Document:

Exhibit

[Letterhead of T. Rowe Price Group, Inc.]

January 30, 2017

VIA HAND DELIVERY

Kenneth Moreland

Dear Ken:
I want to thank you for your many years of service and will use this letter as the way to memorialize our discussion regarding your transition.  Although you have announced that you will be retiring from T. Rowe Price, we want to retain your services to assist during the transition, while we engage in a search for a new Chief Financial Officer. I greatly appreciate your agreement to support the firm during this transition and am confident that you will remain committed to executing all of your existing responsibilities with the same care and professionalism the firm has received from you over the past several years.  This letter reflects the terms of the agreement, effective December 28, 2016, under which you will continue to assist me and serve T. Rowe Price. 
		
	1.
	Resignation 

(a.)Your resignation and the resulting end of your employment and service as an officer of T. Rowe Price Group, Inc. will be effective the earlier of (1) ninety (90) days after a new Chief Financial Officer is hired and commences employment with T. Rowe Price, (2) December 31, 2017, or (3) a date prior to December 31, 2017 that is mutually agreed to by you and the Company.  The date that your employment ends shall hereafter be referred to as the “Retirement Date”.  As used in this Agreement, “T. Rowe Price” and the “Company” refer to T. Rowe Price Group, Inc. and its subsidiaries and affiliates, collectively. 

(b.)You will continue to receive your regular base salary for all days worked and your benefits will continue as an active employee through the Retirement Date.

(c.)Effective upon the Retirement Date, your service as a director or officer of any T. Rowe Price fund or entity also will end.  
2.    Transition Period
During the transition period leading up to your Retirement Date, we will expect the following:
(a.)You will continue to perform your duties as Chief Financial Officer for as long as the Company asks you to, and you will perform those duties and any other duties that may be assigned to you to the best or your ability.

(b.)You will cooperate and assist with the transition of functions and responsibilities as may be requested by me.  Among other things, you will assist in the search for a new Chief Financial Officer as requested, and you will be expected to cooperate and assist with the transition after a new Chief Financial Officer is identified.

(c.)You will comply with the T. Rowe Price Code of Ethics, all T. Rowe Price policies and procedures and with all applicable regulatory and other legal requirements. 
3.    Separation Payment  
 Provided that in the good faith judgment of the Company, you satisfy all of the expectations set forth above in Section 2 continuously through the date your employment ends, you will receive a lump-sum separation payment (the “Separation Payment”) in the total gross amount equal to (a) Three Hundred Fifty Thousand Dollars ($350,000.00), plus (b) Eighty-Three Thousand Three Hundred Thirty-Three Dollars ($83,333.00) times the number of full or partial months you remain employed by T. Rowe Price in 2017.  This Separation Payment will be treated as supplemental wages for tax purposes, and T. Rowe Price therefore will withhold applicable taxes, including Federal Insurance Contributions Act (“FICA”) taxes and federal, state and local income taxes.  The Separation Payment shall not constitute 

“Eligible Compensation” under the T. Rowe Price U.S. Retirement Program.  You therefore will not be able to make pre-tax contributions from the Separation Payment, and such payment will not serve as the basis for any T. Rowe Price contributions under the U.S. Retirement Program. You will receive the Separation Payment prior to March 15, 2018 -- within thirty (30) days after your Retirement Date.

4.    Confidential Business Information
Throughout your employment with T. Rowe Price, you have been privy to T. Rowe Price’s confidential and proprietary business information, including client, account, and fund information, business plans, strategic plans, marketing strategies, financial, tax and performance information, and other information about the present and proposed business of T. Rowe Price.  Accordingly, you acknowledge and affirm your continuing obligation to keep confidential any and all confidential, trade secret, business, financial, tax or proprietary information that you acquired during your employment with T. Rowe Price.  You shall not disclose any such information to any person or entity outside of T. Rowe Price at any time in the future, and you shall not use any such information for the benefit of anyone other than T. Rowe Price. You also will continue to be bound by any other preexisting agreement or other legal obligation relating to the Company’s proprietary information and your obligation to maintain the confidentiality of the Company’s information.
5.    Post-Employment Cooperation
In the event the Company is or becomes a party to, or is otherwise involved in, any actual or threatened legal proceeding regarding any matter which arose or occurred during the term of your employment with the Company, you specifically agree to make yourself available to, and cooperate with, the Company and its counsel in such proceedings.  You further agree that in the event that you are required by subpoena to provide testimony in any proceeding against or involving the Company, you will provide written notice of such subpoena to:  David Oestreicher, T. Rowe Price Associates, Inc., 100 E. Pratt Street, Baltimore, MD 21202.

