EX-10.9



 





EXHIBIT 10.9




EXECUTIVE EMPLOYMENT AGREEMENT




               THIS EMPLOYMENT AGREEMENT (the “Agreement”) dated as of October 30, 2007 (the “Effective
Date”) is entered into by and among Pzena Investment Management, Inc. (the “Company”), Pzena
Investment Management, LLC. (the “Operating Company” and together with the Company, the “Employer”)
and John P. Goetz (the “Executive”).



               WHEREAS, the Executive currently provides services to the Operating Company and owns units
therein (the “OC Units”);



               WHEREAS, the Employer desires to employ Executive in the positions set forth below and to
enter into an agreement embodying the terms of such employment;



               WHEREAS, the Executive desires to provide such services to the Employer and enter into such an
agreement; and



               WHEREAS, the Agreement is entered into in connection with: (1) the initial public offering and
sale of shares of Class A common stock of the Company (the “Class A Shares”) and simultaneous
listing of the Class A Shares on the New York Stock Exchange, (2) the Company’s acquisition of
interests in the Operating Company in exchange for certain OC Units and its appointment as the
managing member thereof (the “Managing Member”), (3) the amendment and restatement of the operating
agreement of the Operating Company, to be dated as of October 30, 2007 (the “Operating Agreement”),
pursuant to which the Executive’s OC Units will become exchangeable for Class A Common Stock at the
times and in the amounts described therein and to sell such Class A Shares at the times and in the
amounts and the manner described therein.



               NOW, THEREFORE, in consideration of the promises and mutual covenants set forth herein and for
other good and valuable consideration, the parties agree as follows:




	1.	 	Term of Employment. Subject to earlier termination as provided herein, Executive
shall be employed by the Employer for a period commencing on the Effective Date and ending on
the third anniversary of the Effective Date (the “Term”) on the terms and subject to the
conditions set forth in this Agreement; provided, however, that commencing with the third
anniversary of the Effective Date and on each anniversary thereof (each, an “Extension Date”),
the Term shall be automatically extended for an additional one-year period, unless the
Employer provides the Executive 60 days’ prior written notice or the Executive provides the
Employer six (6) months’ prior written notice, in each case, before the next Extension Date
that the Term shall not be so extended. For purposes of this Agreement, “Employment Term”
shall mean the period of time that Executive is employed under this Agreement.




 









 












	2.	 	Positions.






	 	(a)	 	During the Employment Term, the Executive shall serve as (i) President,
Co-Chief Investment Officer of the Operating Company and have the authority
commensurate with such position and such duties commensurate with such position, as
shall be determined from time to time by the Managing Member, and (ii) President,
Co-Chief Investment Officer of the Company and have the authority commensurate with
such position and such duties commensurate with such position, as shall be determined
from time to time by the Board of Directors of the Company (the “Board”). If appointed
thereto, the Executive further agrees to serve, without additional compensation, as a
director of the Company or a director (or equivalent for non-corporate entities) or
officer of the Operating Company or any other consolidated subsidiary of the Company.
	 
	 	(b)	 	During the Employment Term, the Executive will devote Executive’s full business
time and best efforts to the performance of the duties of the positions in which he
serves pursuant to Section 2(a) hereof and will not engage in any other business,
profession or occupation for compensation or otherwise which would conflict or
materially interfere with the rendition of such services either directly or indirectly,
without the prior written consent of the Board and the Managing Member; provided that
nothing herein shall preclude Executive from (i) continuing to serve on any board of
directors or trustees of any business corporation or charitable organization on which
the Executive serves as of the Effective Date and which have been previously disclosed
to the Employer, (ii) serving on the boards of directors (or bodies with similar
management powers) of any entities managed by the Operating Company and/or consolidated
by the Company; or (iii) subject to the prior written consent of the Board and the
Managing Member, from accepting appointment to any board of directors or trustees of
any business corporation or charitable organization; provided in each case, and in the
aggregate, that such activities do not conflict or materially interfere with the
performance of the Executive’s duties hereunder or conflict with Section 5 of this
Agreement.






