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Verizon - General Counsel Employment Agreement
EXHIBIT 10z
1095 Avenue of the Americas
New York, NY 10036 April 8, 2003
William P. Barr 1200 Daleview Drive McLean, Virginia 22102
Dear Bill:
I am pleased to offer you this new employment agreement (the "Agreement") with Verizon Communications Inc. ("Verizon"). For purposes of this Agreement, the term "Company" means Verizon, all corporate subsidiaries and other companies affiliated with Verizon, all companies in which Verizon has an ownership or other proprietary interest of more than 10 percent, and their successors and assigns.
As set forth in paragraphs 3 ("Term") and 28 ("Entire Agreement"), below, this Agreement shall not become effective before July 1, 2003, and your current employment agreement with the Company, dated November 2, 2000 (the "Prior Agreement"), shall remain in effect until that date. Should your employment with Verizon end for any reason before July 1, 2003, the terms of the Prior Agreement shall control your and the Company's rights and obligations in connection with your termination of employment, and this Agreement shall be null and void.
The many opportunities and challenges facing the Company are enormous and exciting. As a leader in our industry, we will be constantly challenged with sustaining our market growth and presence. We will meet these challenges by leveraging the strength of our talented and committed leaders. This Agreement demonstrates my continued confidence in you.
I value you and the leadership, vision, and commitment you bring to the Company. I am excited by the prospect of you continuing as a key member of the Company's leadership team.
The terms and conditions of this Agreement are set forth below.
1. PURPOSE - Verizon enters into this Agreement with you because the rapidly-changing and increasingly global telecommunications market requires the Company to make critical strategic, marketing, and technical decisions. These decisions by the Company will be based, in whole or in part, on confidential analyses of the evolving telecommunications market, confidential assessments of
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the technical capabilities and strategic plans of the Company and competing businesses, and confidential or proprietary information regarding the Company's technology, resources, and business opportunities or other confidential or proprietary information relating to the Company's business. Verizon seeks by this Agreement to ensure that you remain a part of the executive management team that plays a central role in this decision-making process.
In consideration for your entering into this Agreement, including the restrictions on the disclosure and use of confidential or proprietary information and the limitations on your engaging in competitive activities, the Company is providing you with the security of a written agreement with a term that will always be two years, short- and long-term award opportunities, and other benefits.
2. GENERAL - Under this Agreement, you shall continue as Executive Vice President and General Counsel of Verizon. As Executive Vice President and General Counsel, you shall report to the Chief Executive Officer of Verizon (the "CEO").
3. TERM - The term of employment under this Agreement ("Term of Employment") shall commence on July 1, 2003, and end on June 30, 2005; provided that, commencing on July 1, 2003, and on each day thereafter, the remaining Term of Employment shall at all times be two years. For example, on August 1, 2003, the Term of Employment shall end on July 31, 2005. Notwithstanding the preceding provisions of this paragraph 3, (a) as provided in paragraph 28 ("Entire Agreement"), should your employment with Verizon end before July 1, 2003, the Term of Employment shall not commence, and this Agreement shall be null and void, and (b) the Company reserves the right to terminate your employment and the Term of Employment at any time. Your employment and the Term of Employment also may terminate for other reasons (such as your resignation, retirement, death, or disability). The consequences of the termination of your employment are specified in paragraph 11 ("Termination Of Employment").
4. DUTIES AND RESPONSIBILITIES - Subject to the provisions of paragraph 11(d) ("Termination For Good Reason"), you shall continue to serve as Executive Vice President and General Counsel of Verizon, and you shall perform all duties incidental to such positions, shall cooperate fully with the CEO or his successor, and shall work cooperatively with the other officers of the Company. You shall continue to devote your entire business skill, time, and effort diligently to the affairs of the Company in accordance with the duties assigned to you, and you shall perform all such duties, and otherwise conduct yourself, in a manner reasonably
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calculated in good faith by you to promote the best interests of the Company. During the Term of Employment, except to the extent specifically permitted in writing by the CEO or his successor, and except for memberships on boards of directors that you hold on July 1, 2003 (the effective date of this Agreement), you shall not, directly or indirectly, render any services of a business, commercial, or professional nature to any other person or organization other than the Company or a person or organization in which the Company has a financial interest, whether or not the services are rendered for compensation.
