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| 8-K - FORM 8K - SMITHFIELD FOODS INC | form_8k.htm |
RETIREMENT AGREEMENT AND
GENERAL RELEASE
This
RETIREMENT AGREEMENT AND GENERAL RELEASE (“Agreement”) dated as of August 9,
2010, is made by and between Smithfield Foods, Inc., a Virginia Corporation (the
“Company”), and Richard J. M. Poulson (“Executive”). The Company and
Executive may be referred to collectively herein from time to time as “the
Parties.”
WHEREAS,
Executive has been employed by the Company in a senior management capacity since
June 1998 and currently serves as an Executive Vice President; and
WHEREAS,
Executive and the Company have mutually agreed that Executive shall retire from
employment with the Company, resign as an officer of the Company and be removed
from the Company’s active payroll effective as of September 1, 2010 (the
“Retirement Date”); and
WHEREAS,
the Parties have agreed to the terms and conditions relating to the termination
of Executive’s employment with the Company as set forth herein; and
NOW,
THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the Parties agree as follows:
1. Effective Date of
Agreement. This Agreement shall become effective and
enforceable on the date on which it is executed by the Parties (the “Effective
Date”). Once effective, all of the terms, conditions, benefits and
restrictions of this Agreement shall be fully enforceable and binding on the
Parties.
2. Separation of
Employment.
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a.
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Executive
agrees to resign his employment and any positions and/or titles he holds
with the Company and its subsidiaries and affiliates, including but not
limited to his office and title of Executive Vice President, effective as
of the Retirement Date. From and after the Retirement Date, the Executive
shall have no further duties or responsibilities to be performed for the
Company or any of its subsidiaries or affiliates, other than as specified
herein, and shall have no authority to act or endeavor to act on behalf of
the Company or any of its subsidiaries or affiliates for any reason
whatsoever.
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b.
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Executive
agrees to fully cooperate with the Company in transitioning his present
duties and responsibilities to the appropriate Company personnel between
the Effective Date and the Retirement
Date.
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c.
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Executive
will not receive any compensation or benefits from the Company after the
Retirement Date, except as expressly provided in Section 3
below. Executive and the Company each agree that valid
consideration exists for the promises contained in this Agreement, it
being specifically acknowledged by Executive that, subsequent to his
retirement from the Company, the Company would not otherwise be required
to undertake some or all of the obligations set forth in Sections 3(b)
through 3(k) below except in accordance with the terms of this
Agreement.
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3. Payments and Benefits to
Executive.
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a.
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The
Company shall pay to Executive all unpaid salary, benefits and other
compensation accrued as of the Retirement Date, including but not limited
to deferred compensation and qualified retirement benefits, as
outlined in Schedules A, B and C hereto, provided that payment of the
Executive’s SERP benefits shall commence immediately after the expiration
of six months from the Retirement
Date.
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b.
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The
Company shall pay to Executive the amount of $50,000.00 (Fifty Thousand
Dollars) per month, less applicable deductions, for eight (8) consecutive
months, with the first such payment on September 30, 2010 and the last
such payment on April 30, 2011. These are considered to
be separate payments for purposes of Internal Revenue Code Section
409A.
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c.
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The
Company shall permit Executive to remain eligible to participate in any
Company life insurance plans in which Executive was enrolled immediately
prior to the Retirement Date through April 30,
2011.
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d.
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The
Company shall afford Executive the continued use of his Company vehicle
through April 30, 2011. The Company shall reimburse Executive
for all reasonable repairs, maintenance and fees associated with his usage
of this car in accordance with Company policy through April 30,
2011. Executive agrees to return his Company vehicle to the
Company on that
date.
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e.
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Executive
shall cease accruing service under the Company’s pension and other benefit
plans (and Executive’s eligibility to make contributions to the Company’s
401(k) plan shall end) on the Retirement
Date.
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f.
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Executive
may elect to continue his current health insurance coverage (including
group medical, dental and vision benefits) under COBRA and the Company
agrees to reimburse Executive for the amount of the employee portion of
the COBRA premium from the Retirement Date through April 30, 2011. As of
May 1, 2011, Executive will be afforded continued COBRA coverage for an
additional eighteen (18) months at his own expense. Executive understands
and agrees that the Company’s obligation to reimburse him for his COBRA
premium shall expire upon the Executive’s obtaining any new employment
that provides health insurance coverage substantially equivalent to the
health insurance coverage then in effect for Company employees. Executive
agrees to promptly notify the Company upon obtaining any new employment.