	3.	 	Guaranteed Payments and Employee Benefits.






	 	(a)	 	During the Employment Term, the Operating Company shall make a “guaranteed
payment” to the Executive at the annual rate of $300,000, payable in regular
installments in accordance with the Operating Company’s usual payment practices for
members. With respect to each fiscal year of the Operating Company which ends during
the Employment Term, the Operating Company shall also make an additional “guaranteed
payment” (the “Performance Payment”) to the Executive in an amount to be determined by
the Compensation Committee of the Board of the Managing Member in its sole discretion,
which Performance Payment shall not exceed $2,700,000 for any fiscal year of the
Company ending




 









 






	 	 	 	during the Employment Term. The Performance Payment, if any, shall be paid to the
Executive in a lump sum when payments are made to other members, but in no event
later than the 15th day of the third month following the end of the
fiscal year in respect of which such guaranteed payment is earned, so long as
Executive is providing services to the Employer as of the last day of the fiscal
year in respect of which such guaranteed payment is earned.
	 
	 	(b)	 	During the Employment Term, the Executive shall be entitled to participate in
all employee benefit programs of the Employer on a basis which is no less favorable
than is provided to any other executives of the Employer.






	4.	 	Termination.






	 	(a)	 	General. This Agreement and the Executive’s employment hereunder may
be terminated by either party at any time and for any reason; provided that the
Executive shall be required to give the Employer at least six (6) months’ advance
written notice of any resignation of the Executive’s employment hereunder. Following
any such termination, the Executive shall have no further rights to any payments or
other benefits provided pursuant to the provisions of this Agreement.
	 
	 	(b)	 	Expiration of Term.






	 	(i)	 	In the event the Term is not extended pursuant to Section 1 of
this Agreement, unless this Agreement and the Executive’s employment hereunder
has been earlier terminated pursuant to paragraph (a) of this Section 4, the
Executive’s employment hereunder shall be deemed terminated (whether or not the
Executive continues to provide services to the Employer thereafter) as the
close of business on the day immediately preceding the next scheduled Extension
Date. Following any such expiration of the Term, the Executive shall have no
further rights to any payments or other benefits provided pursuant to the
provisions of this Agreement.
	 
	 	(ii)	 	Unless the parties otherwise agree in writing, continuation of
the Executive’s employment by the Employer beyond the expiration of the Term
shall be deemed employment “at-will” and shall not be deemed to extend any of
the provisions of this Agreement, except for Sections 5 and 6 of this
Agreement, each of which shall survive the expiration of the Term and any
termination of this Agreement.




 









 












	 	(c)	 	Notice of Termination. Any purported termination by the Employer or by
the Executive (other than due to the Executive’s death) shall be communicated by
written notice of termination to the other party hereto in accordance with Section 6(h)
hereof.






	5.	 	Executive Covenants. The Executive acknowledges and recognizes the highly competitive
nature of the business of the Employer and its affiliates and accordingly agrees to be bound
by the restrictive covenants set forth in Sections 5.07 and 5.08 of the Operating Agreement,
to which the Executive is a party, and, in the event of his violation of such restrictive
covenants, the forfeiture of certain of his OC Units pursuant to Section 6.02 of the Operating
Agreement. A recitation of such restrictive covenants is set forth in Exhibit A hereto. The
Executive further acknowledges that he and the Employer have agreed to enter into this
Agreement in connection with the transactions described in the recitals hereto, pursuant to
which the Executive will have the opportunity to exchange OC Units for Class A Shares and sell
such Class A Shares.






	6.	 	Miscellaneous.






	 	(a)	 	Survival of Certain Provisions. The provisions of Sections 5 and 6 of
this Agreement shall survive any expiration of the Term or any termination of the
Employment Term or this Agreement.
	 
	 	(b)	 	Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to conflicts of laws
principles thereof.
	 
	 	(c)	 	Entire Agreement; Amendments. This Agreement, along with the Operating
Agreement, contains the entire understanding of the parties with respect to the
services (or any termination thereof) to be provided by the Executive to the Company
and the Operating Company, and supersedes all prior agreements and understandings
(including verbal agreements) between the Executive and any of the Company, the
Operating Company or their respective affiliates regarding the terms and conditions of
the Executive’s services to the Company, the Operating Company and their respective
affiliates. There are no restrictions, agreements, promises, warranties, covenants or
undertakings between the parties with respect to the subject matter of this Agreement
other than those expressly set forth in this Agreement. This Agreement may not be
altered, modified, or amended except by written instrument signed by the parties
hereto.
	 
