Document:

Exhibit

Exhibit 10.1

	
			
	 	
	 

	 
	 
	 

November 19, 2015

Joseph P. Lacher, Jr.
1260 West Kennicott Drive
Lake Forest, IL 60045

Dear Joe:

We are pleased to confirm our offer of employment with Kemper Corporation (“Kemper” or “Company”).  This letter sets forth the terms and conditions of our offer for you to join Kemper as President and Chief Executive Officer (“CEO”), and as a member of our Board of Directors, effective November 19, 2015 (“Start Date”).

The principal terms of this offer are as follows:

		
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	Your base salary will be $750,000 annualized.

		
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	You will be eligible to participate in Kemper’s annual cash bonus program and your target bonus opportunity for the 2016 annual bonus award shall be 125% of base salary, with 65% for threshold performance and a maximum payout of 250% of the target.  For 2016, you are guaranteed a minimum bonus payment of 65% of target.  The 2016 award will be 70% based on Company performance and 30% based on individual performance criteria, with the specific metrics and goals to be set at the Board of Directors’ Compensation Committee meeting in February 2016.  

		
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	You will receive a “sign-on” award of $1,000,000 in value, delivered in nonqualified stock options.  The number of options granted shall be determined by dividing $1,000,000 by the option value, with the option value set at 25% of the closing price of Kemper common stock on the grant date, which shall be the Start Date.  The option exercise price shall be the closing price of Kemper stock on the grant date.  The option term is 10 years and options become exercisable in four equal, annual installments beginning on the six-month anniversary of the grant date.   

		
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	You will be eligible for long-term incentive (“LTI”) awards with a total value of $2,000,000 allocated 1/3 in nonqualified stock options and 2/3 in performance-based restricted stock units (“RSUs”), based on the value on the grant date, which shall be the 

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Compensation Committee’s meeting in February 2016.  The number of options granted shall be determined by dividing the allocated value by the option value of 25% of the closing price of Kemper common stock on the grant date.  The option exercise price shall be the closing price of Kemper stock on the grant date, the term is 10 years and options become exercisable in four equal, annual installments beginning on the six-month anniversary of the grant date.  The number of target RSUs granted shall be determined by dividing the allocated value by the closing price of Kemper common stock on the grant date.  The RSUs will have a 3-year performance period, with threshold payout at 50% of the target number and maximum payout of 200% of the target number.  Half of the RSUs vest based on total shareholder return relative to the S&P Supercomposite Insurance Index and half vest based on operational performance metrics and goals to be set at the Compensation Committee meeting in February 2016.
		
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	The aforementioned stock option and LTI awards are subject to the Company’s Omnibus Equity Plan and applicable award agreements.

		
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	You will be eligible for a Severance Agreement that applies in the event of a change in control (“CIC”) of the Company, which agreement provides for a lump-sum severance payment of three times annual salary.  Additionally, with regard to LTI awards (options and RSUs), in the event of a “Qualifying Termination” as defined in the Severance Agreement: (i) outstanding unvested options vest on the termination date, and (ii) performance-based RSUs also “accelerate” in that the number of shares available to be earned is calculated on the entire performance period (not pro rata using the termination date) for each outstanding RSU, with the number of shares actually earned (using applicable performance metrics) being based on the greater of (a) targeted performance, or (b) actual performance attained for the shortened performance period ending with the termination date.  The Severance Agreement will be effective on the Start Date and, in the event of a severance payment thereunder, also provides for continuation of life and health insurance benefits for three years and outplacement services for up to fifty-two weeks.

		
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	You will be eligible to participate in the following Kemper retirement benefits plans:

		
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	Defined contribution retirement plan (“DC Plan”);

		
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	Non-qualified supplemental defined contribution plan (“DC SERP”); and

		
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	Voluntary 401(k) plan which includes a Company matching contribution. 