Executive further agrees that, should he fail to notify the Company of his
new employment and collect any payment from the Company under this
section after having commenced such new employment, the Company shall
be entitled to a reimbursement from Executive of any amount that it paid
to Executive after the expiration of its obligation under this
section.
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g.
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With
respect to Executive’s outstanding stock options listed on Schedule A
attached hereto, the Company agrees that: (1) the unvested
portion of the July 6, 2009 award shall fully vest on the Retirement Date
and (2) the 90-day post-termination exercise period applicable to all such
stock options shall be waived so that Executive may continue to hold and
exercise such options through their stated normal 7- or 10-year expiration
date.
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h.
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With
respect to Executive’s outstanding performance share units (“PSUs”) listed
on Schedule B, the Company agrees that notwithstanding any provision of
such PSU awards to the contrary, Executive shall be fully vested in (1)
6,500 of the PSUs dated June 16, 2008, which are divided into five equal
portions or tranches of 1,300 PSUs each, each portion with a different
stock price target as provided therein, (2) 66,667 of the PSUs dated July
6, 2009, (3) 33,333 of the PSUs dated December 8, 2009, and (4) 12,500 of
the PSUs dated June 15, 2010. Payment under all such vested
PSUs shall remain subject to the satisfaction of the performance goals
contained therein and shall be made at the time or times provided in the
PSU
grants.
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i.
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The
Company shall maintain full Directors and Officers liability insurance
coverage for Executive at the Company’s expense and shall indemnify
Executive as to all matters arising from or relating to events occurring
prior to the Retirement Date to the same extent as it indemnifies other
directors and officers of the
Company.
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4. Access to Company Records
and Resources. On and after the Retirement Date, Executive
shall have no further access to, or the use of, Company records, documents,
equipment, personnel or other assets.
5. Waiver, Release of Claims,
and Covenant Not to Sue.
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a.
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Executive,
for himself, his agents, personal representatives, heirs and assigns,
hereby unconditionally releases and forever discharges the Company and all
of its affiliated entities and subsidiaries, as well as their respective
officers, directors, partners, owners, employees, agents, representatives,
financial advisors, predecessors and successors, whether in their
individual or representative capacities (collectively “Released Parties”)
from all liability for any acts, occurrences or omissions arising out of
or connected in any way with Executive’s employment, or termination of
employment, by the Company and any of its affiliates or subsidiaries, or
any other matter relating to the Company or its business, both as to
matters now known and those discovered hereafter. The foregoing
includes, but is not limited to, any and all claims for monetary relief,
injunctive relief, back pay, fringe benefits, attorney fees, costs, and
employment or reinstatement, that could have been raised under common law,
including wrongful discharge, breach of any contractual rights, both
express or implied, breach of any covenant of good faith and fair dealing,
both express or implied, any tort, any claim of invasion of privacy, any
legal restrictions on the Released Parties’ rights to terminate employees,
and any federal, state, or other governmental statute, regulation,
ordinance, or directive. The foregoing also includes any and
all claims Executive could have brought or could bring as a shareholder,
partner, member, director or officer of any of the Released
Parties. Executive covenants not to sue the Released Parties
with respect to any of the released claims or potential claims described
above. The foregoing release does not waive or infringe:
(i) Executive’s right to receive retirement benefits or other vested
benefits to the extent he is eligible for such benefits pursuant to the
terms of any applicable retirement or benefit plan; (ii) any rights
to vested stock or PSUs described in Section 3; (iii) any
indemnification rights of Executive under the Company’s charter, by-laws
and/or insurance; and (iv) Executive’s rights pursuant to this
Agreement.
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b.
