Document:

Exhibit 10.1

 

OWENS-ILLINOIS

 

WORLD OPERATIONS

 

October 26, 2011

 

Mr. Albert P. L. Stroucken

4832 Devilbiss Court

Toledo, OH 43623

 

Dear Al:

 

As discussed, this letter agreement (the “Letter Agreement”) will amend and restate that letter agreement dated January 3, 2007, (the “Prior Agreement”) and will govern the terms of your continued employment with Owens-Illinois, Inc. (the “Company”) on and after January 1, 2012 (the “Effective Date”).

 

1.             Position and Term.  During the Term (as defined below), you will continue to serve as both Chief Executive Officer and Chairman of the Board of Directors of Owens-Illinois, Inc. (the “Board” and the “Company,” respectively).   During the Term, you agree to inform the Board if you are considering serving as a member of the board of directors of any other company or organization, in addition to those on which you serve as of the date of this Letter Agreement.

 

2.             Term.  Your employment under the terms set forth in this Letter Agreement will commence on the Effective Date and shall continue until June 30, 2016 (the “Term”), subject to earlier termination as provided herein.  Upon expiration of the Term, you will be deemed to have voluntarily terminated your employment due to retirement.

 

3.             Base Salary.  You will be entitled to an annual base salary of $1,049,000, plus such increases, if any, as may be determined from time to time by the Compensation Committee of the Board (“Base Salary”).  The Base Salary will be paid, subject to income tax and benefit plan withholdings, in accordance with the Company’s normal payroll practices for executives.

 

4.             Annual Bonus.  You will participate in the Company’s Incentive Bonus Plan, as amended from time to time (or any successor plan).  Subject to the terms of that plan, you will be eligible for a bonus.  Your target bonus will be 150% of your Base Salary (the “Target Bonus”), which is achieved if you meet 100% of the target objectives, and your maximum bonus will be 300% of your Base Salary, which you will earn if you exceed your target objectives according to the Incentive Bonus Plan.

 

5.             Equity Awards.  You will continue to participate in the Company’s equity plans in effect from time to time in accordance with the terms of such plans.  You will be eligible for future equity awards in the sole discretion of the Board.

 

 

6.                                       Nonqualified Retirement Benefits.

 

a.             Defined Contribution.  You will continue to be eligible to participate in the Company’s Executive Deferred Savings Plan during the Term.

 

b.             Defined Benefit SERP.  You will receive following your termination of employment for any reason, including voluntary termination, a non-qualified pension benefit (the “SERP Benefit”) based on (i) your actual years of service as an employee with the Company plus 1.5 years, and (ii) your final average earnings, as calculated under the Owens-Illinois Salary Retirement Plan and the Owens-Illinois Supplemental Retirement Benefit Plan as in effect on December 4, 2006 (the “Plans”).  The SERP Benefit will be converted to a single lump-sum determined by calculating the actuarial equivalent of the 100% single life annuity amount on the date of your retirement using (x) the applicable interest rate then in effect under the Plans and (y) a remaining life expectancy at the time of retirement using the then applicable mortality table under the Plans.  Payment of the lump sum SERP Benefit will be made within 30 business days after retirement or, if required by Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), the first business day on or after the date which is 6 months after your retirement.

 

7.                                       Employee Benefits and Perquisites.

 

a.             You also will continue to be eligible to participate in the Company’s employee benefit plans (except for the severance plan, as in effect from time to time), including without limitation the Company’s 401(k) plan, group health plans (medical, dental, vision and prescription drug benefits), short term disability, long term disability, and life insurance or benefit plans (collectively, the “Employee Benefits”), on the same basis as those benefits are generally made available to other senior executives of the Company.

 

b.             Vacation.  You will be provided with five weeks (25 days) of paid vacation per calendar year.

 

c.             Physical Exam.  Each year during the Term, you will be reimbursed for the cost of an annual physical exam in accordance with the Company policies and programs in effect from time to time for senior executives.

 

d.             Car Allowance.  Each year during the Term, you will be provided with an annual car allowance of not less than $24,000 per calendar year payable in no less frequent than monthly installments of $2,000 each, in accordance with the Company policies and programs in effect from time to time for senior executives.

 

e.             Life Insurance.  Each year during the Term, you will be reimbursed for the premiums on a term life insurance policy on your life with a coverage amount equal to three times your Base Salary.

 

f.              Aircraft.  You will be permitted to use Company aircraft for business purposes and up to 50 hours per calendar year for personal travel in accordance with the Company policies and programs in effect from time to time for senior executives.  The cost of personal usage of the Company’s aircraft will be imputed into your income in accordance with applicable tax laws.  For any personal use of the

 

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Company’s aircraft over 50 hours per calendar year,  you will reimburse the Company for the incremental cost of each flight, with such incremental cost determined according to the methodology used by the Company for reporting the cost of personal aircraft usage by executives in the Company’s annual proxy statement.  However, if necessary to comply with applicable FAA rules, you will enter into an aircraft time share agreement with the Company pursuant to which you will agree to reimburse the Company for personal usage of the Company’s aircraft over 50 hours according to and consistent with such time share agreement and applicable FAA rules.

