Document:

Exhibit 10.1

 

 

August 20, 2013

 

Alan J. M. Haughie

Dear Alan,

 

We are pleased to extend to you this offer of employment for the position of Senior Vice President and Chief Financial Officer of The ServiceMaster Company.  In this position, you will report to Rob Gillette, Chief Executive Officer.  Your effective start date will be a date to be mutually agreed upon.

 

Base Salary

 

Your Base Salary in this position will be at an annual rate of $550,000.00.  This will be paid on the 15th and the last business day of each month.

 

Merit Increase Eligibility

 

ServiceMaster has a pay for performance philosophy.  An annual merit increase is based on the annual performance review for the current calendar year and is effective the following April 1.  If you are hired on or before October 31, you will be eligible to receive a merit increase the following April.  If hired on or after November 1, you will not be eligible for a merit increase during the upcoming merit review process.

 

Annual Bonus Plan (ABP)

 

In this position, you will be eligible to participate in the 2013 Annual Bonus Plan, as amended (“ABP”), with a Target of 70% of your Base Salary.  Any payout is generally in mid-March of the following year, subject to all thresholds and requirements of the ABP, including applicable individual performance goals and targets.  In lieu of your actual 2013 ABP payout, you will be paid the guaranteed amount of $350,000, payable no later than 30 days following your hire date.  For subsequent years, you will be eligible to receive an annual bonus with a Target of 70% of your Base Salary.

 

Sign-On Bonus

 

You will receive a $250,000 sign-on bonus payable 30 days following your hire date.  You will be required to sign a Sign-On Bonus Repayment Agreement, with a two-year term, included with your new hire paperwork.

 

Equity

 

Upon approval by the Compensation Committee of the Board of Directors, you will have the opportunity to participate in the ServiceMaster Global Holdings, Inc. Stock Incentive Plan, as

 

 

amended and restated (“MSIP”), by investing up to an aggregate value of $1,000,000 with a minimum required investment of $500,000 at the next offering of the sale of shares following your start date.  The value of the shares at the time of your purchase will be the Fair Market Value (as defined in the MSIP documents), as determined by the Compensation Committee of the Board of Directors.  The number of shares you receive will be determined by dividing the amount of your investment by the Fair Market Value per share.

 

Upon approval by the Compensation Committee, you will also be granted four (4) options for each share purchased.  Each option will have a strike price equal to the Fair Market Value of a share of stock at the time of the grant of the options.

 

Upon approval by the Compensation Committee, you will also be granted 75,000 restricted stock units (RSUs) that will vest in equal installments on the first three anniversaries of the date of the grant.

 

Additional information on the MSIP, including the MSIP documents, will be provided to you.

 

All compensation, including Base Salary, bonus and incentive payments will be subject to applicable payroll withholding and deductions.  The Company reserves the right, in its sole discretion, to at any time revise, modify, suspend, or withdraw any compensation, ABP, MSIP or other bonus plans, as to participation level, payout metrics, eligibility, timing or other features of the plan.

 

Paid Time Off

 

You are also eligible for four weeks (twenty business days) vacation in addition to personal days, sick time and holidays.  Please refer to your associate handbook for details about time off accruals and observed holidays.

 

Benefits

 

ServiceMaster offers you a comprehensive and flexible benefits package that allows you to choose coverage that best meets your needs.  Regular, full-time associates are eligible to participate in medical, dental, vision, disability and life insurance, the legal services plan, and reimbursement accounts.  Coverage for most plans is effective the first of the month following or coincident with three consecutive months of service; however, disability coverage is effective the day following the completion of twelve consecutive months of service.  The ServiceMaster LifeManagement Program—ServiceMaster’s EAP—is available to you and your immediate family members on your first day of employment.

 

The ServiceMaster Profit Sharing and Retirement Plan provides you a convenient way to save for retirement.  You will be automatically enrolled in the 401(k) at a 3% contribution rate after completing 90 days of service.  You may increase, decrease, or stop your 401(k) contributions at any time before or after your automatic contributions to the plan begin.

 

ServiceMaster will reimburse you for the cost of your COBRA benefit continuation coverage until your ServiceMaster benefit coverage effective date.  If you choose to not enroll in ServiceMaster’s benefits, your COBRA reimbursement will not continue beyond your ServiceMaster coverage effective date.

 

2

 

Additional information on all health and welfare and retirement benefits will be mailed to your home address approximately six weeks after your date of hire.

 

Relocation

 

You will receive the Tier 4 relocation package per the attached relocation policy.  You will be required to sign a Relocation Repayment Agreement, included with your new hire paperwork.  Please contact Andrea Hough, who will be handling your relocation, at 901-597-7822 if you have any questions.

