GHL » Topics » EMPLOYMENT, NON-COMPETITION AND PLEDGE AGREEMENTS

This excerpt taken from the GHL DEF 14A filed Mar 10, 2009.
EMPLOYMENT, NON-COMPETITION AND PLEDGE AGREEMENTS
 
We entered into employment, non-competition and pledge agreements with those of our managing directors who were members of Greenhill & Co. Holdings, LLC prior to our initial public offering and non-competition and pledge agreements with those of our U.K.-based managing directors who were partners of Greenhill & Co. International LLP prior to our IPO. Signatories to these agreements include those officers who served as our named executive officers in 2008 other than Mr. Lieb and Mems. Ganz and Ekman. The remaining restrictions on Mr, Liu pursuant to his employment, non-competition and pledge agreement will expire on March 14, 2009. Accordingly, the references in this section to “managing director” only include those managing directors (Messrs. Bok, Borrows, Niehaus and Rodriguez); we also refer to those managing directors in this section as the “covered managing directors”. The following are descriptions of the material terms of (1) each such employment, non-competition and pledge agreement and (2) each such non-competition and pledge agreement (other than the base salary, benefits, confidentiality, termination of employment and transfer of client relationships provisions described below which are not included in the non-competition and pledge agreements), including any amounts or time periods that are specific to our named executive officers. With the exception of the few differences noted in the description below, the terms of each employment, non-competition and pledge agreement and non-competition and pledge agreement are in relevant part identical.
 
Each employment, non-competition and pledge agreement and each non-competition and pledge agreement (other than the base salary, benefits, termination of employment and transfer of client relationships provisions, which are not included in the non-competition and pledge agreements) provides as follows:
 
Base Salary.  Each covered managing director who devotes 100% of his time to Greenhill will be paid an annual base salary of $600,000. The amount of each covered managing director’s annual salary is subject to annual review by the Compensation Committee. In addition, a covered managing director may be awarded an annual bonus in an amount determined in the sole discretion of the Compensation Committee.
 
Benefits.  Each covered managing director will be entitled to participate in all of our employee retirement and welfare benefit plans, including, without limitation, our group health, dental and life insurance plans, 401(k) savings plan, profit sharing plan and equity incentive plan.
 
Confidentiality.  Each covered managing director is required to protect and use “confidential information” in accordance with the restrictions placed by us on its use and disclosure.
 
Non-competition.  During the period ending 12 months after the date a covered managing director ceases to provide services to us, or in the case of all initial members of the Management


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Committee, during the period ending 24 months after the date such managing director ceases to provide services to us, that covered managing director may not:
 
  ○   form, or acquire a 5% or greater ownership, voting or profit participation interest in, any competitive enterprise; or
 
  ○   engage in any business activity in which we operate.
 
“Competitive enterprise” means any business (or business unit) that engages in any activity in which we or any of our subsidiaries engage at the time such covered managing director ceases to provide services to us, including investment banking financial advisory services and merchant-banking and related services. These restrictions on competition will expire in May 2009. As a result, any covered managing director who continues to provide services to us then will no longer be subject to the non-competition restrictions. However, any covered managing director whose service with us terminates prior to May 11, 2009 will remain subject to the non-competition restrictions until the expiration of that covered managing director’s 12-month or 24-month restriction period following his or her termination of service with us, unless the covered managing director’s service with us has been terminated without cause in connection with a Change in Control and the covered managing director will then no longer be subject to the non-competition restrictions. “Change in Control” is defined in our equity incentive plan. We have also entered into non-competition agreements on similar terms with our post-IPO managing directors (including Mr. Lieb and Ms. Ekman) that expire six months following the termination of employment.
 
In addition to the provisions relating to non-competition in the agreements described above, that portion of any new grants of restricted stock units which remains unvested at retirement is subject to forfeiture (as defined in the Equity Incentive Plan) unless the retiring managing director enters into a senior advisor agreement with us. The terms of the senior advisor agreement will provide, among other things, that for the three year period during which a retired managing director serves as a senior advisor, he will not compete with us (on the same terms as described above). The non-compete provision in the senior advisor agreement (if and when entered into) would effectively extend the non-compete provisions described above for a period of three years.
 