 

g.             Tax and Financial Services.  You will be reimbursed for personal tax and financial services up to $15,000 per calendar year during the Term in accordance with the Company policies and programs in effect from time to time for senior executives.

 

h.             409A Requirements.  All reimbursements under this Section 7 and Section 8 shall be made as specified herein, or if no date is so specified, as soon as practicable following the date such expense is properly submitted for reimbursement, but no later than the last day of the calendar year following the calendar year in which such reimbursable expense was incurred.  You may not accrue amounts for use in later calendar years, and the reimbursements or benefits provided under this Section 7 are for each calendar year only, and may not be used to increase or decrease the amount reimbursable or available in any subsequent year.  You may not liquidate or exchange your rights to reimbursement and or receipt of benefits under this Section 7 for cash or any other benefit.

 

8.                                       Reimbursement for Loss on Sale of Ohio Residence.  If your employment with the Company is terminated at anytime other than for Cause and you sell your primary residence in the Toledo, Ohio area, within two years of such termination, then the Company will reimburse you for any loss on such sale, subject to a maximum reimbursement equal to the lesser of (a) $240,000 or (b) 20% of the then appraised value of the residence.  For example, if your residence has an appraised value of $1.2 million at the time of your termination, your reimbursement for a loss will not exceed $240,000 (20% of the appraised value.)  For this purpose, your loss on the sale is difference between (i) the appraised value of the residence at the time of your termination of employment and (ii) the actual sale price, after deducting brokerage commissions.  Such reimbursement will be made as soon as practicable after you submit to the Company documents evidencing the loss, but no earlier than the first day of the second taxable year following the year of your termination and no later than the last day of such taxable year.

 

9.                                       Payment of Legal Fees.   The Company will reimburse you for reasonable legal and consultant costs you incur in connection with the negotiation of this Letter Agreement, up to a maximum of $25,000.

 

10.                                 Miscellaneous.

 

a.             Governing Law.  This Letter Agreement will be governed by and construed in accordance with the laws of the State of Ohio, without regard to conflicts of laws principles thereof.

 

b.             Arbitration.  Any dispute, claim or controversy based on, arising out of or relating to your employment or this Agreement shall be settled by final and binding arbitration in Toledo, Ohio, before a single neutral arbitrator in accordance with

 

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the National Rules for the Resolution of Employment Disputes (the “Rules”) of the American Arbitration Association (“AAA”), and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction.  If the parties are unable to agree upon an arbitrator, the Company shall obtain a list from AAA of the names of 10 arbitrators who are members of the national Academy of Arbitrators to ensure their neutrality.  From that list, with you to strike first, you and the Company will alternately strike names, until one name remains and that person will be the arbitrator.  Each party shall pay the fees of its own attorneys, the expenses of its witnesses and all other expenses connected with presenting its case; however, you and the Company agree that, to the extent permitted by law, the arbitrator may, in his discretion, award reasonable attorneys’ fees to the prevailing party.  Other costs of the arbitration, including the cost of any record or transcripts of the arbitration, AAA’s administrative fees, the fee of the arbitrator, and all other fees and costs, shall be borne by the Company.  Arbitration is intended to be the exclusive method for resolving any and all claims by the parties against each other for payment of damages under this Letter Agreement or relating to your employment; provided, however, that neither this Letter Agreement nor the submission to arbitration shall limit the parties’ right to seek provisional relief, including without limitation injunctive relief, in any Ohio court of competent jurisdiction.  Seeking any such relief shall not be deemed to be a waiver of such party’s right to compel arbitration.  Both parties expressly waive their right to a jury trial.

 

c.             Entire Agreement; Amendments. This Letter Agreement contains the entire understanding of the parties with respect to your employment by the Company.  Appendix A is a part of this Letter Agreement and is incorporated by reference.  This Letter Agreement (including Appendix A) may not be amended except by written instrument signed by you and the Company.

 

d.             No Waiver.  The failure of the Company or you to insist upon strict adherence to any term of this Letter Agreement (including Appendix A) will 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 Letter Agreement.

 

e.             Severability.  Whenever possible, each provision of this Letter Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Letter Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, and such invalid, void or otherwise unenforceable provision will be null and void.  It is the intent of the parties, however, that any invalid, void or otherwise unenforceable provisions be automatically replaced by other provisions which are as similar as possible in terms to such invalid, void or otherwise unenforceable provisions but are valid and enforceable to the fullest extent permitted by law.

 

f.              Withholding Taxes.  The Company may withhold from the amounts payable under this Letter Agreement any amounts required by law.

 

g.             Headings and Interpretations.  The headings of the sections contained in this Letter Agreement are for convenience only and will not be deemed to control or affect the meaning or construction of any provision of this Agreement.  Neither this Letter Agreement nor any uncertainty or ambiguity herein will be construed or resolved against a party as the draftsperson.