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Executive
further represents and agrees that Executive has not filed in any state,
federal, or local court or with any state, federal or other governmental
agency or entity or any administrative tribunal, or any arbitration forum,
any claim or complaint of whatever kind or nature, whether in Executive’s
own capacity or otherwise, and is not aware that he is a member of a class
in any action that has been filed, based upon any rights, privileges,
entitlements or benefits arising out of or related to Executive’s
employment with the Company, and that any remedies for such claims or
complaints Executive might have standing to assert are released by this
Agreement. Executive further agrees that, other than pursuant
to valid subpoena, process, or court order commanding attendance or
testimony, Executive shall not: (1) assist any other person or entity, in
any judicial, administrative, arbitral or other proceedings that in any
way involve or relate to Executive’s employment with the Company, and
shall not (2) voluntarily participate or assist in, any such litigation or
proceeding of any nature brought by or on behalf of any present or
previous employee or agent of the Company, unless requested by the
Company, or except as may be required by law. Executive
understands that he may file claims with the Equal Employment Opportunity
Commission or its federal or state equivalent, but Executive acknowledges
that he has irrevocably waived any right to recovery against the Company
in connection with such claims or
activities.
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6. Confidentiality.
Executive shall keep confidential all secret or confidential information,
knowledge or data relating to the Company or any of its subsidiaries, joint
ventures or other affiliated companies which shall have been learned or obtained
by Executive during Executive’s employment by the Company, except for such
information, knowledge or data which becomes public knowledge (other than as a
result of any act by Executive or any of his representatives in violation of
this Agreement). Executive shall not, without the prior written
consent of the Company or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those designated by it. As used herein, the term
“confidential information,” means and includes any and all confidential
information (whether recorded in documentary form or by electronic or other
means) relating to the Company’s (or any of its affiliated companies’) assets,
properties or investments; business methods; corporate, strategic development,
acquisition, marketing and other business plans and objectives; management and
Board discussions and analyses; financial results, condition and projections;
litigation; political and public affairs; financing plans, methods and
strategies; employees, officers, directors, shareholders, customers, suppliers
or other affiliates; and any other
information to which the Company attaches an equivalent level of confidentiality
or in respect of which the Company owes an obligation of confidentiality to any
third party, knowledge of which Executive acquired at any time during his
employment by the Company or any of its affiliated companies and which is not
readily ascertainable to persons not connected with the Company either at all or
without significant expenditure of labor, skill or money. The
nondisclosure obligation set forth in this paragraph is in addition to
Executive’s fiduciary, statutory and other common law duties to maintain the
confidentiality of the Company’s confidential information and, to the extent not
otherwise provided herein, the Company’s trade secrets.
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7. Agreement Not To Compete;
Non-Solicitation. The Company has agreed to provide the payments and
benefits set forth in this Agreement only on the condition that Executive accept
certain post-employment restrictions with respect to his post-retirement
employment related activities. Executive agrees to accept such conditions as set
forth herein:
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a.
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Executive
hereby acknowledges and agrees that his employment with the Company placed
him in a position of trust and confidence with respect to the business
operations, customers, prospects and personnel of the
Company. Executive further agrees that, during his employment
with the Company, he was intimately involved with all material aspects of
the Company’s business affairs, including, among other things, the
Company’s short and long-term strategic plans and objectives, merger and
acquisition activity, investment and tax planning and analysis,
litigation, regulatory matters and public affairs. As such, Executive
acknowledges that his engaging in any business that competes with the
Company in the Meat Processing Business (as defined below) will cause the
Company significant and irreparable
harm.
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b.
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Executive
agrees that, for a period of 12 months following the Retirement Date (the
“Non-Compete Period”), Executive shall not, without the prior written
consent of the Company, either directly or indirectly, as an employee,
consultant, advisor or otherwise, for himself or on behalf of or in
conjunction with any other person, persons, company, firm, partnership,
corporation, business, group or other entity (each, a “Person”) engage in
competition with the Company by being associated with any other company or
business which engages in the production, processing, packaging,
distribution or sale of pork, beef or poultry anywhere in the world where
the Company has operations or sales (the “Meat Processing
Business”). Executive will be deemed to have associated with a
business entity if he serves as an officer, director, employee, consultant
or in any managerial or executive position with respect to the business
entity, or, directly or indirectly and whether or not for compensation, is
a shareholder owning beneficially or of record more than five percent (5%)
of the outstanding shares of any class of shares or other type of
ownership interest in a business
entity.
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c.
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Executive
further agrees that, during the Non-Compete Period, he shall not, directly
or indirectly solicit, aid or otherwise encourage (A) any of the Company’s
employees to leave the Company or work elsewhere or (B) any of the
Company’s customers or suppliers to move their business from the Company
or to place business
elsewhere.
