SIAL » Topics » Employment Agreement with Dr. Harvey

This excerpt taken from the SIAL 8-K filed Jan 19, 2006.

Employment Agreement with Dr. Harvey

 

On January 16, 2006, Sigma-Aldrich Corporation, a Delaware corporation (the “Company”), entered into an employment agreement, effective January 1, 2006, (the “Harvey Employment Agreement”) with David R. Harvey for an initial term extending through the annual general meeting of the stockholders of the Company in May 2006 of the Company, and may be extended by written agreement for successive additional one-year periods. Under the Harvey Employment Agreement, Dr. Harvey will serve as the Company’s Chairman or in any other capacity, as determined by the Board of Directors.

 

Pursuant to the Harvey Employment Agreement, Dr. Harvey will receive a minimum annual base salary of $250,000. In addition, Dr. Harvey will be entitled to participate in all retirement, disability, pension, savings, health, medical and dental insurances and other fringe benefits or plans of the Company generally available to executive employees. Dr. Harvey will not be granted a bonus pursuant to the Harvey Employment Agreement, but may be granted stock options when the Company considers granting stock options to management employees generally, provided, however, that any such option award granted to Dr. Harvey will be granted with an exercise price equal to the fair market value on the date of grant and will provide that Dr. Harvey will have the right to exercise the unexercised portion of any such option at any time during the period equal to the lesser of five years from the date of Dr. Harvey’s retirement from the Company or the remaining term of the award.

 

If the Company terminates Dr. Harvey’s employment for Cause (as defined in the Harvey Employment Agreement) or Dr. Harvey voluntarily terminates his employment prior to the end of the employment period, Dr. Harvey will receive his base salary through the date of termination but will not be entitled to any severance compensation or to any further base salary or benefits, unless otherwise provided by the applicable benefit plan or program. If the Company terminates Dr. Harvey’s employment without Cause, Dr. Harvey will receive all accrued and unpaid base salary as of the date of termination but will not be entitled to any severance compensation or to any further base salary or benefits, unless otherwise provided by the applicable benefit plan or program. The Company’s obligations will not be subject to offset to the extent Dr. Harvey receives compensation from any subsequent employer.

 

The Company’s obligations under the Harvey Employment Agreement will terminate on the last day of the month in which Dr. Harvey dies or on the date as of which he first becomes entitled to receive disability benefits under the Company’s long-term disability plan. The Company will pay to Dr. Harvey or his estate all accrued and unpaid base salary as of such date.

 

If any payment or distribution by the Company to Dr. Harvey would be subject to excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), then the payments will be decreased to the greatest amount that could be paid to Dr. Harvey such that receipt of the payments would not give rise to any such excise tax.

 

Dr. Harvey is also subject to current and post-employment confidentiality restrictions and non-competition and non-solicitation covenants during and for two years following his employment.

 

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The Harvey Employment Agreement provides that Dr. Harvey will use his best efforts both during and after his employment with the Company to protect the confidential, trade secret and/or proprietary character of the Company’s confidential information. In addition, Dr. Harvey may not compete with the Company, directly or indirectly, and may not solicit the Company’s customers or employees at any time during his employment or for two years following the termination of his employment. Pursuant to the Harvey Employment Agreement, Dr. Harvey will also disclose and assign his right in all of his work-related ideas, inventions and discoveries to the Company except for patents currently held by Dr. Harvey developed outside of his employment with the Company.

 

This excerpt taken from the SIAL DEF 14A filed Mar 29, 2005.

Employment Agreement with Dr. Harvey

 

The Company entered into an employment agreement, effective January 1, 2003, (the “Employment Agreement”) with Dr. Harvey for an initial term extending through January 1, 2006, with automatic one-year renewal periods thereafter unless 180 days prior notice is provided. Under the Employment Agreement, Dr. Harvey will serve as the Company’s Chief Executive Officer or in any other capacity, as determined by the Board of Directors. On February 10, 2004, the Employment Agreement was amended (the “Employment Agreement as amended”).

 

Pursuant to the Employment Agreement as amended, Dr. Harvey will receive a minimum annual base salary of $725,000, be eligible to participate in the Company’s annual cash bonus program and be eligible for annual performance bonuses (with an initial target bonus of 66.6% of his annual base salary). In addition, Dr. Harvey will be entitled to participate in all retirement, disability, pension, savings, medical and dental insurances and other fringe benefits or plans of the Company generally available to employees. The Compensation Committee will review Dr. Harvey’s annual base salary and bonus opportunity each year but may not reduce Dr. Harvey’s base salary below $725,000. During the two-year period commencing on a Change of Control (as defined in the Employment Agreement as amended), Dr. Harvey’s base salary and bonus opportunity may not be reduced below the level established by the Compensation Committee immediately prior to the Change of Control.