 

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h.             Counterparts.  This Letter Agreement may be signed in counterparts, each of which will be an original.

 

i.              No Mitigation; No Offset.  You will be under no obligation to seek other employment following a termination of employment and there will be no offset against amounts due you under the Letter Agreement.

 

j.              Assignability; Binding Nature.  This Letter Agreement will be binding upon and inure to the benefit of (i) the Company and its respective successors and permitted assigns and (ii) you and your heirs, executors, beneficiaries and administrators.  No obligations of the Company under this Letter Agreement may be assigned without your consent; provided that the Company may assign this Letter Agreement without your consent to any of its direct or indirect subsidiaries or in a Change in Control without your consent.  You may not assign your rights or obligations under this Letter Agreement without the consent of the Company.

 

k.             Survival.  The respective rights and obligations of you and the Company hereunder will survive any termination of your employment to the extent necessary to the intended preservation of such rights and obligations.

 

l.              Notices.  Any notice or other communication to be given hereunder will be in writing and will be deemed sufficient if (i) mailed by United States certified mail, return receipt requested, (ii) sent by nationally recognized overnight courier, (iii) if sent to a Company, sent by facsimile (with confirmation), or (iv) delivered in person, in each case, at the address set forth below, or such other address as a party may provide to the other in accordance with the procedure for notices set forth in this Letter Agreement.  Any notice or other communication so delivered will constitute valid notice under this Agreement and will be deemed to have been received (A) on the fifth business day after the date of deposit in the United States mail, (B) on the next business day after the date when sent in the case of delivery by nationally recognized overnight courier, (C) upon receipt by the sender of confirmation of delivery if sent by facsimile prior to 5 p.m. local time on a business day and otherwise on the next business day, and (D) on the day of actual delivery in the case of personal delivery if delivered on a business day and otherwise on the next business day.

 

	
If   to the Company:
    	
 
    	
Owens-Illinois, Inc.
    
	
 
    	
 
    	
James   W. Baehren
    
	
 
    	
 
    	
Senior   Vice President, Strategic Planning and General Counsel
    
	
 
    	
 
    	
Attention:   Board of Directors
    
	
 
    	
 
    	
Telephone: (567) 336-1032
    
	
 
    	
 
    	
 
    
	
If   to you:
    	
 
    	
Mr. Albert   P.L. Stroucken
    
	
 
    	
 
    	
current   address and phone no. on file with the Company for purposes of W-2
    
	
 
    	
 
    	
 
    
	
With   a copy to:
    	
 
    	
Reed   Smith LLP
    
	
 
    	
 
    	
225   Fifth Avenue
    
	
 
    	
 
    	
Pittsburgh,   PA 15222
    
	
 
    	
 
    	
Attention:   Dodi Walker Gross, Esquire
    
	
 
    	
 
    	
Telephone:   (412) 288-4132
    

 

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Al, we look forward with great pleasure to working with you.  Please countersign this Letter and Appendix A in the space indicated below, and return an original to my attention.

 

	
 
    	
 
    	
Owens-Illinois, Inc.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/   James W. Baehren
    
	
 
    	
 
    	
By:
    	
James   W. Baehren
    
	
 
    	
 
    	
Its:
    	
Senior   Vice President Strategic Planning
   and General Counsel
    
	
 
    	
 
    	
 
    
	
Acknowledged   and Agreed:
    	
 
    	
 
    
	
ALBERT   P. L. STROUCKEN
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/   Albert P.L. Stroucken
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
October 26,   2011
    	
 
    	
 
    
					

 

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Appendix A to Letter Agreement – Albert P. L. Stroucken

 

Provisions Relating to Termination of Employment and Restrictive Covenants

 

This Appendix A, dated October 26, 2011, is an integral part of the Letter Agreement, which is incorporated herein and constitutes part of the Letter Agreement, and amends and restates the Appendix A entered into and which formed a part of the Prior Agreement.  Capitalized terms used herein will have the meaning set forth in the Letter Agreement, unless otherwise defined below.

 

Paragraph 1.                              Termination of Employment.  Your employment may be terminated by the Company at any time prior to the end of the Term with Cause, without Cause upon ninety days prior written notice or due to your Disability.  You may terminate your employment during the Term for any reason upon ninety days prior written notice to the Company.  Termination will occur automatically on your death.

 

a.                                       Termination Without Cause.  If your employment is terminated by the Company without Cause, you will receive the following:

 

(i)            the Accrued Rights.

 

(ii)           Severance Pay payable over a period of 24 months commencing immediately following your termination, except as otherwise provided in Paragraph 1(c) below, and subject to your continued compliance with the provisions of Paragraphs 2 and 3 of this Appendix A, and execution and non-revocation of a general release on terms reasonably satisfactory to the Company, within 60 days following your termination date.