Non-solicitation.  During the period ending 12 months after the date a covered managing director ceases to provide services to us (or 6 months in the case of Mr. Lieb and Ms. Ekman), that managing director may not, directly or indirectly, in any manner solicit any of our employees (at an associate or above level) to apply for, or accept employment with, any competitive enterprise.
 
Liquidated Damages.  In the case of any breach of the non-competition or non-solicitation provisions, the breaching managing director will be liable for liquidated damages. The amount of liquidated damages for each named executive officer (other than Mr. Lieb and Mems. Ganz and Ekman) is as follows:
 
  ○   Scott L. Bok: $18.8 million
 
  ○   Simon A. Borrows: $18.8 million
 
  ○   Robert H. Niehaus: $14.2 million
 
  ○   Harold J. Rodriguez, Jr.: $2.0 million
 
For each of the other covered managing directors, the amount of liquidated damages is between $2.0 million and $18.8 million.
 
Pledge in Connection with Liquidated Damages.  The liquidated damages provision in each covered managing director’s employment, non-competition and pledge agreement or non-competition and pledge agreement, as applicable, will be secured by a pledge of our common stock owned by that managing director (including through indirect ownership and ownership through affiliated entities), subject to a minimum pledge of our common stock generally with a value equal to the liquidated


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damages amounts described above. Each pledge of our common stock will terminate on the earliest to occur of:
 
  ○   the death of the relevant managing director;
 
  ○   the expiration of the 12-month period or 24-month period, as applicable, following the termination of the service of the relevant managing director or, if the relevant managing director’s service with us was terminated without cause in connection with a Change in Control (as defined in the equity incentive plan described below), on the date of the managing director’s termination of service; or
 
  ○   May 11, 2009 (unless service has been terminated earlier).
 
These liquidated damages are in addition to the forfeiture of any future equity-based awards that may occur as a result of the breach of any non-competition or non-solicitation provisions contained in those awards.
 
Transfer of Client Relationships.  Each covered managing director is required, upon cessation of his or her services, to take all actions and do all things reasonably requested by us to maintain for us the business, goodwill and business relationships with our clients with which he or she worked.
 
Termination of Employment.  Each employment, non-competition and pledge agreement may generally be terminated by either that covered managing director or us on 90 days’ prior written notice, subject to the continuing survival of the non-competition, non-solicitation, liquidated damages, transfer of client relationships and confidentiality provisions described above, to the extent applicable.
 
Nonexclusivity.  The liquidated damages and pledge arrangements discussed above are not exclusive of any injunctive relief to which we may be entitled for a breach of the non-competition provisions.
 


EMPLOYMENT, NON-COMPETITION AND PLEDGE AGREEMENTS

     We entered into employment, non-competition and pledge agreements with those or our managing directors who were members of Greenhill & Co. Holdings, LLC prior to our initial public offering and non-competition and pledge agreements with those of our U.K.-based managing directors who were partners of Greenhill & Co. International LLP prior to our IPO, which include our named executive officers. Accordingly, the references in this section to “managing director” only include those managing directors; we also refer to those managing directors in this section as the “covered managing directors”. The following are descriptions of the material terms of (1) each such employment, non-competition and pledge agreement and (2) each such non-competition and pledge agreement (other than the base salary, benefits, confidentiality, termination of employment and transfer of client relationships provisions described below which are not included in the non-competition and pledge agreements), including any amounts or time periods that are specific to our named executive officers. With the exception of the few differences noted in the description below, the terms of each employment, non-competition and pledge agreement and non-competition and pledge agreement are in relevant part identical.

     Each employment, non-competition and pledge agreement and each non-competition and pledge agreement (other than the base salary, benefits, termination of employment and transfer of client relationships provisions, which are not included in the non-competition and pledge agreements) provide as follows:

     Base Salary. Each covered managing director who devotes 100% of his time to Greenhill will be paid an annual base salary of $600,000. The amount of each covered managing director's annual salary is subject to annual review by the Compensation Committee. In addition, a covered managing director may be awarded an annual bonus in an amount determined in the sole discretion of the Compensation Committee.