6.    No Solicitation of Employees
As further consideration for the opportunity to receive the Separation Payment and other consideration under this Agreement, you agree that for a period of twelve (12) months following the end of your employment with T. Rowe Price, you shall not, either on your own behalf or on behalf of any third party, directly or indirectly:
 (i)    recruit, solicit, encourage or attempt to cause (or in any way assist another in recruiting, soliciting, encouraging or attempting to cause) any employee or consultant of the Company to terminate his or her employment or other relationship with the Company; or
(ii)    hire, employ or seek to employ, or cause, recommend or assist any Competing Business to employ or seek to employ any person who is then (or was at any time within the preceding six (6) months) employed by the Company.  
“Competing Business,” for purposes of this Agreement, shall mean a business that that is engaged in the sale, marketing and/or offering of products and/or services that are similar to or competitive with products or services that are offered by T. Rowe Price to individual and institutional clients.  “Competing Business” includes, but is not limited to, investment advisory and management services for domestic and international clients.

7.    Miscellaneous
(a.)    This letter sets forth the entire Agreement between you and T. Rowe Price with respect to the matters addressed, including the end of your employment, and it supersedes and replaces any prior agreements relating to such matters. You will not receive a bonus for 2017, and you will not be entitled to any bonus, compensation, remuneration, benefits or other payments, except as specifically provided in this Agreement.  This Agreement may not be modified 

except by a new written agreement signed by both you and an authorized representative of T. Rowe Price. Your signature below will confirm that you have not relied on any representation or statement not set forth in this Agreement.  
 (b.)    The validity and construction of this Agreement or of any of its terms or provisions shall be determined under the laws of the State of Maryland, regardless of any principles of conflicts of laws or choice of laws of any jurisdiction.  You agree that the exclusive jurisdiction and venue of any lawsuit arising out of or relating to this Agreement shall be the United States District Court for the District of Maryland, the Circuit Court of Maryland for Baltimore County or another Maryland state court, and you and T. Rowe Price hereby agree, acknowledge and submit to the exclusive jurisdiction and venue of such courts for the purposes of any such lawsuit.
(c.)    The Company does not guarantee any particular tax effect of the provisions of this Agreement. You acknowledge that you are not relying upon advice or representation of the Company with respect to the tax treatment of any payments or benefits during and after your employment.
(d.)    The various section headings are inserted for convenience of reference only and shall not affect the meaning or interpretation of this Agreement or any section thereof. 
I thank you for your years of service to T. Rowe Price, and I look forward to continuing to work with you during the transition.  
Very truly yours,

/s/ William J. Stromberg  
William J. Stromberg 

AGREED AND ACCEPTED:
/s/ Kenneth V. Moreland
Kenneth Moreland
Date: January 30, 2017Exhibit

Exhibit 10.1

PHILIP MORRIS INTERNATIONAL INC.
2012 PERFORMANCE INCENTIVE PLAN 

RESTRICTED STOCK UNIT AGREEMENT
FOR PHILIP MORRIS INTERNATIONAL INC. COMMON STOCK
 (February 2, 2017)

PHILIP MORRIS INTERNATIONAL INC. (the “Company”), a Virginia corporation, hereby grants to the employee identified in the Award Statement (the “Employee”) under the Philip Morris International Inc. 2012 Performance Incentive Plan (the “Plan”), a Restricted Stock Unit Award (the “Award”) dated February 2, 2017 (the “Award Date”) with respect to the number of shares of the Common Stock of the Company (the “Common Stock”) set forth in the Award Statement (the “RSUs”), all in accordance with and subject to the following terms and conditions:

1.    Normal Vesting.  Subject to Section 2 below, the RSUs shall become fully vested on the Vesting Date set forth in the Award Statement (the “Vesting Date”), provided that the Employee remains an employee of the PMI Group during the entire period commencing on the Award Date and ending on the Vesting Date, and provided further that the Employee has complied with all applicable provisions of HSR. 