 

(iii)          Health Benefits for a period of up to 24 months (with such coverage being concurrent with and not in addition to any COBRA continuation rights you may have under Section 4980A of the Internal Revenue Code of 1986, as amended (“Code”) or any similar state law), provided that this continued coverage will terminate if you become covered under a subsequent employer’s group health plan, or if you fail to make timely payment of the same premiums for the coverage you would have paid as an active employee.  Notwithstanding the foregoing, if the Company determines in its sole discretion that it cannot provide the foregoing Health Benefits without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company shall, in lieu of such Health Benefits, provide you a taxable lump sum cash payment in an amount equal to the cost of the monthly Health Benefit premium as in effect immediately prior to the date of termination, calculated at the same cost to you as in effect immediately prior to such date (the “Monthly Premium”), multiplied by 24 (the “Health Benefits Payment”).  In addition, if at any time following the commencement of providing health insurance benefits under this Section 5(c), the Company determines in its sole discretion that the provision of such benefits potentially would violate applicable law, the Company shall, in lieu of such health insurance benefits, make a taxable lump sum cash payment to you in an amount equal to the Monthly Premium multiplied by the number of full calendar months remaining until the second anniversary of the date of termination, which amount shall be paid within thirty 

 

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(30) days following the date of the Company’s determination, subject to any required delay under Section 1(f) hereof;

 

The payments and benefits under clauses (i), (ii), and (iii) above constitute the “Basic Termination Benefits.

 

b.                                      Disability.  If your employment terminates due to your Disability you will be entitled to the Basic Termination Benefits (and subject to the same terms) and all other outstanding equity awards shall vest and be exercisable in full.

 

c.                                       Death.  If your employment terminates due to your death, you will be entitled to the Accrued Rights and the Target Bonus for the year of death and all other outstanding equity awards shall vest and be exercisable in full.  Payments under this Paragraph 1(c) will be made to your surviving spouse or, if no surviving spouse, to your estate within 60 business days of your death.

 

d.                                      Change of Control.  If within 1 year after a Change of Control you are terminated without Cause or within 2 years after a Change of Control you voluntarily terminate because your responsibilities are significantly reduced or altered (after providing the Company with written notice of such reduction/alteration within 90 days after the reduction/alteration and the Company’s failure to cure within 30 days after the notice to the Company), in addition to receiving the Basic Termination Benefits (and subject to the same terms), and subject to any applicable 6-month delay required under Section 409A:

 

(i)            You will receive an amount equal to one times the sum of (A) your Base Salary in effect when your employment terminates; and (B) your Target Bonus, payable over a period of 12 months following the end of the payment of the Basic Termination Benefits under Paragraph 1(a)(ii), (the sum of (A) and (B) constituting “Additional Severance Pay”) subject to your continued compliance with the provisions of Paragraphs 2 and 3 of this Appendix A, and the execution and non-revocation of the general release required under Paragraph 1(a)(ii), (so that the total of the Severance Pay and Additional Severance Pay shall equal three times the sum of your Base Salary and Target Bonus payable over a period of 36 months following termination of employment);

 

(ii)           In the event it shall be determined that any payment or distribution by the Company to or for your benefit, whether paid or payable or distributed or distributable pursuant to the terms of this Letter Agreement or otherwise, (a “Payment”) would be subject to the tax imposed by Section 4999 of the Code (such excise tax, together with any such interest and penalties, are collectively referred to as the “Excise Tax”), then either (A) such Payments shall be paid in full, or (B) the Payments shall be reduced until no such Payments are subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, results in you receiving on an after-tax basis, the greatest amount of Payments, notwithstanding that all or some portion of such Payments may be taxable under Section 4999 of the Code.  If Payments are to be reduced, such reduction will be made in a manner as you and the Company shall mutually agree that would not result in a violation of Section 409A. All determinations required to be made under this Paragraph 1(d)(ii), and the 

 

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assumptions to be utilized in arriving at such determination, shall be made by the a nationally recognized public accounting firm as may be designated by the Company (the “Accounting Firm”) based on reasonable assumptions, interpretations and approximations concerning applicable taxes and relying on reasonable good faith interpretations concerning the applications or Code Sections 280G and 4999; provided such determinations are made with substantial authority (within the meaning of Code Section 6662).  The Accounting Firm shall provide detailed supporting calculations both to the Company and you within 15 business days of the receipt of notice from you that there has been a Payment, or such earlier time as is requested by the Company.  All fees and expenses of the Accounting Firm shall be borne solely by the Company.

 

e.                                       By the Company For Cause or by Your Resignation For Any Reason.  If your employment is terminated by the Company for Cause or if you voluntarily terminate for any reason not covered by (d) above, you will receive the Accrued Rights, subject to any 6-month delay required under Section 409A.