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d.
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Executive
further agrees that, for a period of 36 months following the Retirement
Date, he shall not, without the prior written consent of the Company,
either directly or indirectly, as an employee, consultant, advisor or
otherwise, (i) make, or in any way participate in, any solicitation of
proxies to vote, or seek to advise or influence any person with respect to
the voting of, any voting securities of the Company or any of its
subsidiaries, or seek or propose to influence, advise, change or control
the management, board of directors, policies, affairs or strategy of the
Company by way of any public communication, or other communications, to
the Company’s security holders intended for such purpose, (ii) make a
proposal for any acquisition of, or similar extraordinary transaction
involving, the Company or a material portion of its securities or assets,
(iii) seek to control or influence the management or policies of the
Company or any of its subsidiaries or affiliates, or (iv) enter into any
agreements or understandings with any other Person for the purpose of any
of the actions described in clauses (i), (ii) or (iii)
above.
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8. Acknowledgement of
Enforceability of Covenants. It is agreed by the Parties that
the covenants contained in Sections 6 and 7 impose a fair and reasonable
restraint on Executive in light of the activities and business of the Company on
the date of the execution of this Agreement and the current plans of the
Company; but it is also the intent of the Company and Executive that such
covenants be construed and enforced in accordance with the changing activities,
business and locations of the Company and its affiliates throughout the term of
these covenants. Executive also acknowledges that this restraint will not
prevent him from earning a living in his chosen field of work.
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a.
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In
the event any court of competent jurisdiction shall determine that the
scope, time or other restrictions set forth herein are unreasonable, then
it is the intention of the Parties that such restrictions be enforced to
the fullest extent that such court deems reasonable, and the Agreement
shall thereby be reformed to reflect the same, to the extent permitted
under applicable
law.
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b.
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It
is specifically agreed that the duration of the period during which the
agreements and covenants of Executive made in Sections 6 and 7 shall be
effective shall be computed by excluding from such computation any time
during which Executive is in violation of any provision of Sections 6 and
7.
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c.
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Notwithstanding
any of the foregoing, if any applicable law, judicial ruling or order
shall reduce the time period during which Executive shall be prohibited
from engaging in any competitive activity described in Sections 6 and 7
hereof, the period of time for which Executive shall be prohibited
pursuant to Sections 6 and 7 hereof shall be the maximum time permitted by
law.
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9. Consultation in Advance of
Action. Before Executive engages in any action which may
reasonably be construed as a violation of this Agreement, or as to which
Executive believes the application of the Agreement is not clear, specifically
including the provisions of Sections 6 and 7 above, Executive agrees to contact
and confer with the Chief Executive Officer of the Company, or his designee,
regarding Executive’s intended action, to make a good faith effort to avoid a
violation, and to discuss the availability of alternative courses of action that
would not result in a violation. Both Parties agree to engage in such
discussions in good faith.
10. Injunctive and Contractual
Relief. Executive understands and agrees that the covenants
contained in Sections 6 and 7 are special, unique and of an extraordinary
character. Because of the difficulty of measuring economic losses to
the Company as a result of a breach of the foregoing covenants, and because of
the immediate and irreparable damage that could be caused to the Company for
which it would have no other adequate remedy, in the event of any default or
breach these Sections by Executive, (a) the Company may cease all payments under
Section 3 and immediately cancel all unexercised stock options listed on
Schedule A and all unpaid PSUs listed on Schedule B, and (b) the Company shall
be entitled to institute and prosecute proceedings as provided for in
Section 14, and shall be entitled specifically to injunctive relief and to
such other and further relief as may be available to the Company at law and/or
in equity. Executive hereby waives any right to require the posting
of a bond in the event the Company seeks injunctive and/or other equitable
relief to enforce this Agreement. The rights, obligations and
remedies provided in this section and in Section 14 shall be in
addition to, and not in lieu of, any rights, obligations and/or remedies imposed
by applicable law under statutes enforcing the protection of trade secrets and
other confidential and proprietary information.
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11. Severability. The
Parties understand and agree that every Section, and each subpart, sub-paragraph
or provision therein, of this Agreement is separable, severable and divisible
from the rest of the Agreement. If any Section, subpart,
sub-paragraph or provision herein is ruled invalid, illegal, unenforceable or
void by any arbitrator, regulatory agency or court of competent jurisdiction,
the Parties understand and agree that the remainder of this Agreement shall
continue to be enforceable to the fullest extent permitted by
law.