		
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	Starting in 2016, you may participate in Kemper’s Non-qualified Deferred Compensation Plan, under which you may elect to defer current year compensation to a future period.  

		
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	You will be expected to comply with Kemper’s Stock Ownership Policy under which the CEO is required to maintain, at a minimum, ownership of shares valued at five times base salary; there is a five year grace period to reach this ownership level.

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	The Company will pay for your membership to a Chicago-area business club providing dining facilities and business meeting services.  Additionally, Kemper will pay for spousal travel to accompany you to occasional off-site business meetings, in accordance with Company policy. 

		
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	You will be eligible to participate in the same employee welfare benefit plans that are generally available to all full-time, salaried Kemper employees, including: 

		
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	basic life and accident insurance up to a maximum of $400,000, business travel insurance up to a maximum of $200,000, and short-term disability coverage for up to 26 weeks; and

		
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	health and dental insurance, health and dependent care reimbursement accounts, supplemental life, accident and long-term disability insurance.  

		
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	Kemper provides Paid Time Off (“PTO”) and starting in 2016, you will be eligible for up to 29 days of PTO on an annual basis; your PTO will be front-loaded at the Start Date with a balance of 37.5 hours (5 days).

		
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	Payments by the Company to you may be subject to tax and other withholdings and deductions as required or permitted by applicable law and Company policy.

		
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	You acknowledge that by accepting employment at Kemper, you will not use or disclose any of the confidential or trade secret information of your former employers.

		
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	As a condition of employment with Kemper, on the Start Date you will need to sign our standard, mutual Arbitration Agreement, a copy of which will be provided at your request.

		
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	Our offer is contingent upon successful completion of a background check and a drug-screening test in accordance with Company policy, as well as confirmation of references.

		
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	Kemper’s Essential Standards of Conduct (“ESOC”) sets forth key Company business ethics and employee policies, and you will be asked to acknowledge your receipt and understanding and agree to be bound by the ESOC.

		
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	The term of your employment is “at will” which means that you or the Company may end your employment at any time and for any reason.

Please indicate your acceptance of these terms by signing the original copy of this letter and returning it in the enclosed envelope.  Once we have your signed original, the Kemper Board of Directors must meet and approve: (i) the terms of your compensation, and (ii) your election as President and CEO and as a member of the Board of Directors.

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We believe Kemper is a rewarding place to work and we look forward to you joining the team.

Sincerely,

Kemper Corporation Board of Directors

/s/ Douglas G. Geoga
Douglas G. Geoga, Chair of Compensation Committee

Accepted by:

/s/ Joseph P. Lacher, Jr.
Joseph P. Lacher, Jr.

Date: November 19, 2015

Page 4 of 4EXHIBIT 10.1

November 12, 2015

Ms. Sona Chawla

[Personal information omitted]

CONFIDENTIAL: OFFER TERMS

Dear Sona:

It is my pleasure to invite you to join the team at Kohl’s Department Stores. 

Your Position: You are being offered the position of Chief Operating Officer. You will report directly to me and will be a “principal officer” of Kohl’s.  Your areas of responsibility will include:  Store Operations, E-Commerce, IT, Logistics and Construction.  The following executives would report directly to you:

·

EVP – Interim Chief Information Officer,

·

EVP – Digital Technology,

·

EVP – Multi-Channel/Chief Digital Officer,

·

EVP – Director of Stores,

·

SVP, Financial Planning & Operations,

·

SVP - Logistics, and

·

SVP- Construction, Store Planning. 

Your Start Date:  Your first day of employment with Kohl’s will be mutually determined. 

Employment Agreement:  On or before your start date, you and Kohl’s will enter into a three-year evergreen Employment Agreement.  Except as stated otherwise in this letter, the terms and conditions of that agreement will be substantially the same as those of the Employment Agreement of our Chief Customer Officer, Chief Administrative Officer and Chief Financial Officer.   As we have discussed, the new form of this agreement was finalized by Kohl’s Board of Directors’ Compensation Committee on November 10, and we have provided a copy of that form to your legal counsel.   