 

f.                                         409A Requirements.  If required to comply with Section 409A, all or a portion of the Severance Pay or other payments under this Appendix A or the Letter shall be delayed, and you may be required to pay part or all of the full cost of the Health Benefits, during the six-month period following your termination of employment (the “Delay Period”).  Upon expiration of the Delay Period, the Company shall pay you in a lump sum an amount equal to (x) the amounts of Severance Pay and other payments which otherwise would have been paid during the Delay Period if not for the requirements of Section 409A (including the Health Benefits Payment, if payable) plus (y) if you are receiving the Health Benefits and not the Health Benefits Payment, then the amount of the Health Benefits paid by you during the Delay Period to the extent it exceeded the amount you would have paid as an active employee during the Delay Period.  In addition, if the 60 day period in which you have to execute and return the release required to receive the Severance Pay would span two taxable years, the Severance Pay shall not commence until the taxable year immediately following the taxable year in which the date of termination occurs.  A termination of employment shall be deemed to occur on the date you terminate employment with all members of the Company’s controlled group (within the meaning of Section 409A) or such earlier date as would constitute a separation from service under Section 409A.

 

Paragraph 2.                              Non-Competition/Non-Solicitation.

 

a.                                       You acknowledge and recognize the highly competitive nature of the businesses of the Company and its affiliates and accordingly agree as follows:

 

(i)                                     While employed and for a period of one year thereafter, you will not, directly or indirectly:

 

(A)          engage in, invest in, or enter into the employ of or otherwise render any services to, any business that competes with the business of the Company or its affiliates (including, without limitation, businesses which the Company or its affiliates have specific plans to conduct in the future and as to which you are aware of such planning) in any geographical area where the Company or its affiliates manufactures, 

 

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produces, sells, leases, rents, licenses or otherwise provides its products or services (a “Competitive Business”); or

 

(B)           interfere with, or attempt to interfere with, business relationships (whether formed before, on or after the date of the Letter Agreement) between the Company or any of its affiliates and customers, clients, suppliers, or investors of the Company or its affiliates.  Notwithstanding anything to the contrary in this Letter Agreement, you may own up to 2% of the securities of any person engaged in the business of the Company or its affiliates that are publicly traded.

 

(ii)                                  While employed by the Company and for a period of two years thereafter, you will not, directly or indirectly:

 

(A)          solicit or encourage any employee of the Company or its affiliates to leave the employment of the Company or its affiliates; or

 

(B)           hire any employee who was employed by the Company or its affiliates within one year prior to termination of your employment.

 

b.                                      It is expressly understood and agreed that, although you and the Company consider the restrictions contained in this Paragraph 2 to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Appendix A is an unenforceable restriction against you, the provisions of this Appendix A will not be rendered void but will be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable.  Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Appendix A is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding will not affect the enforceability of any of the other restrictions contained herein.

 

Paragraph 3.                              Confidentiality.  You may not disclose to any person outside the Company any non-public, proprietary or confidential information concerning the business of the Company, and its subsidiaries and affiliates, unless such information is required by law to be disclosed.

 

Paragraph 4.                              Specific Performance.  You acknowledge and agree that the Company’s remedies at law for a breach or threatened breach of any of the provisions of Paragraph 2 or Paragraph 3 of Appendix A would be inadequate and the Company would suffer irreparable damages as a result of such breach or threatened breach.  Accordingly, you agree that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond, will be entitled to cease making any payments or providing any benefit otherwise required by the Letter Agreement and/or Appendix A and obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available.

 

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Paragraph 5.                              Certain Definitions.

 

a.                                       “Accrued Rights” mean:

 

(i)                                     your accrued but unpaid Base Salary through the date of termination payable in accordance with applicable law;

 

(ii)                                  unless you are terminated for Cause, any annual bonus earned but unpaid under the Company’s Incentive Bonus Plan for any previously completed fiscal year payable in accordance with applicable law;

 

(iii)                               benefits under any Company benefit plan or program in which you are a participant on the date of termination, specifically including the SERP Benefit, payable in accordance with the terms of the applicable benefit plan or program to the extent not inconsistent with the terms of the Letter Agreement or this Appendix A; and

 

(iv)                              unless you are terminated for Cause, any loss on the sale of your Ohio residence, as provided in Paragraph 8 of the Letter Agreement.

 

b.                                      “Cause” means:

 

(i)                                     the commission of an act of fraud against the Company or any affiliate thereof or embezzlement;

 

(ii)                                  breach of one or more of the following duties to the Company:

 

(A)          the duty of loyalty;

 

(B)           the duty not to take willful actions which would reasonably be viewed by the Company as placing your interest in a position adverse to the interest of the Company;

 

(C)           the duty not to engage in self-dealing with respect to the Company’s assets, properties or business opportunities;

 

(D)          the duty of honesty; or

 

(E)           any other fiduciary duty which you owe to the Company;

 

(iii)                               your conviction (or a plea of nolo contendere in lieu thereof) for

 

(A)          a felony; or

 

(B)           a crime involving fraud, dishonesty or moral turpitude;

 

(iv)                              intentional misconduct as an executive of the Company, including, but not limited to, knowing and intentional violation by you of material written policies of the Company or specific directions of the Board, which policies or directives are neither illegal (or do not involve illegal conduct) nor do they require you to violate reasonable business ethical standards; or

 

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(v)           your failure to substantially perform your duties for the Company (other than as a result of total or partial incapacity due to physical or mental illness) for a period of 10 days following written notice by the Company of such failure.