5. LOCATION - During the Term of Employment, you shall perform services for the Company in both Washington, D.C., and at Verizon's New York City headquarters, or at any other location designated by the Company as necessary or appropriate for the discharge of your responsibilities under this Agreement. In the event of any change in your principal work location, you shall be eligible for relocation assistance under the terms of any Company relocation policy applicable to other senior executives of the Company at the time of such relocation. In addition, a change in your principal work location could qualify as a "Good Reason" in accordance with paragraph (3) of Exhibit B hereto.
6. BASE SALARY - During the Term of Employment, your annual base salary shall not be less than your annual base salary on June 30, 2003. Beginning January 1, 2004, the Human Resources Committee of Verizon's Board of Directors or its designee shall review your base salary at least annually.
7. BONUS OPPORTUNITIES - During the Term of Employment, the Company shall provide you with annual short-term and long-term bonus opportunities. While you are not guaranteed an annual short-term or long-term bonus in any amount, (a) the value of your annual short-term bonus opportunity shall not be less than 75 percent of your then-current base salary, and (b) the value of your annual long-term bonus opportunity shall not be less than 425 percent of your then-current base salary.
8. BENEFITS AND PERQUISITES - (a) IN GENERAL - For the immediate future, you shall-
(1) participate in the tax-qualified and nonqualified
retirement plans in which you currently participate
(including, but not limited to, the Verizon Income
Deferral Plan (the "IDP"));
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(2) be eligible for the perquisites available to other
senior executives in your peer group; and
(3) participate in the other employee benefit plans,
programs, and policies in which you currently
participate, including medical, dental, and life
insurance plans;
provided that the Company retains the right to amend or terminate any benefit plan, policy, program, or perquisite at any time. In any event, during the Term of Employment, you shall be eligible for the same flexible spending account and financial planning benefits that are provided to other senior executives in your peer group.
(b) ANNUAL PHYSICAL - You are encouraged to take an annual physical examination from a physician at the Company's expense and to certify in writing to the Company's designee each year (1) that you have had the examination and (2) the nature and extent of any medical impairments that prevent you from currently performing the essential functions of your position.
(c) ADDITIONAL BENEFIT CREDIT - Consistent with the terms of your Prior Agreement, you shall start the Term of Employment credited with eighteen years of service, for purposes of receiving benefits and for vesting, retirement eligibility, benefit accrual, and all other purposes under all of the Company's benefit and compensation plans, programs, and policies (including, but not limited to, health, life insurance, and stock plans, but excluding the Company's pension and short-term and long-term disability plans) in which you participated on June 30, 2003, or any successors thereto. The additional benefit credit described in the preceding sentence is not provided under the Company's pension plans (both qualified and non-qualified) because additional pension benefit credit pursuant to paragraph 10(c) of the Prior Agreement was included in the calculation of the GTE Supplemental Executive Retirement Plan conversion credit added to your Retirement Contribution Sub-Account in the IDP as of January 1, 2002 (the "SERP Conversion Credit"), therefore, this benefit will not be duplicated in any future calculation. Your credit for service after June 30, 2003, shall be determined in accordance with the Company's applicable service-crediting rules for all purposes under all Company benefit and compensation plans, programs, and policies. In addition, consistent with the terms of your Prior Agreement, you shall start the Term of Employment deemed to have satisfied the Rule of 75 for purposes of determining your right to benefits under all of the Company's benefit and compensation plans, programs, and policies (including, but not limited to, the Company's Long-Term
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Incentive Plan, the Company's Retiree Medical Plan, the IDP and the Company's Executive Life Insurance Plan) in which you participated on June 30, 2003, or any successors thereto. For purposes of the preceding sentence, you and the Company agree and acknowledge that your pension benefit under the Company's management pension plan will be calculated pursuant to the cash-balance formula.