 

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Pursuant to the Employment Agreement as amended, the Compensation Committee granted to Dr. Harvey options to purchase 40,000 shares of Common Stock at an exercise price of $57.96 equal to the fair market value of the Common Stock on February 10, 2004 and 25,900 shares of restricted Common Stock on February 10, 2004. Dr. Harvey also has a performance bonus award under which he may earn up to $1,000,000 cash as of January 1, 2006. One-half of these awards will vest on January 1, 2006 if Dr. Harvey is still employed by the Company, and all or a portion of the other half of the awards will vest on January 1, 2006 if Dr. Harvey is still employed by the Company and the Company achieves performance goals established by the Board of Directors. The performance goals will be based upon the Company’s performance equal to or better than the average performance of its peers with respect to one or more or a combination of revenue growth, earnings per share growth and growth in operating cash flow. The Board of Directors may modify the peer group annually, or may determine that the Company’s performance will be measured against a weighted market basket index of companies in the three sectors corresponding to the Company’s business – life sciences, biotechnology and chemicals. These three sectors will be appropriately weighted to reflect the percentage of the Company’s business in each such sector. In determining performance of the Company relative to its peers, the Board of Directors in its discretion will make appropriate adjustments for acquisitions or divestitures, unusual or nonrecurring items which have a material effect and the impact of currency adjustments.

 

If the Company achieves the targeted level of performance in calendar years 2003, 2004, and/or 2005, 16-2/3% of the package will vest for each year such performance is achieved provided Dr. Harvey is employed on January 1, 2006. Even if the Company does not achieve the targeted level of performance in each of 2003, 2004, and 2005, the other half of the package will nonetheless vest in full if Dr. Harvey is employed on January 1, 2006 and the Company achieves the targeted level of performance for the three-year period beginning January 1, 2003 and ending January 1, 2006.

 

The vesting of the awards will be accelerated if within 24 months after a Change of Control Dr. Harvey’s employment is involuntarily terminated by the Company or if Dr. Harvey terminates his employment for Good Reason (as defined in the Employment Agreement as amended). A pro rata portion of the awards will vest in the event of the termination of Dr. Harvey’s employment as a result of his death or disability prior to January 1, 2006. A pro rata portion of 50% of the awards shall vest in the event of Dr. Harvey’s involuntary termination with Cause (as defined in the Employment Agreement as amended) prior to January 1, 2006.

 

If the Company terminates Dr. Harvey’s employment for Cause or Dr. Harvey voluntarily terminates his employment without Good Reason (as defined in the Employment Agreement as amended) prior to the end of the employment period, Dr. Harvey will receive his base salary through the date of termination but will not be entitled to any severance compensation or to any further base salary, bonus or benefits, unless otherwise provided by the applicable benefit plan or program. If the Company terminates Dr. Harvey’s employment without Cause before or more than 24 months following a Change of Control (excluding any involuntary termination which is a direct result of a Change of Control and which occurs within 60 days before a Change of Control), Dr. Harvey will receive all accrued and unpaid base salary as of the date of termination and severance pay equal to one year of base salary and paid in installments over one year. If, within 24 months after a Change of Control or within 60 days before a Change of Control in the event of an involuntary termination without Cause which is a direct result of the Change of Control, the Company terminates Dr. Harvey’s employment without Cause or Dr. Harvey terminates his employment with Good Reason, Dr. Harvey will receive all accrued and unpaid base salary as of the date of termination and severance pay equal to three years of base salary paid in installments over three years. All payments will be subject to deductions for customary withholdings, including federal and state withholding taxes and social security taxes.

 

The Company’s obligations will not be subject to offset to the extent Dr. Harvey receives compensation from any subsequent employer.

 

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The Company’s obligations under the Employment Agreement as amended will terminate on the last day of the month in which Dr. Harvey dies or on the date as of which he first becomes entitled to receive disability benefits under the Company’s long-term disability plan. The Company will pay to Dr. Harvey or his estate all accrued and unpaid base salary as of such date.

 

If any payment or distribution by the Company to Dr. Harvey would be subject to excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended, then the payments will be decreased to the greatest amount that could be paid to Dr. Harvey such that receipt of the payments would not give rise to any such excise tax.

 

Dr. Harvey is also subject to current and post-employment confidentiality restrictions and non-competition and non-solicitation covenants during and for two years following his employment. The Employment Agreement as amended provides that Dr. Harvey will use his best efforts both during and after his employment with the Company to protect the confidential, trade secret and/or proprietary character of the Company’s confidential information. In addition, Dr. Harvey may not compete with the Company, directly or indirectly, and may not solicit the Company’s customers or employees at any time during his employment or for two years following the termination of his employment. Pursuant to the Employment Agreement as amended, Dr. Harvey will also disclose and assign his right in all of his work-related ideas, inventions and discoveries to the Company except for patents currently held by Dr. Harvey developed outside of his employment with the Company.

 

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