TESS » Topics » Employment Agreements

This excerpt taken from the TESS DEF 14A filed Jun 19, 2006.
Employment Agreements

Mr. Barnhill.   Pursuant to the terms of an employment agreement between the Company and Mr. Barnhill entered into in March 1994, as amended, Mr. Barnhill is employed as Chairman of the Board, President and Chief Executive Officer of the Company at a current annual base salary of $450,000, and is eligible for additional cash bonuses in accordance with the Company’s Reward for Results Program. The Reward for Results Program is designed to reward the Company’s officers based upon the growth in the Company’s earnings per share and improvement in other key individual and corporate performance measures. The employment agreement provides for an initial term of three years, and, unless the Board of Directors notifies Mr. Barnhill otherwise before the end of any calendar year, the term of the agreement automatically renews daily for the succeeding three-year period.

 

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The employment agreement also provides for (i) the establishment of a supplemental executive retirement plan, which will provide Mr. Barnhill with a $75,000 annual pension benefit payable upon Mr. Barnhill’s retirement, termination of employment for reasons other than cause (as defined in the employment agreement) or attainment of age 62, and (ii) a long-term disability policy providing Mr. Barnhill with a benefit equal to not less than 70% of his annual base salary. In addition, as required by the employment agreement, the Company had since April 1994 paid the premiums on a $2,000,000 second-to-die split-dollar life insurance policy on Mr. Barnhill and his spouse. Because of then proposed changes in the income tax regulations relating to the tax treatment of split-dollar insurance policies, and because of concerns that continuing the split-dollar arrangement, as required by the employment agreement, would violate the Sarbanes-Oxley Act of 2002, the Company and Mr. Barnhill agreed, effective May 2003 to terminate the split-dollar arrangement, and in order to afford Mr. Barnhill an equivalent after-tax benefit, to amend the employment agreement to provide for an additional annual payment to Mr. Barnhill (for as long as the Company is required to fund a comparable life insurance policy) of approximately $65,000.

In the event of the termination of Mr. Barnhill’s employment for certain reasons, including death, disability or a termination resulting from a change in control of the Company (as defined in the employment agreement), the employment agreement provides for payment to Mr. Barnhill, when and as due, of the total salary payable to him for the next three years, plus bonuses to which he would have been entitled had he remained in the employ of the Company during the three-year period. In addition, Mr. Barnhill would be entitled to receive the employee benefits he would have received during such three-year period or an after-tax payment in an amount equal to the value of such benefits.

The Compensation Committee is currently considering possible changes to Mr. Barnhill’s employment arrangements. At present, the Committee’s focus is to update Mr. Barnhill’s annual base salary (which has not changed since 2000) and to provide for an extended employment term to better assure Mr. Barnhill’s active long-range participation in the pursuit of initiatives currently underway, the development and execution of new initiatives and the formulation and implementation of a leadership succession and transition plan.

Senior Vice Presidents.   The Company is also party to employment letter agreements with each of its Senior Vice Presidents.  Each is entitled to receive performance based bonuses in accordance with the Company’s Reward for Results Program, and is provided severance payments of up to six months salary, depending upon the date of termination of employment, in the event that their employment is terminated by the Company “without good cause” or by them for “good reason,” as such terms are defined in the employment letter agreements.

This excerpt taken from the TESS DEF 14A filed Jun 16, 2005.
Employment Agreements

Mr. Barnhill.   Pursuant to the terms of an employment agreement between the Company and Mr. Barnhill entered into in March 1994, as amended, Mr. Barnhill is employed as Chairman of the Board, President and Chief Executive Officer of the Company at a current annual base salary of $450,000, and is eligible for additional cash bonuses in accordance with the Company’s Reward for Results Program. The Reward for Results Program is designed to reward the Company’s officers based upon the growth in the Company’s earnings per share and improvement in other key individual and corporate performance measures. The employment agreement provides for an initial term of three years, and, unless the Board of Directors notifies Mr. Barnhill otherwise before the end of any calendar year, the term of the agreement automatically renews daily for the succeeding three-year period.

The employment agreement also provides for (i) the establishment of a supplemental executive retirement plan, which will provide Mr. Barnhill with a $75,000 annual pension benefit payable upon Mr. Barnhill’s retirement, termination of employment for reasons other than cause (as defined in the employment agreement) or attainment of age 62, and (ii) a long-term disability policy providing Mr. Barnhill with a benefit equal to not less than 70% of his annual base salary. In addition, as required by the employment agreement, the Company had since April 1994 paid the premiums on a $2,000,000 second-to-die split-dollar life insurance policy on Mr. Barnhill and his spouse. Because of then proposed changes in the income tax regulations relating to the tax treatment of split-dollar insurance policies, and because of concerns that continuing the split-dollar arrangement, as required by the employment agreement, would violate the Sarbanes-Oxley Act of 2002, the Company and Mr. Barnhill agreed, effective May 2003 to terminate the split-dollar arrangement, and in order to afford Mr. Barnhill an equivalent after-tax benefit, to amend the employment agreement to provide for an additional annual payment to Mr. Barnhill (for as long as the Company is required to fund a comparable life insurance policy) of approximately $65,000.

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In the event of the termination of Mr. Barnhill’s employment for certain reasons, including death, disability or a termination resulting from a change in control of the Company (as defined in the employment agreement), the employment agreement provides for payment to Mr. Barnhill, when and as due, of the total salary payable to him for the next three years, plus bonuses to which he would have been entitled had he remained in the employ of the Company during the three-year period. In addition, Mr. Barnhill would be entitled to receive the employee benefits he would have received during such three-year period or an after-tax payment in an amount equal to the value of such benefits.

Senior Vice Presidents.   The Company is also party to employment letter agreements with each of its Senior Vice Presidents. Each is entitled to receive performance based bonuses in accordance with the Company’s Reward for Results Program, and provide for severance payments of six months salary, depending upon the date of termination of employment, in the event that their employment is terminated by the Company “without good cause” or by them for “good reason”, as such terms are defined in the employment letter agreements.

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