 

Conditions of Employment

 

This offer of employment is contingent upon successfully passing a drug-screening test and criminal background check, and education verification if applicable.  This offer is also contingent upon the completion of verification of the facts you have provided on your application for employment and for I-9 purposes.

 

This offer of employment is also contingent on your execution of a ServiceMaster Non-Compete/Non-Solicitation/Confidentiality agreement (enclosed) and your agreement to utilize ServiceMaster’s alternative dispute resolution program We Listen to resolve any and all work-related disputes/concerns and to arbitrate such disputes if they are not resolved (enclosed).

 

This letter shall not constitute an employment contract and nothing herein changes your status as an “at-will” employee.

 

If you have any questions please do not hesitate to call me at 901-597-2350 or Jed Norden at 901-597-1852.  Please return your signed offer letter, along with the completed enclosures, to me within seven (7) days of the date of this offer letter.

 

Alan, we look forward to having you as a key member of the ServiceMaster team.  Our success hinges upon the people who make up our organization and we are excited about the strength you will lend to our team.

 

	
Sincerely,   
    	
 
    
	
 
    	
 
    
	
/s/   Robert J. Gillette
    	
 
    
	
Robert J.   Gillette
    	
 
    
	
Chief   Executive Officer
    	
 
    

 

I accept this offer of employment under the terms and conditions set forth above.

 

	
Signature:
    	
/s/   Alan J. M. Haughie
    	
 
    	
Date:
    	
August 26,   2013
    

 

3Exhibit 10.2

 

 

Mr. Alan Haughie

Senior Vice President & Chief Financial Officer

 

Subject:  Severance Agreement

 

Dear Alan:

 

This letter agreement (the “Agreement”) embodies the understanding between Alan Haughie (“Executive”) and The ServiceMaster Company (the “Company”) regarding any future separation or severance payments by the Company to which Executive may become entitled in connection with a future termination of employment with the Company and its affiliates.

 

1.                                      Severance Benefits.

 

(a)           In the event that (i) Executive’s employment with the Company and its affiliates is terminated at any time by the Company without Cause or by Executive for Good Reason, then the Company shall, subject to the below terms, restrictions and conditions, pay the following to Executive as severance pay (the “Severance Pay”):

 

(i)            An amount equal to twelve times Executive’s monthly base salary in effect as of the Termination Date (as defined below) (the “Monthly Salary”); plus

 

(ii)           An amount equal to Executive’s then current year’s annual bonus at target (the “Target Bonus”), pursuant to the terms of the then Annual Bonus Plan (the “ABP”); plus

 

(iii)          An amount equivalent to the pro-rata percentage of Executive’s then current annual bonus target pursuant to the ABP based on actual Plan Year performance, if the Termination Date is after June 30th, payable when annual bonuses are generally payable pursuant to the ABP (currently in March of the following year); plus

 

(iv)          An amount equal to twelve times the Executive’s monthly cost for health care continuation coverage for those eligible plans (such as medical and prescription drug, dental and vision coverage) in place immediately before the termination, to be paid on the sixtieth (60th) day after termination.

 

The Monthly Salary and the Target Bonus shall be aggregated as a single sum (the “Period Payment”), and such sum shall be paid in 12 equal monthly installments over a 12 month period starting on the first practicable payroll date after the severance agreement referred to in Section 2 has become irrevocable (the date of Executive’s termination of employment, the “Termination Date”, and such 12 month period, the “Severance Payment Period”); provided, that if the 22-day period plus the applicable statutory revocation period begins in one calendar year and ends in a subsequent calendar year, the Severance Payment Period shall begin in the subsequent calendar year.  All payments hereunder are subject to normal Federal, state and/or local income tax or

 

 

other lawful withholding.  Executive may not elect to defer or accelerate any payment hereunder.  If Executive’s employment is terminated by the Company for “Cause” (defined in Exhibit A hereto) or Executive terminates his employment without “Good Reason” (defined in Exhibit A hereto), the Company shall not be obligated to make any payments hereunder.  In addition, if on the Termination Date, (x) Executive is a “specified employee,” as defined in Treasury Regulation Section 1.409A-1(i) and determined using the identification methodology selected by the Company from time to time, or if none, the default methodology and (y) any stock of the Company or an affiliate thereof is publicly traded on an established securities market or otherwise, then any or all amounts payable under this Agreement on account of such termination of employment that would (but for this provision) be payable within six months following the Termination Date, shall instead be paid in a lump sum on the first day of the seventh month following the Termination Date or, if earlier, upon Executive’s death, except to the extent of amounts that are not subject to the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

 

(b)                                 Recoupment.  Executive agrees that he shall be subject to such “clawback” or “recoupment” policies as may be adopted by the Company’s Board of Directors for senior executives or named executive officers generally from time to time.

