EMPLOYMENT AGREEMENT
This Agreement is made as of January 1, 2001, between Gannett Co., Inc., a
Delaware corporation ("Gannett"), and Douglas H. McCorkindale ("McCorkindale").
Mr. McCorkindale has contributed substantially to the growth and success of
Gannett over a period of years. Gannett desires to retain his services until his
retirement from Gannett as set forth in this Agreement and to provide the
necessary compensation to assure such services.
Gannett and McCorkindale therefore agree as follows:
1. Employment.
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Gannett hereby employs McCorkindale as its President and Chief Executive
Officer and, effective February 1, 2001, as Chairman of the Board or in such
other senior executive position as the Board of Directors and McCorkindale shall
mutually agree upon. McCorkindale hereby accepts the employment specified
herein, agrees to perform, in good faith, the duties, consistent with his
position, prescribed by the Board of Directors, abide by the terms and
conditions described in this Agreement and to devote his full working time and
best efforts to Gannett. These obligations shall not restrict McCorkindale from
engaging in his customary activities as a director or trustee of other business
and not-for-profit organizations. Gannett agrees to nominate McCorkindale for
election to the Board as a member of the management slate at each annual meeting
of stockholders during his employment hereunder at which McCorkindale's director
class comes up for election. McCorkindale agrees to serve on the Board if
elected.
2. Term of Employment.
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The term of employment under this Agreement shall commence on the date
first set forth above and shall extend until McCorkindale's normal retirement
date (as this term is defined in Gannett's Retirement Plan), provided that the
parties may agree to one or more one year extensions of this Agreement
commencing on McCorkindale's normal retirement date and each anniversary
thereof. This Agreement shall be deemed to have been extended by the parties
after McCorkindale's normal retirement date for an indefinite number of one year
extensions until either party gives notice, no less than 90 days prior to
McCorkindale's normal retirement date or an anniversary thereof, whichever may
be relevant, of an unwillingness to extend for another year.
3. Compensation.
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During the term of McCorkindale's employment, Gannett shall pay him a base
salary at the rate of $1,600,000 per annum, or such greater amount as the Board
of Directors shall determine. Such salary shall be payable in accordance with
Gannett's standard payroll practices for senior executives. Gannett may pay
McCorkindale a bonus in such amount and at such time or times as the Board of
Directors shall determine.
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4. Reimbursement for Expenses.
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McCorkindale shall be expected to incur various reasonable business
expenses customarily incurred by persons holding like positions, including but
not limited to traveling, entertainment and similar expenses incurred for the
benefit of Gannett. Gannett shall reimburse McCorkindale for such expenses from
time to time, at McCorkindale's request, and McCorkindale shall account to
Gannett for such expenses.
5. Termination of Agreement by Gannett.
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(a) Gannett shall have the right to terminate this Agreement under the
following circumstances:
(i) Upon the death of McCorkindale.
(ii) Upon notice from Gannett to McCorkindale in the event of
an illness or other disability which has incapacitated him
from performing his duties for six months as determined in
good faith by the Board.
(iii) For good cause upon notice from Gannett. For this purpose,
"good cause" means (1) any material misappropriation of funds
or property of Gannett by McCorkindale; (2) unreasonable (and
persistent) neglect or refusal by McCorkindale to perform his
duties as provided in Section 1 hereof and which he does not
remedy within thirty days after receipt of written notice from
Gannett; (3) the breach by McCorkindale of any provision of
Sections 10 or 14 if such breach has had or is likely to have
a material adverse affect on the business or financial
condition of Gannett; (4) conviction of McCorkindale of a
felony; or (5) McCorkindale's voluntary resignation as an
employee of Gannett without the prior written consent of
Gannett.
(b) If this Agreement is terminated pursuant to Section 5(a) above,
McCorkindale's rights and Gannett's obligations hereunder shall
forthwith terminate except as expressly provided in this Agreement.
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(c) If this Agreement is terminated pursuant to Section 5(a)(i) or
(ii) hereof, McCorkindale or, in the case of death, his estate shall
be entitled to receive a cash payment equal to the present value
(based on Gannett's then current cost of borrowing) of his projected
salary and bonuses (prior to any elective deferrals or any other
deductions) and the deemed value of all fringe benefits for the
balance of the term of this Agreement, payable within 30 days of the
date of termination. For this purpose, projected salary and bonuses
shall be determined by assuming that annual percentage increases in
future calendar years will equal the average annual percentage
increase in salary and bonus over the three calendar years preceding
the year of determination. The deemed value of fringe benefits in any
calendar year shall equal five percent of such year's salary (actual
or projected as the case may be) plus the aggregate amount of club
dues (not counting dues for the Robert Trent Jones Golf Club to the
extent this membership is continued under Section 9) and home
security charges paid by Gannett on McCorkindale's behalf in the
calendar year prior to the year of termination.