	 	(d)	 	No Waiver. The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver of such
party’s




 









 






	 	 	 	rights or deprive such party of the right thereafter to insist upon strict adherence
to that term or any other term of this Agreement.
	 
	 	(e)	 	Severability. In the event that any one or more of the provisions of
this Agreement shall be or become invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions of this Agreement
shall not be affected thereby.
	 
	 	(f)	 	Assignment. This Agreement, and all of the Executive’s rights and
duties hereunder, shall not be assignable or delegable by the Executive. Any purported
assignment or delegation by the Executive in violation of the foregoing shall be null
and void ab initio and of no force and effect. This Agreement may be assigned by the
Employer to a person or entity which is an affiliate or a successor in interest to
substantially all of the business operations of the Employer. Upon such assignment,
the rights and obligations of the Employer hereunder shall become the rights and
obligations of such affiliate or successor person or entity.
	 
	 	(g)	 	Successors; Binding Agreement. This Agreement shall inure to the
benefit of and be binding upon personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
	 
	 	(h)	 	Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be deemed to
have been duly given when delivered by hand or overnight courier or three days after it
has been mailed by United States registered mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth below in this Agreement, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective only
upon receipt.
	 
	 	 	 	If to the Employer:
	 
	 		 	120 West 45th Street

New York, New York 10036

Attention: General Counsel
	 
	 	 	 	If to the Executive:
	 
	 	 	 	To the most recent address of the Executive set forth in the personnel records of
the Employer.
	 
	 	(i)	 	Cooperation. The Executive shall provide the Executive’s reasonable
cooperation in connection with any action or proceeding (or any appeal from any action
or




 









 












	 		 	 proceeding) which relates to events occurring during the Executive’s employment
hereunder.
	 
	 	(j)	 	Withholding Taxes. The Employer may withhold from any amounts payable
under this Agreement such Federal, state and local taxes as may be required to be
withheld pursuant to any applicable law or regulation.
	 
	 	(k)	 	Counterparts. This Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.





[Remainder of Page Intentionally Left Blank]




 









 








     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and
year first above written.



	 	 	 	 	 	 	 
	 	 	PZENA INVESTMENT MANAGEMENT, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/
Richard S. Pzena	 	 
	 

	 	 	 	 

Name: Richard S. Pzena

Title: Chief Executive Officer
	 	 
	 
	 	 	 	 	 	 
	 	 	PZENA INVESTMENT MANAGEMENT, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Pzena Investment Management, Inc.,

its Managing Member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/
Richard S. Pzena	 	 
	 

	 	 	 	 

Name: Richard S. Pzena

Title: Chief Executive Officer
	 	 
	 
	 	 	 	 	 	 
	 	 	EXECUTIVE:	 	 
	 
	 	 	 	 	 	 
	 	 	/s/
John P. Goetz	 	 
	 	 	Name: John P. Goetz	 	 






 









 





Exhibit A




Restrictive Covenants



Excerpted from the Amended and Restated Operating Agreement of Pzena Investment Management, LLC,
dated as of October 30, 2007, as may be amended from time to time. All capitalized terms used but
not defined in this Exhibit A have the meaning assigned to them in such agreement.




     5.07 Non-Solicitation/Non Compete.



          (a) In consideration of the Class B Units granted and to be granted to the Employee Members
from time to time by the Company, each Employee Member agrees that during the entire term of the
Non-Compete Period applicable to such Employee Member, such employee shall not, directly or
indirectly, whether as an officer, director, owner, partner, investor, member, adviser,
representative, consultant, agent, employee, co-venturer or otherwise, provide Investment Advisory
Services, except in the performance of his duties with the Company Group, or engage, or assist
others to engage, in whole or in part, in any business in competition with the business of the
Company Group.