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     Benefits. Each covered managing director will be entitled to participate in all of our employee retirement and welfare benefit plans, including, without limitation, our group health, dental and life insurance plans, 401(k) savings plan, profit sharing plan and equity incentive plan.

     Confidentiality. Each covered managing director is required to protect and use “confidential information” in accordance with the restrictions placed by us on its use and disclosure.

     Non-competition. During the period ending 12 months after the date a covered managing director ceases to provide services to us, or in the case of all initial members of the Management Committee (each of whom will be a member of our Management Committee at the time of the consummation of this public offering), during the period ending 24 months after the date such managing director ceases to provide services to us, that covered managing director may not:

  • form, or acquire a 5% or greater ownership, voting or profit participation interest in, any competitive enterprise; or

  • engage in any business activity in which we operate.

     “Competitive enterprise” means any business (or business unit) that engages in any activity in which we or any of our subsidiaries engage at the time such covered managing director ceases to provide services to us, including investment banking financial advisory services and merchant-banking and related services. These restrictions on competition will expire in 2009. As a result, any covered managing director who continues to provide services to us then will no longer be subject to the non-competition restrictions. However, any covered managing director whose service with us has terminated prior to May 11, 2009 will remain subject to the non-competition restrictions until the expiration of that covered managing director's 12-month or 24-month restriction period following his or her termination of service with us, unless the covered managing director's service with us has been terminated without cause in connection with a Change in Control and the covered managing director will then no longer be subject to the non-competition restrictions. “Change in Control” is defined in our equity incentive plan.

     Non-solicitation. During the period ending 12 months after the date a covered managing director ceases to provide services to us, that managing director may not, directly or indirectly, in any manner solicit any of our employees (at an associate or above level) to apply for, or accept employment with, any competitive enterprise.

     Liquidated Damages. In the case of any breach of the non-competition or non-solicitation provisions, the breaching managing director will be liable for liquidated damages. The amount of liquidated damages for each named executive officer is as follows:

  • Robert F. Greenhill: $56.6 million

  • Scott L. Bok: $18.8 million

  • Simon A. Borrows: $18.8 million

  • Robert H. Niehaus: $14.2 million

  • John D. Liu: $2.0 million

     For each of the other covered managing directors, the amount of liquidated damages is between $2.0 million and $18.8 million.

     Pledge in Connection with Liquidated Damages. The liquidated damages provision in each covered managing director's employment, non-competition and pledge agreement or non-competition and pledge agreement, as applicable, will be secured by a pledge of our common stock owned by that managing director (including through indirect ownership and ownership through affiliated entities), subject to a minimum pledge of our common stock with an initial value equal to the lesser of (1) the greater of $2,000,000 and that managing director's percentage ownership in Greenhill & Co. Holdings, LLC prior to its conversion to corporate form multiplied by $200,000,000 and (2) the value of 50% of our common stock owned by that managing director (including through indirect

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ownership and ownership through affiliated entities) at the time of the consummation of the IPO. Each pledge of our common stock will terminate on the earliest to occur of:

  • the death of the relevant managing director;

  • the expiration of the 12-month period or 24-month period, as applicable, following the termination of the service of the relevant managing director or, if the relevant managing director's service with us was terminated without cause in connection with a Change in Control (as defined in the equity incentive plan described below), on the date of the managing director's termination of service; or

  • May 11, 2009 (unless service has been terminated earlier).

     These liquidated damages are in addition to the forfeiture of any future equity-based awards that may occur as a result of the breach of any non-competition or non-solicitation provisions contained in those awards.

     Transfer of Client Relationships. Each covered managing director is required, upon cessation of his or her services, to take all actions and do all things reasonably requested by us to maintain for us the business, goodwill and business relationships with our clients with which he or she worked.

     Termination of Employment. Each employment, non-competition and pledge agreement may generally be terminated by either that covered managing director or us on 90 days' prior written notice, subject to the continuing survival of the non-competition, non-solicitation, liquidated damages, transfer of client relationships and confidentiality provisions described above, to the extent applicable.

     Nonexclusivity. The liquidated damages and pledge arrangements discussed above are not exclusive of any injunctive relief to which we may be entitled for a breach of the non-competition provisions.

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