 

However, “Cause” does not include termination of your employment due to Disability or death, or upon expiration of the Term.  Additionally, the Company shall provide you written notice of any event or action which the Board has determined constitutes Cause, and if the Board determines in its sole discretion that such event or action is curable, will provide you with a reasonable opportunity to cure prior to terminating you for Cause.

 

c.                                       “Change of Control” means:

 

(i)                                     A transaction or series of transactions (other than an offering of Common Stock to the general public through a registration statement filed with the Securities and Exchange Commission) whereby any “person” or related “group” of “persons” (as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act) (other than the Company, any of its subsidiaries, an employee benefit plan maintained by the Company or any of its subsidiaries or a “person” that, prior to such transaction, directly or indirectly controls, is controlled by, or is under common control with, the Company) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company possessing more than 50% of the total combined voting power of the Company’s securities outstanding immediately after such acquisition; or

 

(ii)                                  During any period of two consecutive years, individuals who, at the beginning of such period, constitute the Board together with any new director(s) (other than a director designated by a person who shall have entered into an agreement with the Company to effect a transaction described in paragraphs (a) or (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 of the directors then still in office who either were directors at the beginning of the two-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or

 

(iii)                               The consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of the Company’s assets in any single transaction or series of related transactions or (z) the acquisition of assets or stock of another entity, in each case other than a transaction:

 

(A)          Which results in the Company’s voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Company’s assets or 

 

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otherwise succeeds to the business of the Company (the Company or such person, the “Successor Entity”)) directly or indirectly, at least a majority of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction; and

 

(B)           After which no person or group beneficially owns voting securities representing 50%  or more of the combined voting power of the Successor Entity; provided, however, that no person or group shall be treated for purposes of this subparagraph (c)(ii) as beneficially owning 50% or more of combined voting power of the Successor Entity solely as a result of the voting power held in the Company prior to the consummation of the transaction; or

 

(iv)                              The Company’s stockholders approve a liquidation or dissolution of the Company.

 

d.                                      “Disability” shall mean your permanent and total disability as determined in the discretion of the Board based on the advice of a licensed physician that you will be unable to perform the essential duties of your employment for an unknown period of time.

 

e.                                       “Health Benefits” mean coverage under the Company’s group health plan in which you participated at the time of your termination of employment.

 

f.                                         “Severance Pay” means an amount equal to two times the sum of:

 

(i)                                     your Base Salary in effect when your employment terminates; and

 

(ii)                                  your Target Bonus.

 

	
 
    	
 
    	
OWENS-ILLINOIS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/   James W. Baehren
    
	
 
    	
 
    	
By:
    	
James   W. Baehren
    
	
 
    	
 
    	
Its:
    	
Senior   Vice President Strategic
   Planning and General Counsel
    
	
 
    	
 
    	
 
    
	
Acknowledged   and Agreed:
    	
 
    	
 
    
	
ALBERT   P. L. STROUCKEN
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/   Albert P.L. Stroucken
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Date   Signed:
    	
October   26, 2011
    	
 
    	
 
    
					

 

13Exhibit 10.1

 

Janus Capital Variable Compensation Program

 

The Janus Capital Variable Compensation Program (the “Program”) covers all variable compensation to be paid to employees of Janus Capital Group Inc. (“JCG”), Janus Management Holdings Corporation, Janus Capital International Limited, Janus Capital Asia Limited, Janus Capital Singapore Pte. Limited and any future subsidiary that has one or more Janus employee(s) (collectively, “Janus”).

 

The Program at a Glance

 

The Program is designed to fund 100% of Janus employee variable compensation awards from company profits.  The Program has two separate variable compensation pools:  (i) the Janus Investments Pool, and (ii) the JCG Pool.  Each pool will fund variable cash and long-term incentive (“LTI”) awards to employees eligible to receive awards from that pool.  Employees will generally be eligible to participate in one pool or the other, as determined by JCG’s Chief Executive Officer (“CEO”).

 

1.     The Janus Investments Pool:  The Janus Investments Pool covers employees contributing to the investment management team of Janus, such as portfolio managers, research analysts, research associates, traders, client portfolio managers, portfolio analytics personnel, risk personnel and the investment team’s administrative support.

 

2.     The JCG Pool:  The JCG Pool covers employees contributing to the executive, distribution, administrative, and operational support of JCG and its subsidiaries, such as non-investment team officers, core employees, distribution/sales personnel, and any other Janus employee who is not eligible to participate in the Janus Investments Pool.

 

General Eligibility Criteria: To be eligible for either pool, an employee must be actively employed by Janus on the day that Janus pays or otherwise distributes awards under the Program.  Eligibility to participate in the Program does not guarantee that variable compensation will be paid to or earned by an eligible employee.

 

How the Program Works for You

 

Overview.  The Program provide participants with the opportunity to earn variable incentive compensation in addition to an employee’s base salary, sales commissions, if any, and retirement benefits such as employer contributions to the Janus 401(k), Profit Sharing and Employee Stock Ownership Plan.  The Program is designed to reward Janus employees based on a combination of company, team, and individual contributions.