          (b) In consideration of the Class B Units granted and to be granted to the Employee Members
from time to time by the Company Group, each Employee Member agrees that during the entire term of
the Non-Solicitation Period applicable to such Employee Member, such Employee Member shall not,
directly or indirectly (other than in the course of performing his duties to the Company Group) (i)
solicit the hiring of or hire any employee of the Company Group or any Person who, within the prior
six months had been an employee of the Company Group, assist in, or encourage such hiring by any
Person or encourage any such employee to terminate or alter his relationship with the Company
Group; (ii) in competition with the Company Group, solicit, seek, induce, pursue in any way, or
accept a business relationship of any kind with, any Person who is a Client of the Company Group,
including by way of indirect or sub-advisory arrangements (such obligation to include the duty of
the Employee Member to decline any such offered business activity even if unsolicited); (iii)
otherwise solicit, encourage or induce any Client to terminate or reduce its business or
relationship with the Company Group; or (iv) otherwise take any action or have any communication
with any Person which purpose is, or the reasonably likely effect of which could be, to cause any
such Client to terminate, alter, reduce, modify or restrict in any way its relationship or business
with the Company Group.




          (c) In the event that the Employee Member, upon notice from the Company of an inadvertent
breach of Section 5.07(b) by such Employee Member, promptly pays to the Company all fees and other
compensation that are earned by such Employee Member during the Non-Solicitation Period in
connection with such breach, such inadvertent breach shall not be treated as a breach resulting in
a forfeiture of Class B Units pursuant to Section 6.02(b)(2) or (3).




 









 








          (d) Each Employee Member acknowledges and agrees that the covenants set forth in this Section
5.07 are reasonable and necessary for the protection of the Company. Each Employee Member further
agrees that irreparable injury will result to the Company in the event of any breach of any of the
terms of Section 5.07, and that in the event of any actual or threatened breach of any of the
provisions contained in Section 5.07, the Company will have no adequate remedy at Law. Each
Employee Member accordingly agrees that in the event of any actual or threatened breach by such
Employee Member of any of the provisions contained in this Section 5.07, the Company shall be
entitled to seek such injunctive and other equitable relief as may be deemed necessary or
appropriate by a court of competent jurisdiction, without the necessity of showing actual monetary
damages and without posting any bond or other security.




          (e) If any court of competent jurisdiction shall at any time deem the term of any particular
restrictive covenant contained in this Section 5.07 too lengthy or the geographic scope too
extensive, the other provisions of this Section 5.07 shall nevertheless stand, the Non-Compete
Period and the Non-Solicitation Period applicable to such Employee Member shall be deemed to be the
longest period permissible by applicable Law under the circumstances and the geographic scope shall
be deemed to comprise the largest territory permissible by applicable Law under the circumstances.
The court in each case shall reduce the Non-Compete Period, the Non-Solicitation Period and/or
geographic scope to permissible duration or size.




          (f) During the six (6) month period following the termination of employment of a 1% Member
with the Company Group, the Managing Member may, in its sole discretion, elect to cause the Company
Group to provide base and bonus compensation to such 1% Member at the same rate and the same time
as it was then compensating such 1% Member, provided that the bonus component of such
compensation applicable to such six (6) month period shall equal 50% (subject to reduction pursuant
to the last sentence of this Section 5.07(f)) of the annual bonus earned by such 1% Member most
recently prior to such termination of employment and shall be paid in cash promptly following the
end of such six (6) month period. In the event the Managing Member elects to provide such 1%
Member such compensation, the Non-Compete Period applicable to such 1% Member shall continue until
the last day of such six (6) month period. In order to make such election, the Managing Member
shall, within five (5) Business Days upon issuing to or receiving from a 1% Member a written notice
of termination of employment, notify such 1% Member in writing whether the Company Group will
provide such base and bonus compensation for such six (6) month period. If the Managing Member
does not timely make such an election, then the Non-Compete Period shall end when such 1% Member’s
employment with the Company Group terminates. Notwithstanding the foregoing, to the extent that a
1% Member gives a notice of termination of employment at least fourteen (14) days in advance of
such termination, (i) such 1% Members’ Non-Compete Period shall be reduced, for up to ninety (90)
days, by the number of days elapsed between the date of such notice and the date of the termination
of such 1% Member’s employment (such number, the “Reduced Number of Days”), (ii) the period
during which the Company shall provide compensation pursuant to this Section 5.07(f) shall be
reduced by the Reduced Number of Days and (iii) the percentage contained in the proviso to the
first sentence of this Section 5.07(f) (including with respect to the annual bonus) shall equal the
product of 50% multiplied by a fraction the numerator of which is 182 minus the Reduced Number of
Days and the denominator of which is 182.