(d) POST-TERMINATION LIFE AND MEDICAL INSURANCE - The Company shall provide you, at the Company's expense, for a period beginning on the date of your termination of employment with the Company, the same medical, dental, and life insurance coverage as was in effect on the date of your termination from employment. Such coverage shall end upon the expiration of 24 months after your termination of employment. For purposes of this paragraph 8(d), "at the Company's expense" means that the Company shall make all contributions or premium payments required to obtain coverage, and that you shall not make any such contributions or premium payments, but that you shall be subject to any deductibles and co-payment provisions in effect immediately before the termination of employment.
9. SPECIAL RETENTION ACCOUNT PROGRAM - Pursuant to the Prior Agreement, the Company established a Special Retention Account on your behalf under the GTE Executive Salary Deferral Plan, which was subsequently transferred to the IDP. As of the effective date of this Agreement, you are entitled to the entire balance in your Special Retention Account and it shall not be subject to offset or forfeiture. Your rights to the balance in your Special Retention Account following your termination of employment or otherwise shall be governed by the provisions of the IDP that apply to your "Employee Balance" (as that term is defined in Section 2.01(p) of the IDP) in the IDP, except that you shall not be entitled to receive payments of your Special Retention Account until after your separation from service from the Company (for any reason) and provided that upon your voluntary termination of employment with the Company (including your retirement) you have given the CEO at least 30 calendar days' (exclusive of vacation days) advanced written notice of your intent to terminate employment with the Company. Your rights to the balance in your Special Retention Account following the termination of your employment shall not be governed by the terms of paragraphs 11 ("Termination of Employment") and 12 ("Release"), the terms of the IDP applicable to other employees with Special Retention Accounts, or the terms of Exhibit C to the Prior Agreement.
10. EXCISE TAX GROSS-UP - Under certain circumstances you may become entitled to a gross-up payment with respect to the excise tax imposed by section
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4999 of the Internal Revenue Code (the "Code"). The terms governing the gross-up payment are set forth in Exhibit A, which is incorporated herein by reference.
11. TERMINATION OF EMPLOYMENT - (a) VOLUNTARY TERMINATION BY YOU - Since you are currently eligible to retire, the consequences of any voluntary termination of employment by you shall be governed by paragraph 11(c) ("Retirement"), except as otherwise provided in paragraph 11(d) ("Termination For Good Reason").
(b) TERMINATION DUE TO DEATH OR DISABILITY - If, during the Term of Employment, you terminate employment because of death or disability (as defined under the Company-sponsored long-term disability plan that applies to you at the time your employment is so terminated),
(1) The Company shall make a lump-sum cash payment
to you equal to the excess of (i) 100 percent of
your base salary, 50 percent of your maximum
short-term bonus opportunity, and 100 percent of
your long-term bonus opportunity for two years,
over (ii) any amounts payable to you under any
Company-sponsored disability plan (excluding any
amounts payable to you under any Company-sponsored
deferred compensation plan, such as the IDP) during
the two years following your termination of
employment. For this purpose, your base salary
shall be based on your base salary rate in effect
immediately before your employment terminated; your
annual maximum short-term bonus opportunity shall
be equal to 150 percent of your annual base salary
in effect immediately before your employment
terminated; and your annual long-term bonus
opportunity shall be equal to 425 percent of your
annual base salary in effect immediately before
your employment terminated. If your long-term bonus
is subject to a performance target, it shall be
assumed that the target is met;
(2) Your unvested stock options shall immediately vest,
and you may exercise all then-outstanding stock
options at any time up to the earlier of (i) the
fifth anniversary of the date your employment
terminates
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(or any later date prescribed by the terms of
the option relating to termination of
employment) or (ii) the expiration of the
option;
(3) Your unvested Performance Share Retention Units
shall vest to the extent prescribed by the
provisions of paragraph 8(d) of Exhibit B to the
Prior Agreement; and
(4) Any unvested performance stock units shall vest
to the extent prescribed by the provisions of
any applicable performance stock unit agreement
that you may enter into with the Company on and
after January 1, 2003.
provided that if you terminate employment because of death, your rights under this subparagraph (b) shall pass to your estate or to a beneficiary that you have designated in writing (and in a form and manner acceptable to the Company) before your death.