 

Any award under the Program may be paid in all cash or in a combination of cash and LTI awards based on the employee’s role within the organization.   Janus generally will issue awards under the Program on an annual basis, or more or less frequently as determined in Janus’ discretion.  Participants in the Program must be actively employed on the date of the payment or grant of the applicable periodic or annual variable cash award and/or LTI award to earn any part of such variable compensation, and the amount of any variable compensation award shall be discretionary as described under “Awards from the Pools” section below.

 

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Awards from the Pools. Amounts in the Janus Investments Pool and the JCG Pool will be awarded as follows:

 

1.     Janus Investments Pool

a.     Investment Portfolio Managers:  For the second half of 2011 and all of 2012, Janus will transition the formulaic component of variable compensation awards to investment portfolio managers that was in effect for 2010 (the “Prior Formulaic Methodology” which is attached hereto as Exhibit A) in the following manner:

i.      For the second half of 2011, Janus will use the Prior Formulaic Methodology to determine a formulaic award to an individual investment portfolio manager and pay such award out of the Janus Investments Pool to the extent earned under this Program.  Any additional variable compensation award for 2011 will be determined by the Co-Chief Investment Officers, subject to approval by the CEO.

ii.     For 2012, Janus will use the Prior Formulaic Methodology to calculate a formulaic award, and pay 50% of such formulaic calculation to the extent earned under this Program.  Any additional variable compensation award for 2012 will be determined by the Co-Chief Investment Officers, subject to approval by the CEO.

iii.    Effective on and after January 1, 2013, any awards to investment portfolio managers out of the Janus Investments Pool will become fully discretionary and the amount of any such award shall be determined by the Co-Chief Investment Officers, subject to approval by the CEO.

 

b.     Other Eligible Participants under the Janus Investments Pool:  Effective July 1, 2011, variable compensation awards to other employees that are eligible to participate in the Janus Investments Pool are fully discretionary.  The amount of any award under the Janus Investments Pool to an eligible employee shall be determined by the Co-Chief Investment Officers, subject to approval by the CEO.  In exercising this discretion, the Co-Chief Investment Officers will consider, among other things, whether specific goals, performance criteria and/or objectives established for each eligible employee by his or her manager or supervisor have been met.

 

2.     JCG Pool

a.     Effective January 1, 2011, variable compensation awards to employees that are eligible to participate in the JCG Pool are fully discretionary (except awards to applicable commissioned sales personnel which are more fully described below).  The amount of any award out of the JCG Pool to an eligible employee shall be determined by the CEO after consultation with senior management.  In exercising this discretion, Janus will consider, among other things, whether specific goals, performance criteria and/or objectives established for each eligible employee by his or her manager or supervisor have been met.

b.     Commissioned Sales Personnel: For the second half of 2011 and all of 2012, Janus will transition the formulaic component of any annual cash bonus and/or LTI award to commissioned sales personnel with an individual sales compensation plan (“Prior Sales Methodology”) in the following manner (excluding monthly sales commissions).  A more detailed description of the compensation arrangement will be set forth in the individual sales compensation plans (where applicable).

i.      For the second half of 2011, Janus will use the Prior Sales Methodology to calculate the formulaic component of the funding of any annual cash bonus and/or LTI award pool, and fund 67% of such formulaic calculation to the pool to the extent earned under this Program.  Any additional variable compensation award for 2011 will be determined at the sole discretion of the Head of Distribution and the President of Janus International after consultation with senior sales management, subject to approval by the CEO.

 

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ii.     For 2012, Janus will use the Prior Sales Methodology to calculate the formulaic component of the funding of any annual cash bonus and/or LTI award pool, and fund 33% of such formulaic calculation to the pool to the extent earned under this Program.  Any additional variable compensation award for 2012 will be determined at the sole discretion of the Head of Distribution and the President of Janus International after consultation with senior sales management, subject to approval by the CEO.

iii.    Effective on and after January 1, 2013, the funding and any annual cash bonus and/or LTI award to commissioned sales personnel out of the JCG Pool will become fully discretionary and the amount of any awards shall be determined by the Head of Distribution and the President of Janus International after consultation with senior sales management, subject to approval by the CEO.

 

LTI Awards.  LTI awards, if any, made from either of the two pools may consist of one or more of the following components:  restricted stock, stock options, restricted stock units, phantom stock, stock appreciation rights, Janus Capital Management LLC’s (“JCM”) equity or phantom interests, and/or mutual fund unit awards. The annual mix of the LTI awards will be approved by the Compensation Committee of the JCG Board of Directors (“Compensation Committee”).  LTI awards will be subject to a vesting schedule (typically 4 years), and therefore LTI compensation is not fully earned until the applicable vesting schedule is satisfied. LTI awards granted under the Program will be made on an annual basis and generally at the same time that  annual LTI awards are granted to eligible employees.  LTI awards granted pursuant to this Program shall be valued in accordance with Janus’ standard valuation methodology for such awards, and shall be subject to such other terms and conditions as may be determined in the Compensation Committee’s discretion, but in any event, in accordance with the Company’s applicable LTI plans and related award agreements and documentation.