 

(c)                                  Executive’s entitlements under all other compensation or benefit plans, programs or policies of the Company and its affiliates shall be governed by their respective plan documents and are not modified or changed by this Agreement.  Without limiting the generality of the preceding sentence, to the extent necessary for compliance with Section 409A of the Code, the applicable provision relating to time and form of payment under any deferred compensation plan shall control over the any provision relating to time and form of payment under this Agreement.

 

2.                                      Additional Severance Conditions.

 

(a)                                 Release; Non-competition.  In the event the Company is obligated to make payments pursuant to this Agreement, it shall be a condition to such payments that Executive must, within 22 days after the Termination Date, enter into a severance agreement in accordance with the Company’s then current practice, which shall include (a) a general release waiving any and all claims against the Company, its subsidiaries, their affiliates and their respective officers, directors, employees, agents, representatives, stockholders, members and partners, (excluding claims for indemnification and claims based on Executive’s purchased stock of the Company, subject to the applicable stock purchase or option agreement),  (b) a 12-month non-compete and non-solicitation provision consistent with the Company’s then current practice, and (c) perpetual confidentiality and non-disparagement clauses.

 

(b)                                 Notice of Termination. Executive shall provide the Company with thirty (30) days’ advance written notice of his intention to terminate his employment for any reason.  In such event, the Company may elect to waive all or any portion of such notice and deem the termination to be immediately effective.

 

(c)                                  Covenants.  Executive is currently bound by the following policies and agreements, which shall not be amended nor superseded by this Agreement:

 

 

(i)                                     Code of Ethics and Business Conduct.  Executive has been provided or have access through the Company’s intranet site to, and agrees to abide by, the Company Code of Ethics and Business Conduct.

 

(ii)                                  Non-Compete/Non-Solicit/Confidentiality.  Executive is subject to a separate agreement covering his obligations to not compete or solicit employees or customers, and confidentiality obligations as to information he has learned or had access to during his employment.

 

3.                                      Additional Requirements.

 

(a)                                 Litigation and Regulatory Cooperation.  During and after Executive’s employment, Executive shall cooperate fully with the Company in the defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of the Company or its affiliates that relate to events or occurrences that transpired while Executive was employed by the Company.

 

(b)                                 Successors and Assigns. This Agreement shall inure to the benefit of and be enforceable by the Company and its successors and assigns and by Executive and Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  In addition, the Company may, upon notice to Executive, assign this Agreement to an affiliate of the Company without the consent of Executive and, following any such assignment, shall be relieved of any right or obligation under this Agreement (whereupon such affiliate shall be “the Company” for purposes of this Agreement).  For purposes of this Agreement, an “affiliate” of the Company shall mean any person that controls, is controlled by, or is under common control with the Company.

 

(c)                                  Notices.  All notices and other communications required or permitted under this Agreement (including the notice required by the definition of Good Reason as set forth in Exhibit A) shall be in writing, shall be given by personal delivery, overnight delivery by an established courier service, or by certified mail, return receipt required, and shall be deemed to have been duly given when delivered, addressed, if to Executive, at his address in the records of the Company, and to the Company to: ServiceMaster Global Holdings, Inc., c/o The ServiceMaster Company, 860 Ridge Lake Blvd., Memphis, TN 38120, attention Senior Vice President, Human Resources, or to such other address as party may have furnished to the other in writing.

 

(d)                                 Entire Agreement; Modification. Except as otherwise specified herein, this Agreement and the Exhibit constitute the entire agreement and understanding between the parties, and supersedes and preempts any prior understandings, agreements or representations by or between the parties, written or oral, relating to severance or separation pay.  No provision of this Agreement may be modified or waived unless such modification or waiver is agreed to in writing and signed by Executive and a Senior Vice President, who is not Executive.  No waiver by either party of a breach or condition of this Agreement shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  Failure by Executive or the Company to insist upon strict compliance with any provision of this Agreement or to assert any right which Executive or the Company may have shall not be deemed to be a

 

 

waiver of such provision or right or any other provision or right of this Agreement. References to “hereunder”, “hereto” or “herein” shall be deemed to be references to this Agreement as a whole and as amended from time to time.