2.    Termination of Employment Before Vesting Date.  In the event of the termination of the Employee’s employment with the PMI Group prior to the Vesting Date due to (a) death, Disability or Normal Retirement, or (b) early retirement or termination of employment (other than for cause), in either case by mutual agreement and after the Employee has attained age 58, then the RSUs shall become fully vested on the date of (i) death, Disability, Normal Retirement, or (ii) such early retirement or termination of employment or the date specified in such mutual agreement.

Subject to the provisions of section 6(a) of the Plan, if the Employee’s employment with the PMI Group is terminated prior to the Vesting Date for any reason not specified in items (a) or (b) of the preceding paragraph, the Employee shall forfeit all rights to the RSUs.  Notwithstanding the foregoing and except as provided in section 6(a) of the Plan, upon the termination of an Employee’s employment with the PMI Group, the Compensation Committee may, in its sole discretion, vest some or all of the RSUs.

3.    Voting and Dividend Rights.  The Employee does not have the right to vote the RSUs or receive dividends prior to the date, if any, such RSUs are paid to the Employee in the form of Common Stock pursuant to the terms hereof.  However, unless otherwise determined by the Compensation Committee, the Employee shall receive cash amounts (less applicable withholding taxes) equal to the dividends paid from the date the Award is granted through the date of payment under Section 7 with respect to shares of Common Stock issuable with respect to the Award, as such dividends are paid.

4.    Transfer Restrictions.  This Award and the RSUs are non-transferable and may not be assigned, hypothecated or otherwise pledged and shall not be subject to execution, attachment or similar process.  Upon any attempt to effect any such disposition, or upon the levy of any such process, the Award shall immediately become null and void and the RSUs shall be forfeited.  These restrictions shall not apply, however, to any payments received pursuant to Section 7 below. 

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5.    Withholding Taxes.  The Company is authorized to satisfy the actual statutory withholding taxes, or hypothetical withholding tax amounts if applicable, arising from this Award by (a) deducting the number of shares of Common Stock payable under the RSUs having an aggregate value equal to the amount of withholding taxes due from the total number of shares of Common Stock payable under the RSUs becoming subject to current taxation or (b) the remittance of the required amounts from any proceeds realized upon the open-market sale of the Common Stock received in payment of vested RSUs by the Employee.  Shares of Common Stock payable under the RSUs deducted from this Award in satisfaction of tax withholding shall be valued at the Fair Market Value of the Common Stock on the date as of which the amount giving rise to the withholding requirement first became includible in the gross income of the Employee under applicable tax laws. If the Employee is on an international assignment, the Company will calculate the amount of hypothetical tax which will be imposed on the Employee’s RSUs, in accordance with the Company’s guidelines in force at the time the withholding obligation arises.

6.    Death of Employee.  If any of the RSUs shall vest upon the death of the Employee, any Common Stock received in payment of the vested RSUs shall be registered in the name of the estate of the Employee.

7.      Settlement of RSUs.  Each RSU granted pursuant to this Award represents an unfunded and unsecured promise of the Company, subject to the vesting and other terms of this Agreement, to issue to the Employee one share of the Common Stock.  Except as otherwise expressly provided in the Award Statement and subject to the terms of this Agreement, such issuance shall be made to the Employee (or, in the event of his or her death to the Employee’s estate as provided above) as soon as reasonably practicable following the vesting of the RSU pursuant to Section 1 or 2 (and, if the Employee is subject to US Federal income tax, in no event later than March 15 of the calendar year following such Employee’s separation from service, except as otherwise provided in Section 8 below), provided, however, that if the Company determines that settlement in the form of Common Stock is impractical or impermissible under the laws of the Employee’s country of residence, the RSUs will be settled in the form of cash, and provided further that any applicable waiting period under HSR has expired or been terminated.

8.    Special Payment Provisions.  Notwithstanding anything in this Agreement to the contrary, if the Employee is subject to US Federal income tax on any part of the payment of the RSUs, and will become eligible for Normal Retirement (a) for RSUs with a Vesting Date between January 1 and March 15, before the calendar year preceding the Vesting Date and (b) for RSUs with a Vesting Date after March 15, before the calendar year in which such Vesting Date occurs, then the RSUs shall be subject to the following provisions of this Section 8.  If the Employee is a “specified employee” within the meaning of Code section 409A, any payment of RSUs under Section 7 above that is on account of his separation from service and is scheduled to be paid within six months after such separation from service shall accrue without interest and shall be paid as soon as reasonably practicable after the first day of the seventh month beginning after the date of the Employee’s separation from service or, if earlier, as soon as reasonably practicable following the Employee’s death.  During such delayed distribution period, the Employee shall continue to receive cash amounts equal to dividends on Common Stock pursuant to Section 3, and such amounts shall be paid to the Employee as such dividends are paid.  In the event of a “Change in Control” under section 6(b) of the Plan that is not also a “change in control event” with the meaning of Treas. Reg. §1.409A-3(i)(5)(i), the RSUs shall vest as set forth in section 6(a) of the Plan, but shall not be paid upon such Change in Control as provided by section 6(a) of the Plan, and shall instead be paid at the time the RSUs would otherwise be paid pursuant to this Agreement.  References to termination of

