Document:

exv10w1

 

Exhibit 10.1

February 22, 2008

Mr. James M. Jenness

Kellogg Company

One Kellogg Square

Battle Creek, Michigan 49017

Dear Jim:

     We are very excited that you will remain Chairman of Kellogg Company (the “Company”). Given
your ongoing time commitment in this key role, the valuable services you provide, and your
affection for the Company and our shareholders, the independent members of the Board have
determined to provide you with the following compensation in 2008.

     1. Compensation. Your total annual compensation will be $630,000, which is comprised
of the same long-term incentives granted to non-management directors (2,100 shares of restricted
stock and 5000 stock options), with the remaining compensation paid in cash. You will receive the
restricted shares and stock options on the same day the annual long-term incentives are granted to
other employees of the Company. The options will vest in the same manner as those received by
other employees (50% on the first anniversary of the grant, and the remaining 50% on the second
anniversary. The stock grant will immediately vest (again, the same manner in which restricted
stock vests for non-management directors), and you agree to hold those shares as long as you are an
employee or director of the Company.

     Of course, you will retain your eligibility for retiree medical benefits and vested stock
option awards according to the terms of the relevant plans. In addition, as long as you remain an
employee of the Company, you will be eligible to participate in the Company’s employee and senior
executive benefits and welfare plans in effect from time to time, such as life, medical and dental
insurance, and our savings and investment plan. However, you will not be entitled to additional
compensation or benefits from the Company other than those that are currently vested or which are
set forth in this letter and the Agreement dated October 20, 2006 (the 2006 Agreement”). To be
clear, you will not (a) participate in the Annual Incentive Plan (bonus plan) or any other long
term incentive or performance plan (e.g., Executive Performance Plans); (b) be entitled to receive
severance benefits from the Company or otherwise participate in the Company’s severance plan; (c)
be entitled to receive change of control benefits from the Company or otherwise participate in the
Company’s Change of Control Plan; or (d)

 

 

Mr. James M. Jenness

Page 2

February 22, 2008

accrue any additional pension benefits by virtue of your continued employment with the
Company.

     With respect to your pension, the 2006 Agreement provides for a lump sum pension benefit as of
January 1, 2008. As previously agreed, this benefit is payable six months after your employment
with the Company ends in accordance with Section 409A of the Internal Revenue Code (the “Code”). In
accordance with our pension plans, the pension benefit will be converted to a lump sum amount using
the PBGC interest rate in effect in October 2007. The lump sum will accrue interest at the 30-year
treasury rate from January 1, 2008.

     2. Section 409A. This letter and the agreements herein will be interpreted to avoid
any penalty sanctions under Section 409A of the Code. Upon your request, the Company agrees to make
any changes to this letter and the agreements herein that will assure that no sanctions will be
imposed under Section 409A of the Code.

     3. No Other Representations. You represent and warrant that no promise or inducement
has been offered or made except as herein set forth and that you are entering into and executing
this Agreement without reliance on any statement or representation not set forth within this
Agreement by the Company, or any person(s) acting on its behalf.

     4. Non-Assignment of Rights. You represent and warrant that you have not sold,
assigned, transferred, conveyed or otherwise disposed of to any third party, by operation of law or
otherwise, any action, cause of action, debt, obligation, contract, agreement, covenant, guarantee,
judgment, damage, claim, counterclaim, liability or demand of any nature whatsoever relating to any
matter covered in this Agreement.

     5. Controlling Law and Venue. You agree that the construction, interpretation, and
performance of this Agreement shall be governed by the laws of Michigan, including conflict of
laws. It is agreed that any controversy, claim or dispute between the parties, directly or
indirectly, shall only be resolved in the Circuit Court of Calhoun County, or the United States
District Court for the Western District of Michigan, whichever court has jurisdiction over the
subject matter thereof, and the parties hereby submit to the jurisdiction of said courts.

     6. Entire Agreement; Amendment. You agree that this Agreement, the 2006 Agreement and
the 2004 Agreement (together with this Agreement, the “Letter Agreements”) constitute the entire
agreement between you and the Company, and that the Letter Agreements supersede any and all prior
and/or contemporaneous written and/or oral agreements relating to such matters. If there is any
conflict between this Agreement and either the 2006 Agreement or the 2004 Agreement, this Agreement
shall control. You acknowledge that this Agreement may not be modified except by written document,
signed by you and the Chief Executive Officer of Kellogg.

 

 

Mr. James M. Jenness

Page 3

February 22, 2008

     7. Employment Relationship. You acknowledge and agree that your employment with the
Company described in this Agreement is an at-will employment relationship, and that only the
General Counsel of Kellogg may modify this provision, and any modification must be in writing
signed by both parties.

     8. Counterparts. This Agreement may be executed simultaneously in one or more
counterparts, any one of which need not contain the signatures of more than one party, but all such
counterparts taken together shall constitute one and the same Agreement.

     If the terms of this letter are acceptable to you, please sign in the space provided below.