 

(e)                                  Governing Law; Validity. The interpretation, construction and performance of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Tennessee without regard to the principle of conflicts of laws. The invalidity or enforceability of any provision of this Agreement shall not affect the validity or enforceability of any of the other provisions of this Agreement, which other provisions shall remain in full force and effect.

 

(f)                                   Mandatory Arbitration of Disputes.  Executive acknowledges that he is subject to the We Listen Dispute Resolution Plan and agrees that any and all disputes or complaints must be resolved solely by resort to We Listen which includes a waiver of any right to bring a case in court or to a jury.

 

(g)                                  No Guarantee of Continued Employment.  This Agreement shall not constitute an employment contract for a fixed term or otherwise change Executive’s status as an at-will employee.  No provision of this Agreement shall be construed to impair the right of the Company and Executive to elect to terminate Executive’s employment at any time and for any reason or no reason.

 

(h)                                 Counsel.  Executive acknowledges that he has been advised to consult his own legal counsel, financial and tax advisors, and has had an opportunity to consult them before signing this Agreement.

 

(i)                                     Income Taxation: Executive understands that the Company has not provided any advice regarding the tax liability resulting from this Agreement and he shall not rely upon any representations or policies of the Company related to taxation. Executive is advised to seek the advice of his own personal tax advisor or counsel as to the taxability of the Severance Pay.  The Company specifically disclaims that it has responsibility for the proper calculation or payment of any taxes which may be due other than for standard statutory withholding.  For purposes of any payment under this Agreement that constitutes deferred compensation subject to Section 409A of the Code, “termination of employment” and correlative phrases, mean a “separation from service” as defined in Treasury Regulation section 1.409A-1(h), other than a termination upon Executive’s death.  The payments pursuant to this Agreement are intended to be exempt from Section 409A to the maximum extent possible, under either the separation pay exemption pursuant to Treasury Regulation section 1.409A-1(b)(9)(iii) or as short-term deferrals pursuant to Treasury Regulation section 1.409A-1(b)(4).  If Executive is subject to Section 409A, he shall be solely responsible for any such taxes which would result in the imposition of additional tax under Section 409A.  All separation benefits will be payable in accordance with the payment schedule applicable to each payment or benefit, and any discretion as to the timing of such payment shall be exercised solely by the Company.  For these purposes, each installment payment and benefit payable under this Agreement is hereby designated as a separate payment and will not collectively be treated as a single payment.

 

[signature page follows]

 

 

IN WITNESS WHEREOF, the Company and Executive have executed this Agreement effective as of August 26, 2013.

 

	
EXECUTIVE  
    	
THE SERVICEMASTER COMPANY   
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/ Alan J. M. Haughie
    	
 
    	
/s/ Jed Norden
    
	
Alan J. M. Haughie
    	
 
    	
By: Jed Norden
    
	
 
    	
Title: Senior Vice President
    

 

 

Exhibit A

 

As used in this Agreement, the following terms shall have the respective meanings set forth below:

 

(a) “Cause” means:

 

(1) a material breach by Executive of his duties and responsibilities (other than as a result of incapacity due to physical or mental illness) which is demonstrably willful and deliberate on Executive’s part, which is committed in bad faith or without reasonable belief that such breach is in the best interests of the Company and which is not remedied within thirty (30) days after receipt of written notice from the Company specifying such breach; or

 

(2) the commission by Executive of a felony or misdemeanor (whether or not a felony) involving any act of fraud, embezzlement, or dishonesty, or any other intentional misconduct by Executive that adversely and significantly affects the business affairs or reputation of the Company or an affiliated company; or

 

(3) any failure by Executive to cooperate with any investigation or inquiry into Executive’s business practices, whether internal or external, including, but not limited to, Executive’s refusal to be deposed or to provide testimony at any trial or inquiry.

 

(b) “Good Reason” means, without Executive’s consent, the occurrence of any of the following events:

 

1.              any reduction in any material respect in Executive’s position(s), authorities or responsibilities as the Senior Vice President & Chief Financial Officer of the Company; or

 

2.              a reduction in Executive’s Base Salary or target annual bonus percentage, each as in effect on the date hereof or as the same maybe increased from time to time thereafter, other than reductions that are proportionate to reductions applicable to senior executives of the Company generally.

 

If Executive determines that Good Reason exists, Executive must notify ServiceMaster in writing, within ninety (90) days following Executive’s knowledge of the first event which Executive determines constitutes Good Reason, or such event shall not constitute Good Reason under the terms of Executive’s employment. If ServiceMaster remedies such event within thirty (30) days following receipt of such notice, Executive may not terminate employment for Good Reason as a result of such event.

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