(d) Whenever compensation is payable to McCorkindale hereunder during a
time when he is partially or totally disabled, and such disability
(except for the provisions hereof) would entitle him to disability
income or to salary continuation payments from Gannett or from its
insurer under the terms of the Gannett long-term disability plan, or
any successor Gannett plan or policy in effect at the time of such
disability, the compensation payable to him hereunder shall be
inclusive of any such disability income or salary continuation and
shall not be in addition thereto.
(e) The failure of this Agreement to be renewed on McCorkindale's normal
retirement date or on any anniversary thereof shall not be considered
as a termination of the Agreement under this Section.
6. Termination of Agreement by McCorkindale
----------------------------------------
(a) McCorkindale shall have the right to terminate his employment under
this Agreement for "good reason" upon 30 days' notice to Gannett
given within 90 days following the occurrence of any of the following
events, each of which shall constitute a "good reason" for such
termination:
(i) McCorkindale is not elected or retained as President and Chief
Executive Officer (or such other senior executive position as
McCorkindale may have agreed to serve in) and a director of
Gannett.
(ii) Gannett acts to materially reduce McCorkindale's duties and
responsibilities hereunder.
(iii) McCorkindale is required to report to anyone other than
Gannett's Board of Directors.
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(iv) Gannett acts to change the geographic location of the
performance of McCorkindale's duties from the Washington, D.C.
Metropolitan area.
(b) The failure to renew this Agreement on McCorkindale's normal
retirement date or on any anniversary thereof shall not be considered
as a termination of the Agreement under this Section.
7. Consequence of Termination or of a Breach by Gannett.
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If this Agreement is terminated by McCorkindale pursuant to Section 6
hereof, or by Gannett for any reason other than the reasons specified in Section
5(a), or if Gannett shall terminate McCorkindale's employment under this
Agreement in any other way that constitutes Gannett's breach of this Agreement,
the following shall apply:
(a) McCorkindale shall be paid all earned but unpaid compensation,
accrued vacation and accrued but unreimbursed expenses required to be
reimbursed under this Agreement; and
(b) McCorkindale shall receive a cash payment equal to the greater of
(1) McCorkindale's total compensation in the year preceding the year
of termination (comprised of salary, bonuses and the value of all
fringe benefits and deferred compensation) or (2) the present value
(based on Gannett's then current cost of borrowing) of McCorkindale's
projected salary and bonuses (prior to any elective deferrals or any
other deductions) and the deemed value of all fringe benefits for the
balance of the term of this Agreement, payable within 30 days of the
date of termination. For this purpose, projected salary and bonuses
shall be determined by assuming that annual percentage increases in
future calendar years will equal the average annual percentage
increase in salary and bonus over the three calendar years preceding
the year of determination. The deemed value of fringe benefits in any
calendar year shall equal five percent of such year's salary (actual
or projected as the case may be) plus the aggregate amount of club
dues (not counting dues for the Robert Trent Jones Golf Club to the
extent this membership is continued under Section 9) and home security
charges paid by Gannett on McCorkindale's behalf in the calendar year
prior to the year of termination. If McCorkindale has received a
change in control payment under Section 11(a)(i), the amount
determined under the preceding sentences of this Section 7 shall be
reduced (but not below zero) by the amount paid to McCorkindale under
Section 11(a)(i); and
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(c) McCorkindale shall have his benefits under any non-qualified
supplemental retirement plan calculated by assuming his termination
date were the normal expiration date of this Agreement and by taking
into account the full service and compensation (projected for years
after termination as specified in Section 5(c)) that he would have had
if he had in fact continued to work until the expiration of this
Agreement; and
(d) McCorkindale shall not be required to mitigate damages or the amount
of any payment provided for under this Agreement by seeking other
employment or otherwise, nor will any payments hereunder be subject
to offset in respect of any claims which Gannett may have against
McCorkindale, nor shall the amount of any payment or benefit provided
for in this Section 7 be reduced by any compensation earned as a
result of McCorkindale's employment with another employer.