 

Other Benefits.  This Program does not supersede or replace Janus’ medical, dental, vision, life insurance, disability or retirement programs, as such programs may be amended or terminated by Janus from time to time in its discretion.

 

Termination of Employment.  Upon termination of employment, Janus will pay to the impacted employee his or her base salary through the date of termination, any fully earned but unpaid monthly sales commissions (if any) through the date of termination in accordance with the terms of any applicable sales commission plan, and any accrued but unpaid personal time off (PTO), but only if PTO is tracked and recorded under Janus’ policies for the applicable position of the employee.  An eligible employee who is terminated will not be entitled to receive or otherwise have earned any cash payment or LTI award to be made under this Program, or any pro rata portion of same, because an employee must be employed on the date such future payment is made to earn the award under this Program.  Additionally, except as set forth in the applicable award agreement, any portion of an LTI award that is unvested, and any rights thereunder, will be terminated, cancelled and forfeited effective upon such termination.

 

How the Program is Funded

 

The Janus Investments Pool will be funded each year in an amount equal to a percentage of JCM’s fully-allocated Pre-Incentive Operating Income (“PIOI”), defined as operating income before the deduction of incentive compensation and overhead using the then-current expense allocation and intracompany practices applied by Janus’ accounting and finance department (the “Janus Investments Funding Level”).  Subject to the terms of the Program, the Janus Investments Funding Level will be annually established by the Compensation Committee.  The Janus Investments Pool is effective as of July 1, 2011.  For the second half of 2011, the Janus Investments Funding Level will be based on JCM’s PIOI for the first half of calendar year 2011.

 

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The JCG Pool will be funded each year in an amount equal to a certain percentage of JCG’s consolidated PIOI (the “JCG Funding Level”).  Subject to the terms of the Program, the JCG Funding Level will be annually established by the Compensation Committee. The JCG Pool became effective January 1, 2011, except for commissioned sales personnel which will be effective as of July 1, 2011.

 

The determination of the funding level and the aggregate amount of awards available for each pool are subject to the approval of the Compensation Committee.  The Compensation Committee retains the discretion to modify or terminate the Program without prior notice, although Janus will not make any change that adversely affects any award under this Program after it has been fully earned by a participant.  The CEO will use his best efforts to obtain the Compensation Committee’s approval to award the full amount of each pool’s funding level for 2011, 2012 and 2013, consistent with the above.

 

Other Important Disclosures

 

Plan Administration.  All calculations and the administration of the Program shall be conducted by Janus management, subject to oversight by the Compensation Committee.  The CEO shall make the final determination regarding the eligibility of a Janus employee to participate in one or both of the pools. All calculations, decisions and interpretations of the terms of the Program by Janus shall be final and binding. No employee shall have the individual or collective right to challenge or appeal the calculation of the pools, issues of eligibility or the amount of any individual share of such pool.

 

Prior Agreements/Verbal Statements.  The Program supersedes any and all prior compensation programs, plans or arrangements for variable compensation, including but not limited to any previous variable compensation or bonus plans or arrangements that a Janus employee may have with Janus or any of its subsidiaries, if any. The terms and conditions of the Program shall not be modified by any oral statement or course of dealing.

 

Taxes.  Janus may withhold such Federal, state, local or foreign taxes from any amounts payable under the Program that are required to be withheld pursuant to any applicable law or regulation.

 

Confidentiality.  The Program and the information contained in this document are proprietary and confidential, and Janus employees shall not disclose, provide or furnish any term of the Program or related communications in any manner, in whole or in part, to any third party without the prior written consent of Janus (excluding an individual’s personal accountant or attorney).

 

No Affect on At-Will Employment.  No provision in the Program nor any other document or statement shall: (i) modify an employee’s status as an at-will employee; (ii) be construed to confer upon any individual the right to remain in the employ or service of any Janus entity; (iii) interfere with Janus’ right or authority to terminate any employee’s employment at any time, with or without cause, with or without prior notice, procedure or formality; nor (iv) interfere with Janus’ right or authority to increase or decrease the compensation or other payments to any individual at any time.   No independent contractor or temporary employee is eligible to participate in this Program.

 

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EXHIBIT A — PRIOR METHODOLOGY FOR PORTFOLIO MANAGERS

 

2010 formulaic compensation for portfolio management duties was based on the performance of the funds and portfolios that he or she manages (“Managed Funds”).  Aggregate compensation derived from the Managed Funds’ performance was calculated based upon a percentage of the total revenue received on the Managed Funds adjusted to reflect the actual performance of such Managed Funds.

 

Actual performance is calculated based on the Managed Funds’ aggregate asset-weighted Lipper peer group performance ranking on a one-, three- and five-year rolling period basis, with a predominant weighting on the Managed Funds’ performance in the three- and five-year periods. The compensation determined from the Managed Funds’ performance is then allocated to the respective portfolio manager(s).

 

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