(c) RETIREMENT - If, during the Term of Employment, you terminate employment by reason of Retirement (as defined below) you shall be entitled to accelerated vesting of all outstanding stock options (other than the Founders' Grant), and to exercise all then-outstanding stock options (excluding nonvested Founders' Grant options) until the earlier of (1) the fifth anniversary of the date your employment terminates (or any later date prescribed by the terms of the option relating to termination of employment) or (2) the expiration of the option. For purposes of this Agreement, "Retirement" means retirement under the terms of the Verizon Management Pension Plan. Except as provided by the preceding provisions of this subparagraph (c), upon the effective date of your Retirement, your base salary and any other Company benefits and perquisites shall cease to accrue; provided that you shall otherwise be eligible to receive any and all compensation and benefits for which a similarly situated senior executive would be eligible under the applicable provisions of the compensation and benefit plans in which he is then eligible to participate, as those plans may be amended from time to time.
(d) TERMINATION FOR GOOD REASON - (1) You may terminate your employment under this Agreement for Good Reason by giving the CEO 30 calendar days' (exclusive of vacation days) in advance of such termination (the "Notice Period") written notice of your intent to so terminate, setting forth in reasonable detail the facts and circumstances deemed to provide a basis for such termination.
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For purposes of this Agreement, "Good Reason" has the meaning prescribed by Exhibit B, which is incorporated herein by reference.
(2) Notwithstanding the foregoing, the Company shall have 15 calendar days from its receipt of such notice to cure the action specified in the notice. In the event of a cure by the Company within the 15-day period, the action in question shall not constitute Good Reason.
(3) Except as provided in subparagraph (d)(2), above, at the end of the Notice Period, the Good Reason termination shall take effect, and your obligation to serve the Company, and the Company's obligation to employ you, under the terms of this Agreement shall terminate simultaneously, and you shall be deemed to have incurred an Involuntary Termination Without Cause, with the consequences described in subparagraph (e), below; provided that your rights under this subparagraph (d) (other than those specified in subparagraph (e)(2) and (3)) are contingent on your execution of a release in accordance with paragraph 12 ("Release").
(4) If you do not fulfill the notice and explanation requirements imposed by this subparagraph (d), the resulting termination of employment shall be deemed a Retirement.
(e) INVOLUNTARY TERMINATION WITHOUT CAUSE - The Company may terminate your employment under this Agreement at any time and for any reason. However, if the Company terminates your employment for any reason other than death, disability, or Cause (as defined in subparagraph (f), below), such termination shall be deemed an Involuntary Termination by the Company, and you shall be entitled to receive the following payments and benefits in lieu of any payment or benefit otherwise provided pursuant to paragraphs 6 ("Base Salary") through 8(c) ("Prior Awards"):
(1) The Company shall make a lump-sum cash payment to you
equal to the excess of (i) 100 percent of your base
salary, 50 percent of your maximum short-term bonus
opportunity, and 100 percent of your long-term bonus
opportunity for two years, over (ii) any amounts
payable to you under any Company-sponsored severance
plan, program, policy, contract, account, or
arrangement (excluding any amounts payable to you
under Company-sponsored deferred compensation plans,
such as the IDP) during the two years following your
termination of employment. For this purpose, your
William P. Barr April 8, 2003 Page 9
base salary shall be based on your base salary rate
in effect immediately before your employment
terminated; your annual maximum short-term bonus
opportunity shall be equal to 150 percent of your
annual base salary in effect immediately before your
employment terminated; and your annual long-term
bonus opportunity shall be equal to 425 percent of
your annual base salary in effect immediately before
your employment terminated. If your long-term bonus
is subject to a performance target, it shall be
assumed for this purpose that the target is met;
(2) Your unvested stock options, including the Founders'
Grant, shall immediately vest, and you may exercise
all of your then-outstanding stock options at any
time up to the earlier of (i) the fifth anniversary
of the date your employment terminates (or any later
date prescribed by the terms of the option relating
to termination of employment) or (ii) the expiration
of the option;
(3) Your Performance Share Retention Units shall vest to
the extent prescribed by the provisions of paragraph
8(b) of Exhibit B to the Prior Agreement;
(4) Any unvested performance stock units shall vest to
the extent prescribed by the provisions of any
applicable performance stock unit agreement that you
may enter into with the Company on or after January
1, 2003; and
(5) You shall be eligible for outplacement services to
the extent that such services are then available to
senior executives of the Company;
provided that your rights under this subparagraph (e) (other than those specified in clauses (2) and (3), above) are contingent on your execution of a release in accordance with paragraph 12 ("Release").