12. Choice of Governing
Law. The Parties understand and agree that the validity,
interpretation, construction and performance of this Agreement, as well as the
rights of the Parties under this Agreement, shall be governed in accordance with
the laws of the Commonwealth of Virginia, without regard to its conflicts of law
principles.
13. Full
Integration. This Agreement constitutes the entire agreement
between the parties regarding the termination of Executive’s employment with the
Company. It fully supercedes any and all prior oral or written
representations, correspondence, communications or agreements between the
parties pertaining to its subject matter. The Parties acknowledge
that no written or oral representations inconsistent with or additional to the
terms and conditions of this Agreement have been made or
reached. Except as provided herein, the parties further agree that no
modification, amendment or waiver of any of the provisions of this Agreement
shall be effective unless made in writing, specifically referring to this
Agreement, and signed by Executive and the Company.
14. Disputes. Each
Party to this Agreement shall be entitled to seek any and all relief to which it
or he, as applicable, is entitled in any court of competent jurisdiction with
respect to any violation or threatened violation by the other Party of this
Agreement. Except as otherwise set forth in Section 11 above, in
the event a Party institutes any proceeding to enforce his or its legal rights
under, or to recover damages for breach by the other Party of, this Agreement,
the prevailing Party shall be entitled to recover from the other Party any
actual expenses for attorney’s fees and disbursements incurred by such
prevailing Party.
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15. No
Waiver. The Parties acknowledge and agree that the failure to
enforce at any time any of the provisions of this Agreement, or to require at
any time performance by any party of any of the provisions hereto, shall in no
way be construed as a waiver of such provision or affect the validity of this
Agreement or any part thereof, or the right of each Party thereafter to enforce
each and every provision in accordance with the terms of this
Agreement.
16. Assignability. This
Agreement is not assignable by Executive but is assignable by the Company,
provided that Executive may assign his rights to the financial benefits set
forth in paragraph 3, subject to the terms of the Agreement and any applicable
plans. This Agreement shall be binding upon and inure to the benefit
of the Company and its successors and assigns.
17. Announcement, Non-Disclosure
of Agreement. The Parties agree that the Company will announce
the Executive’s retirement no later than Monday, August 16, 2010. The
Company agrees to provide the Executive with the text of any announcement and
reasonably consider any revisions requested by the Executive. The
Parties agree to keep any and all other matters relating to this Agreement,
including its existence, terms and the negotiations and circumstances which led
to this Agreement, confidential such that they will not disclose such matters to
any person or entity at any time; provided that (1) the Company may disclose
such matters to (i) any of its officers, directors, partners, owners, agents,
auditors, representatives and employees, (ii) its shareholders in order to
comply with any disclosure obligations to Company shareholders, and (iii) any
party to the extent required by law, and (2) the Executive may disclose this
Agreement to his counsel, his tax and financial advisors and his immediate
family members, and the Executive may discuss his separation from the Company
and this Agreement with persons with whom he has a personal relationship to the
extent such persons inquire of him regarding these matters, so long as the
Executive does not misrepresent in any manner the terms of his separation, and
provided further that Executive may disclose this Agreement to the extent
reasonably necessary in any court proceeding relating to the enforcement of the
Agreement.
18. Non-Disparagement. The
Parties agree that they will not take any action or make any comment which
impugns, defames, disparages, criticizes, negatively characterizes or casts in
an unfavorable light, the other. Executive’s obligation under this
Paragraph shall apply to the Company and to the Released Parties, including
their officers, directors, management, employees, agents and other
representatives. Executive agrees not to voluntarily provide
assistance or information to any person or entity pursuing any claim, charge or
complaint against the Company, except that nothing herein shall be interpreted
to limit Executive’s right to confer with counsel or to provide truthful
testimony pursuant to subpoena or notice of deposition or as otherwise required
by law.
19. Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed an
original for all purposes.
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first written above.
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SMITHFIELD
FOODS, INC.
/s/ C.
Larry Pope
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By:
C. Larry Pope
Title: President and Chief
Executive Officer
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/s/ Richard
J. M. Poulson
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Richard
J. M. Poulson
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