8. Post-Termination Consulting Services.
-------------------------------------
If McCorkindale remains in Gannett's employ to or beyond his normal
retirement date, upon the expiration of this Agreement Gannett shall retain
McCorkindale for a period of five years to perform consulting services at the
request of the then Chief Executive Officer of Gannett. For such services,
McCorkindale shall be paid $150,000 per year in advance at the beginning of each
year of his retirement. Gannett shall also reimburse McCorkindale, upon the
receipt of appropriate documentation, for reasonable expenses which he incurs in
providing consulting services at the request of the Chief Executive Officer, or
which he incurs at the request of Gannett because of his position as a retired
executive officer of Gannett. Gannett's obligations as set forth in this
paragraph are unconditional and irrevocable and shall apply irrespective of
McCorkindale's incapacitation, prior or subsequent to his retirement, to perform
services hereunder.
9. Miscellaneous Additional Benefits.
---------------------------------
(a) Pre-Retirement. McCorkindale shall be entitled to receive during his
period of active full-time employment with Gannett all benefits,
facilities or privileges, in comparable amounts and under comparable
terms and conditions, as are made available during such period to any
other senior executive of Gannett other than sign-on bonuses and
similar one-time benefits, provided that in no event shall the
benefits be less favorable than the benefits McCorkindale receives on
the effective date of this Agreement.
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(b) Post-Retirement. After McCorkindale ceases full-time active employment
(whether before or after reaching his normal retirement date), he
shall receive all benefits afforded to other retired Gannett Chief
Executive Officers and, in accordance with company policies, to other
retired executive officers generally. Whether or not they may be
provided to other retired Chief Executive Officers or senior
executives under the preceding sentence, Gannett shall provide
McCorkindale with the following benefits for the remainder of his
life:
- Executive Medical coverage, including an annual physical, for
himself and dependents up to $25,000 per calendar year, or such
higher amount as may be available from time to time to the then
senior executives of Gannett
- Gannett shall continue to maintain the active membership in the
Robert Trent Jones Golf Club that McCorkindale currently enjoys
and permit McCorkindale to continue enjoying its sole use for
his life
- All computer and other equipment in his office or home that
McCorkindale uses at the time of his retirement shall be
transferred to him when he retires
- Cars and financial planning services under no less favorable
circumstances than those provided to McCorkindale prior to
retirement, and
- Reasonable access to Gannett offices, facilities and services.
10. Restrictive Covenant.
---------------------
McCorkindale agrees that during his employment hereunder and for as long as
he receives post-termination consulting fees under Section 8, he will not,
without the written consent of Gannett, as a principal, officer, director,
stockholder (except as the owner of less than 5% of the stock of a company whose
stock is publicly traded), partner, employee or in any other capacity
whatsoever, engage in or become associated with, or advise or assist, any
business or enterprise which is engaged in providing any goods or services that
are competitive with any goods or services that are or may at any time be
offered by Gannett. For the purposes of this Section 10, a business or
enterprise shall be deemed to be engaged in providing goods or services that are
competitive with any goods or services offered by Gannett if the Board of
Directors of Gannett so determines. It is agreed that Gannett's sole remedy in
the event of McCorkindale's breach of this Section 10 shall be the termination
of all compensation otherwise payable to McCorkindale under Sections 3, 4 or 8
with respect to the period of time after such breach.
11. Change in Control.
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(a) In general. Upon a change in control, as defined below, Gannett shall
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(i) pay McCorkindale as of the date of the change in control a lump
sum cash bonus equal to four times his total annual
compensation (comprised of salary and bonuses prior to any
elective deferrals or any other deductions and the deemed value
of all fringe benefits as determined in Section 5(c)) paid in
the calendar year immediately preceding the change in control,
such payment to be in lieu of the cash payments payable under
Section 7(b).
(ii) treat, to the extent allowed without the need of plan
amendment, all incentive pay, stock options and any other
contingent executive compensation in which McCorkindale has an
interest as if all targets were achieved on the date of the
change in control and as if all otherwise unvested benefits
became fully vested on such date. If any of such benefits
requires action by McCorkindale to exercise his rights under
such benefits, McCorkindale shall be given the greater of 90
days following the change in control or the period of time
permitted under the relevant plan to exercise his rights, but
in no event shall any stock option be exercisable more than 10
years (or such other period as may be prescribed by the
Internal Revenue Code for tax-favored stock options) after the
date of its grant.
(iii) make available to McCorkindale the retiree benefits specified
in Section 9(b).