(f) INVOLUNTARY TERMINATION FOR CAUSE - (1) Nothing in this Agreement prevents the Company from terminating your employment under this Agreement for Cause. In the event of your termination for Cause, the Company shall pay you your full accrued base salary and accrued vacation time through the date of your termination, and the Company shall have no further obligations under
William P. Barr April 8, 2003 Page 10
this Agreement; provided that you shall otherwise be eligible to receive any and all compensation and benefits for which a similarly situated senior executive would be eligible under the applicable provisions of the compensation and benefit plans in which he is then eligible to participate, as those plans may be amended from time to time.
(2) For purposes of this Agreement, "Cause" is defined as (i) grossly incompetent performance or substantial or continuing inattention to or neglect of the duties and responsibilities assigned to you; fraud, misappropriation or embezzlement involving the Company or a material breach of any provision incorporated in paragraph 13 ("Covenants"), as determined by the CEO in his reasonable discretion, or (ii) commission of any felony of which you are finally adjudged guilty by a court of competent jurisdiction.
(3) If the Company terminates your employment for Cause, the Company shall provide you with a written statement of the grounds for such termination within 10 business days after the date of termination.
12. RELEASE - You shall not be entitled to any benefits under this Agreement following the termination of your employment unless, at the time your employment terminates and to the extent required by this Agreement, you execute a release satisfactory to the Company releasing the Company, its affiliates, shareholders, directors, officers, employees, representatives, and agents and their successors and assigns from any and all employment-related claims you or your successors and beneficiaries might then have against them (excluding any claims you might then have under this Agreement (including the Exhibits hereto), the IDP, or any employee benefit plan that is subject to the vesting standards imposed by the Employee Retirement Income Security Act of 1974, as amended). This paragraph 12 shall not apply if your employment is terminated by reason of your death, disability, or Retirement.
13. COVENANTS - In consideration for the benefits and agreements described above, you agree to comply with the covenants set forth in Exhibit C hereto, which is incorporated herein by reference.
14. REQUEST FOR WAIVER - Nothing in this Agreement bars you from requesting, at the time of your termination of employment or at any time thereafter, that the CEO, in his sole discretion, waive in writing the Company's rights to enforce some or all of the provisions incorporated in paragraph 13 ("Covenants").
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15. OTHER AGREEMENTS AND POLICIES - The obligations imposed on you by paragraph 13 ("Covenants") are in addition to, and not in lieu of, any and all other policies and agreements of the Company regarding the subject matter of the foregoing obligations.
16. NONDUPLICATION OF BENEFITS - No provision of this Agreement shall require the Company to provide you with any payment, benefit, or grant that duplicates any payment, benefit, or grant that you are entitled to receive under any Company compensation or benefit plan, award agreement, or other arrangement.
17. OTHER COMPANY PLANS - Except to the extent otherwise explicitly provided by this Agreement, any awards made to you under any Company compensation or benefit plan or program shall be governed by the terms of that plan or program and any applicable award agreement thereunder as in effect from time to time. Notwithstanding the foregoing, you shall not be entitled to participate in any Company compensation or benefit plan that is established after your employment with the Company terminates, and except as specifically provided in this Agreement, you shall not be entitled to any additional grants or awards under any Company compensation or benefit plan after your employment with the Company terminates. The amounts paid, provided, or credited under this Agreement shall not be treated as compensation for purposes of determining any benefits payable under any Company-sponsored pension, savings, life insurance, or other employee benefit plan except to the extent provided by the terms o...
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