Your Salary:  Your annualized salary will be $1,100,000, which is the same as that of our Chief Merchandising & Customer Officer.   You will be paid semi-monthly, on the 15th and 30th of each month. Your job performance and base compensation will next be reviewed in Spring of 2016 with any change in your compensation effective April 1, 2016.  

Signing Incentive:  In addition to your salary, we are offering you a signing incentive of $1,000,000.  This incentive payment will be made within ten (10) days of your start date, and is intended to fully or partially offset any obligations you may incur as a result of your resignation from your current employment and relocation expenses that are not covered by the Kohl’s Relocation Policy.  

Equity Awards:  

1.

 Recruitment Awards:  

(a)

Restricted Shares.  You will receive a recruitment award of Kohl’s restricted stock valued at $8,000,000. In accordance with Kohl’s Equity Compensation Award Guidelines, the grant date for this award will be the last NYSE trading day on or before the 15th of the month following the month of your start date at Kohl’s. The number of restricted shares awarded will be based on the closing share price on the grant date. Your restricted shares will vest in four equal installments on the first through fourth anniversaries of the grant date, provided you continue to be employed by Kohl’s on each vesting date.  

(b)

Performance Share Units (PSUs).  You will receive PSUs valued at $1,000,000.  In accordance with Kohl’s Equity Compensation Award Guidelines, the grant date for this award will be the last NYSE trading day on or before the 15th of the month following the month of your start date at Kohl’s.  The number of PSUs awarded will be based on the closing share price on the grant date. These units cliff-vest following fiscal year 2017.  The actual value of the PSUs is dependent upon Kohl’s performance in 2015, 2016 and 2017, and can be worth 0 to 200% of the grant date value.  The value of the PSUs will also be modified by up to 25% (plus or minus) based upon Kohl’s “Total Shareholder Return” over that 3 year period.

2.

Annual Awards:  You will be eligible to participate in Kohl’s annual equity award process in the Spring of 2016.  For 2016, your annual LTIP grant will be $1.75 million, comprised of:

(a)

40% time-vested restricted shares that vest over four years; and 

(b)

60% Performance Share Units that cliff-vest in three years based on company performance in 2016, 2017 and 2018, as described above.  

Team Performance Bonus:  An important part of Kohl’s overall executive compensation program is our Annual Incentive Plan.  This plan provides for annual incentive payments to key officers upon the achievement of specific annual corporate objectives.  As Chief Operating Officer, you will be eligible to participate in Kohl's Annual Incentive Plan, which will provide an opportunity for an annual cash incentive payment equal to 0% to 200% of your base salary, with the actual amount based upon Kohl’s annual performance relative to specific objectives that are established by Kohl’s Board of Directors’ Compensation Committee at the beginning of each year. You will be eligible for a prorated Annual Incentive Plan award based upon our 2015 performance.  This award will be paid in March, 2016.

Relocation:  This offer is being made with the understanding and expectation that you will relocate your family to the greater Milwaukee area by September 1, 2016.  Your failure to meet this deadline will constitute “Cause” for termination under the terms of your employment agreement.  

The Kohl’s Relocation Policy provides assistance with expenses for house or apartment hunting, temporary residency, meals, final move related travel, and the movement of your household goods. A 

copy of the Relocation Policy has been provided to you, and Kohl’s relocation representatives are standing by to assist you with this process.

Until the time of your relocation to Milwaukee, Kohl’s will provide a temporary apartment in the area and will provide ground transportation assistance between our offices and your home in Winnetka.    

Your Benefits: Kohl’s Department Stores offers a competitive benefit package. These benefits are designed to promote health, assist in your financial future and manage the demands of work and your personal life. 

