termination. No act or
omission shall constitute the basis of a termination for cause if such act or omission is taken or
omitted at the request of the Board or another senior officer of Dean Foods, or is based upon the
advice of counsel to Dean Foods.



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. Such benefits would be
in lieu of, and not in addition to, any severance payments under this agreement. 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.



Other Matters


As you know, 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 in your new position begins and periodically thereafter.



Your new position also requires that you sign a Non-Competition Agreement. Enclosed are two
copies.



The Compensation Committee will review your base salary, bonus opportunities, and other components
of your compensation for possible upward adjustment if the Compensation Committee materially
increases the compensation levels of other senior-level executives.



In light of your new role as President of the Dairy Group, I believe it is appropriate for you to
continue to serve on the Board of Directors. Accordingly, I intend to recommend that the
Governance Committee nominate you for reelection to the Board of Directors when your current term
expires. However, all decisions as to nominations to the Board are and will continue to be made by
the Governance Committee of the Board.




 









 








Mr. Alan Bernon

September 7, 2005

Page 4 of 4



Conclusion


Alan, I am very confident you will make lasting contributions to the company. I look forward to
working with you as we continue to build for the future. We are delighted to have you join us in
Dallas and look forward to your arrival.




	 	 	 
	 

	 	Best regards,
	 
	 	 
	 

	 	/s/ Gregg L. Engles
	 
	 	 
	 

	 	Gregg L. Engles






	 	 	 
	Agreed and accepted:
	 	 
	 
	 	 
	/s/ Alan J. Bernon
	 	 
	 


	 	 
	Alan J. Bernon
	 	 
	 
	 	 
	/s/ September 7, 2005
	 	 
	 


	 	 
	Date
	 	 
	 
	 	 
	Enclosures