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employment and separation from service shall be interpreted to mean a separation from service, within the meaning of Code section 409A, with the Company and all of its affiliates treated as a single employer under Code section 409A.  This Agreement shall be construed in a manner consistent with Code section 409A.

9.    Board Authorization in the Event of Restatement.  Notwithstanding anything in this Agreement to the contrary, if the Board of Directors of the Company or an appropriate Committee of the Board determines that, as a result of fraud, misconduct, a restatement of the Company’s financial statements, or a significant write-off not in the ordinary course affecting the Company’s financial statements, an Employee has received more compensation in connection with this Award than would have been paid absent the fraud, misconduct, write-off or incorrect financial statement, the Board or Committee, in its discretion, shall take such action with respect to this Award as it deems necessary or appropriate to address the events that gave rise to the fraud, misconduct, write-off or restatement and to prevent its recurrence.  Such action may include, to the extent permitted by applicable law, causing the partial or full cancellation of this Award and, with respect to RSUs that have vested, requiring the Employee to repay to the Company the partial or full Fair Market Value of the Award determined at the time of vesting.  The Employee agrees by accepting this Award that the Board or Committee may make such a cancellation, impose such a repayment obligation, or take other necessary or appropriate action in such circumstances.

10.    Other Terms and Definitions.  The terms and provisions of the Plan (a copy of which will be furnished to the Employee upon written request to the Office of the Secretary, Philip Morris International Inc., 120 Park Avenue, New York, New York 10017) are incorporated herein by reference.  To the extent any provision of this Award is inconsistent or in conflict with any term or provision of the Plan, the Plan shall govern. Capitalized terms not otherwise defined herein have the meaning set forth in the Plan.

For purposes of this Agreement, (a) the term “Disability” means permanent and total disability as determined under procedures established by the Company for purposes of the Plan, and (b) the term “Normal Retirement” means retirement from active employment under a pension plan of any member of the PMI Group or under an employment contract with any member of the PMI Group on or after the date specified as the normal retirement age in the pension plan or employment contract, if any, under which the Employee is at that time accruing pension benefits for his or her current service (or, in the absence of a specified  normal retirement age, the age at which pension benefits under such plan or contract become payable without reduction for early commencement and without any requirement of a particular period of prior service).  In any case in which (i) the meaning of “Normal Retirement” is uncertain under the definition contained in the prior sentence or (ii) a termination of employment at or after age 65 would not otherwise constitute “Normal Retirement,” an Employee’s termination of employment shall be treated as a “Normal Retirement” under such circumstances as the Compensation Committee, in its sole discretion, deems equivalent to retirement.  “PMI Group” means the Company and each of its subsidiaries and affiliates.  Generally, for purposes of this Agreement, (x) a “subsidiary” includes only any company in which the Company, directly or indirectly, has a beneficial ownership interest of greater than 50 percent and (y) an “affiliate” includes only any company that (A) has a beneficial ownership interest, directly or indirectly, in the Company of greater than 50 percent or (B) is under common control with the Company through a parent company that, directly or indirectly, has a beneficial ownership interest of greater than 50 percent in both the Company and the affiliate.  “Compensation Committee” means the Compensation and Leadership Development Committee of the Board of Directors of the Company.  “HSR” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,

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as amended.  “Code section 409A” means section 409A of the Internal Revenue Code and the regulations thereunder.

IN WITNESS WHEREOF, this Restricted Stock Unit Agreement has been duly executed as of February 2, 2017.

PHILIP MORRIS INTERNATIONAL INC.
	
		
	

	

/s/ JERRY WHITSON
Jerry Whitson
Deputy General Counsel and Corporate Secretary
Philip Morris International Inc.

 

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