Benefits Basics:  Immediately upon your date of hire you may enroll in Life Insurance, Accidental Death & Dismemberment Plan and Flexible Spending Accounts for medical or dependent care expenses. 

You will be eligible for Medical, Dental, and Vision coverage on the first day of the month following 60 days of employment.  For the period between your start date and your eligibility date, Kohl’s will provide you with full monthly COBRA assistance minus the applicable Kohl’s monthly premium.

You will automatically be eligible for Kohl’s Medical Leave and enrolled in the long-term disability plan at no cost to you.

Executive Medical Supplement Program:  In addition to Kohl’s standard medical plans, you will be eligible for the Kohl’s Executive Medical Supplement Program. The Executive Medical Supplement Program provides up to an additional $50,000 annually to reimburse out of pocket expenses for customary medical and dental services as well as co-payments and deductibles. Eligible expenses must be authorized by your physician and be medically necessary for the treatment of illness or injury.

Kohl's Department Stores 401 (k) Savings Plan:  Immediately upon your date of hire you can begin contributions to the 401(k) savings plan. Our plan will also accept a rollover from your prior employer’s plan. After one year of service you will be eligible to receive a 100% match on your personal savings up to 5% of each paycheck, subject to regulatory limits pertaining to highly compensated employees. 

Non-Qualified Deferred Compensation Plan: This Plan provides an avenue to save pre-tax dollars in a tax-deferred investment program for your personal financial goals. Each year, you may elect to contribute all or a portion of money from your compensation into the Plan and enjoy tax deferral on your contributions and their investment earnings until they are paid to you as you elect to receive them. Eligibility is based on plan requirements and IRS guidelines.

Vacation Benefits: 5 weeks per year.

Company Car: As Chief Operating Officer, you will receive a company car of your choosing.

Financial Planning and Tax Advising:  Kohl’s will reimburse you for financial advisory services up to $3,500 annually, and tax advisory services with no fixed limit.

Employee Discount: You will receive a 15% discount on merchandise you purchase from Kohl’s as gifts, or for yourself and your eligible dependents. 

Outside Directorships:  Pursuant to our Corporate Governance Guidelines, you will be required to resign from the Express Inc. Board of Directors.  We will, however, support your efforts to 

join a non-competing but complimentary public company board at the appropriate time, pursuant to the Board of Directors’ established guidelines.  

Miscellaneous:  

Reimbursement of Certain Payments Upon Termination of Employment:  If you voluntarily end your employment with Kohl’s or are terminated for cause within the first twelve (12) months from the effective date of your relocation, you will be required to repay 100% of any payments made by Kohl’s for your relocation expenses. If you voluntarily end your employment or are terminated for cause from twelve (12) to within twenty-four (24) months from the effective date of your relocation, you will be required to repay 50% of any payments made by Kohl’s for your relocation expenses. Kohl’s may deduct this amount from any final compensation owed to you.

Proprietary or Confidential Information: As we advise all future employees, Kohl’s has no interest in obtaining any proprietary or confidential information from your current or former employer(s). You should not bring any forms of such information with you to Kohl’s and Kohl’s will not accept such information from you for its use. If you have any questions with respect to what may constitute “trade secrets” or otherwise confidential information, I would urge you to contact your employer’s legal department for clarification. 

This covers the key aspects of our employment offer to you. Please note that this letter serves as a non-binding confirmation of an employment offer and it is neither intended nor implied as a contract of employment.  The terms of this offer, and your acceptance, shall not be binding upon either party until the above-referenced Employment Agreement is signed by you and authorized Kohl’s representatives.  

Sona, it is my pleasure to welcome you to Kohl's. We look forward to working with you in supporting the success and growth of our company.

Sincerely,

/s/  Kevin Mansell

Kevin Mansell

Chairman, President & 

Chief Executive Officer 

Accepted and Agreed to this 16th day of November, 2015.

By:  

/s/ Sona Chawla                          

Sona Chawla

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