For purposes of this Agreement, the term "change in control" has the
same meaning given it under Gannett's 1978 Executive Long-Term
Incentive Plan (or any successor plan) provided that a management
buyout under the terms of which Gannett ceases to be a public company
shall not be considered as a change in control under this Agreement.
(b) Timing of Payment. Any cash or in-kind payments due as of the date of
the change in control shall be paid to McCorkindale as soon as
administratively practicable (but in no event later than 30 days)
following the change in control.
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12. Certain Additional Payments by Gannett.
---------------------------------------
Anything in this Agreement to the contrary notwithstanding, in the event it
shall be determined that any payment or distribution by Gannett to or for the
benefit of McCorkindale, whether paid or payable, pursuant to the terms of this
Agreement or otherwise (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the Code or similar section or any interest or penalties with
respect to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
McCorkindale shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by McCorkindale of all taxes
(including any interest or penalties imposed with respect to such taxes),
including any Excise Tax imposed upon the Gross-Up Payment, McCorkindale retains
an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments. Pursuant to Section 13(b) of the Gannett Co., Inc. Transitional
Compensation Plan dated December 11, 1990 (the "Transitional Compensation
Plan"), any compensation and benefits received by McCorkindale under the terms
of the Transitional Compensation Plan will be reduced (but not below zero) by
any compensation and benefits received by McCorkindale under the terms of this
Agreement.
13. Legal Expenses and Interest.
----------------------------
If, with respect to any alleged failure by Gannett to comply with any of
the terms of this Agreement, McCorkindale hires legal counsel with respect to
this Agreement or institutes any negotiations or institutes or responds to legal
action to assert or defend the validity of, enforce his rights under, or recover
damages for breach of this Agreement and thereafter Gannett is found in a
judgment no longer subject to review or appeal to have breached this Agreement
in any material respect, then Gannett shall indemnify McCorkindale for his
actual expenses for attorneys' fees and disbursements, together with such
additional payments, if any, as may be necessary so that the net after-tax
payments to McCorkindale equal such fees and disbursements.
14. Trade Secrets.
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McCorkindale agrees that unless duly authorized in writing by Gannett, he
will neither during his employment by Gannett nor at any time thereafter divulge
or use any trade secrets or confidential information first acquired by him
during and by virtue of his employment with Gannett.
15. Funding.
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Gannett may in its discretion establish a trust to fund any of the payments
which are or may become payable to McCorkindale under this Agreement.
16. Notice.
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Any and all notices referred to herein shall be sufficient if furnished in
writing and sent by registered mail to the parties.
17. Transferability.
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The rights, benefits and obligations of Gannett under this Agreement shall
be transferable and all covenants and agreements hereunder shall inure to the
benefit of and be enforceable by or against its successors and assigns. Whenever
the term "Gannett" is used in this Agreement, such term shall mean and include
Gannett Co., Inc. and its successors and assigns. The rights and benefits of
McCorkindale under this Agreement shall not be transferable other than rights to
property or compensation that may pass on his death to his estate or
beneficiaries through his will or the laws of descent and distribution and the
terms of any Gannett compensation or benefit plan.
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18. Severability.
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If any provision of this Agreement or the application thereof is held
invalid or unenforceable, the invalidity or unenforceability thereof shall not
affect any other provisions of this Agreement which can be given effect without
the invalid or unenforceable provision, and to this end the provisions of this
Agreement are to be severable.
19. Amendment; Waiver.
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This Agreement contains the entire agreement of the parties with respect to
the employment of McCorkindale by Gannett and upon execution of this Agreement
supersedes the Employment Agreement dated as of December 7, 1992, between
Gannett and McCorkindale. No amendment or modification of this Agreement shall
be valid unless evidenced by a written instrument executed by the parties
hereto. No waiver by either party of any breach by the other party of any
provision or conditions of this Agreement shall be deemed a waiver of any
similar or dissimilar provision or condition at the same or any prior or
subsequent time.
20. Tax Withholding.
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Gannett may withhold from any payments due to McCorkindale hereunder, such
amounts as its independent public accountants may determine are required to be
withheld under applicable federal, state and local tax laws.
21. Governing Law.
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This Agreement shall be governed by and construed under and in accordance
with the laws of the State of Delaware without regard to principles of conflicts
of laws.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
GANNETT CO., INC.
By: /s/ Stuart T.K. Ho
--------------------
Chairman of Executive Compensation Committee
/s/ Douglas H. McCorkindale
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Douglas H. McCorkindale
Employment Agreement - Gannett Co. Inc. and Douglas H. McCorkindale
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