	 	 	 	 	 
	 	Sincerely,

 	 
	 	/s/ Gordon Gund
 	 
	 	Gordon Gund 	 
	 	Lead Director 	 
	 

Acknowledged and agreed this 22nd day of February, 2008

	 	 	 
	/s/ James M. Jenness
 

	 	 
	James M. Jennessexv10w2

 

Exhibit 10.2

2008 – 2010

Executive Performance Plan

Plan Summary

Awards: The Performance Shares will be earned on the Vesting Date (as defined below) only
to the extent that the performance goal thresholds for the Performance Period are exceeded, with
any unearned Performance Shares being forfeited without notice on the Vesting Date. The performance
measure is three year growth for Internal Operating Profit (OP) as described in the 2008-2010
Executive Performance Plan Overview (the “Overview”).

Performance Period: The Company’s 2008-2010 fiscal years.

Vesting: Performance Shares are earned and vest on the third anniversary of the grant date
(the “Vesting Date”). Upon the death, Disability or Retirement of a Participant (each, as defined
in the 2003 Long-Term Incentive Plan (the “Plan”)) prior to the Vesting Date, Performance Shares
will continue to vest and such Participant will be eligible for a full un-prorated award upon
vesting. Recipients will forfeit, without further notice and effective as of their date of
termination any unvested Performance Shares if their employment terminates prior to the Vesting
Date for any reason other than death, Disability or Retirement.

Change of Control: Notwithstanding the above, in the event of a Change of Control (as
defined in the Plan), all Performance Shares will be considered fully earned and will be payable at
target promptly as practicable following the Change of Control. The Compensation Committee may
adjust the Performance Shares earned to the extent the growth in Internal Operating Profit at that
date exceeds the target specified in the Overview, but in no case will the Performance Shares
earned be less than the target.

Dividends: Dividends are not paid on Performance Shares. After the Performance Shares are
vested and shares of the Company’s Common Stock are deposited in a Wells Fargo account for the
Participant (net of taxes) soon after the Vesting Date, dividends will be paid
prospectively on all shares of the Company’s common stock if and when declared by the Board
of Directors.

Voting: Performance Shares are not entitled to any voting rights. After the Performance
Shares are vested and shares of the Company’s common stock are deposited in a Wells Fargo account
for the Participant (net of taxes) soon after the Vesting Date, the Participant will be entitled to
voting rights on the shares of the Company’s common stock.

Taxes: Taxes will be due when the Performance Shares vest based on the Fair Market Value
(as defined in the Plan) of the shares on the Vesting Date. In the year of vesting, taxes will be
reported on the appropriate tax reporting forms (W2 in the U.S., T4 in Canada). Participants will
be deemed to have elected to pay the withholding taxes owed by allowing the Company to withhold
shares on the Vesting Date (and delivering to the Participant the net shares of the Company’s
common stock) at the statutory minimum. To the extent a Participant’s taxes on the vesting of
Performance Shares exceeds the amount so withheld (i.e., because the Participant’s tax rate exceeds
the withholding rate), the Participant is responsible for paying the difference. Taxes include
Federal taxes, social insurance or FICA taxes, and state and local taxes, if applicable.

Administration: Soon after the Vesting Date, the number of net shares of the Company’s
common stock earned will be deposited into a Wells Fargo account. After the shares of common stock
are deposited following the Vesting Date, Participants can contact Wells Fargo at 1-877-910-5385
for customer service.

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Communication: Target awards will be communicated to Participants during the salary
planning communication in late February and early March, when other pay decisions such as market
and performance adjustment, bonus and stock option award are communicated. Participants will
receive confirmation of the actual number of Performance Shares earned during the first quarter of
the 2011 calendar year.

Registration: Upon the depositing of the shares in the Wells Fargo account, shares of the
Company’s common stock will be registered in the Participant’s name. Participants can change the
registration of the shares by calling Wells Fargo.

Disposition at Vesting: After the shares of the Company’s common stock are deposited,
Participants can leave the shares with Wells Fargo, ask Wells Fargo to sell the shares, have a
certificate issued to the Participant or have the shares electronically transferred to another
broker.

Benefits: Income from the 2008-2010 Executive Performance Plan will not be included in
earnings for the purposes of determining benefits, including pension, S&I, disability, life
insurance and other survivor benefits.

Insiders: After the Performance Shares vest and the net shares of common stock are
deposited, insiders cannot dispose of the shares of common stock without prior approval of the
Legal Department.

Other Plan Provisions: The 2008-2010 Executive Performance Plan was adopted under the Plan
and is subject to all the provisions of the Plan, including those related to the ability of the
Board of Directors to amend the Plan, the Executive Performance Plan or any awards thereunder.
Nothing in this summary, the Overview, or the Plan shall confer upon the Participant any right of
continued employment.

This plan summary is subject to the actual plan document and any additional terms and conditions as
determined by the Compensation Committee of the Board of Directors.

Issued February 2008

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