Exhibit 10.01
April 13, 2005
Dear Jeff,
It is with great pleasure that I confirm in writing our offer of employment to
you. All of us who have met with you enthusiastically believe you represent an
exceptional fit with Cardinal Health and a superb addition to the executive
management team. The major provisions of your offer are:
1. The position is Executive Vice President, effective as of your start date,
and Chief Financial Officer, effective as of May 15, 2005, reporting
directly to me. You will also serve on the Executive Committee of Cardinal
Health and the CEO Strategy Committee.
2. Your initial annual base salary will be $550,000, and your cash
compensation profile will be reviewed along with all other officers of
Cardinal Health at regular annual intervals with the Human Resources and
Compensation Committee of the Board of Directors (Compensation Committee).
3. You will be eligible to participate in our Management Incentive Plan
(MIP). Your target annual incentive will be 100% of your base salary. Your
incentive for the remainder of fiscal year 2005 (ending June 30, 2005)
will be guaranteed at target, prorated for your start date through the end
of this fiscal year. In addition, we will guarantee 50% of your target
bonus amount for fiscal year 2006.
4. You will receive a stock option grant along with a grant of Restricted
Share Units (RSU's), which represents both a prorated grant for fiscal
year 2005 and a pull-forward grant for fiscal year 2006, which you would
have been eligible to receive in August, 2005. You will be granted,
effective on your start date, a grant of 60,000 option shares, along with
a grant of 9,000 RSU's. The 60,000 options will vest in four equal annual
installments of 25% each year immediately following the grant date, and
will expire on the anniversary of the grant date in 2012. The 9,000 RSU's
will vest in three equal annual installments of 33.3% each year
immediately following the grant date.
In addition, you will receive on your start date:
o 12,000 Restricted Share Units, with a three-year cliff
vesting.
o The cash value of 3,000 Cardinal Health shares on your start
date. If you voluntarily resign from Cardinal Health within
your first year of employment, the value of this award would
be repayable by you to the Company.
o An additional option grant, with a three-year cliff vesting,
whose Black-Scholes present value shall be the remainder of
the total value of the above two awards subtracted from $1.8
million. This option will expire on the anniversary of the
grant date in 2015.
All of the options listed above will be granted at the price of Cardinal
Health stock at the close of market on your start date. All of the above
RSUs will be payable at least six months after your separation from
Cardinal Health. You will be eligible for the next regular annual grant of
stock or stock options in fiscal year 2007, expected to be granted in
August, 2006.
Mr. Jeff Henderson
April 13, 2005
Page Two
5. You are eligible to participate in the Cardinal Health Profit Sharing,
Retirement and Savings Plan (including a 401(k) feature) on the first day
of the month following one full calendar month of employment (provided you
work 20 hours a week or more). You may contribute up to 50% of your
pre-tax earnings to the Plan (subject to IRS maximum). Cardinal Health
matches employee contributions at a rate equal to 100% for each dollar
contributed up to 3% of pay and then 50% on the next 2% of pay. In
addition, the Company has an annual defined contribution of 3%. Employees
are immediately 100% vested in matching contributions and 100% vested in
the defined contributions after three years of continuous service.
Enrollment information will be sent to you by our Plan administrator,
prior to your eligibility date.
6. You will be eligible to participate in the Cardinal Health Deferred
Compensation Plan (Non-Qualified Plan) that complements our 401(k) Plan
and enables the highly compensated employee to continue to save over and
above the IRS limits in the 401(k) qualified plan. You may contribute up
to 20 percent of your total eligible compensation. Cardinal Health matches
dollar for dollar on the first 3 percent and 50 cents on the next 2
percent of salary deferred between $210,000 and $310,000. These matching
dollars vest immediately. The Company also contributes a 3 percent annual
contribution for eligible compensation earned between $210,000 and
$310,000. In addition, the Company provides a social security integration
contribution of 3 percent for eligible compensation between $90,000 and
$310,000. These 3 percent company contributions vest after 3 years of
service.
7. You will be eligible to participate in the Cardinal Health Employee Stock
Purchase Plan at the beginning of the next offering period under the terms
specified in the Plan. You have the opportunity to purchase Cardinal
Health stock at a 15% discount through after-tax payroll deductions. There
are two offering periods each year, January - June and July - December.
Enrollment information will be provided to you prior to the next eligible
offering period after your employment date.
8. You will be eligible for participation in our group benefits program on
your date of hire. This program includes coverage for medical, dental,
vision, life insurance, accidental death and dismemberment, short-term and
long-term disability.
9. Your first day of employment will be mutually agreed to upon acceptance of
this offer.
10. Consistent with our policies for all Cardinal Health personnel and the
special consideration of our industry, this offer is contingent upon the
taking of a company-paid drug screening test, as well as background check,
the results of which must be negative and received prior to the above
start date.
11. If your employment is involuntarily terminated without cause within the
first three years of your start date, the Company will provide you with
severance equal to twelve months of your starting base salary.
Additionally, if within 60 days following the 18-month anniversary of your
start date you provide 60 days notice of your voluntary resignation from
Cardinal Health, and so long as at the time Cardinal Health receives such
notice and for the 60-day period thereafter, Cardinal Health does not have
grounds to terminate your employment for gross misconduct, then you will
receive the following:
o A cash payment equal to two times (2X) the sum of your
starting annual base salary and annual target bonus, which
will be paid to you in equal monthly installments over a
period of 12 months; provided, however, that if you disclose
or use in any capacity other than as necessary in the
performance of duties assigned by the Company any confidential
information, trade secrets or other business sensitive
information or material concerning the Company or its
subsidiaries at any time during this 12-month payout period,
any installment of this cash payment already paid out to you
would be repayable by you to the Company and you will forfeit
any future installments due to you under this provision;
o An additional cash payment equal to 50% of your starting
annual target bonus, which will be paid to you in full upon
your resignation date; and
o 100% vesting of the RSU grants specified in paragraph 4 above,
which will occur upon your resignation date. The RSU grants
will be payable per their terms at least six months after your
separation from Cardinal Health.
Mr. Jeff Henderson
April 13, 2005
Page Three
If the severance payments above are ever deemed to be covered by recently
adopted deferred compensation tax rules (Section 409A of the Internal
Revenue Code), it may be necessary for Cardinal Health to delay
commencing your severance payments until after the six month anniversary
of your termination of employment.
12. You will be eligible for the Company's executive relocation program, which
will be forwarded to you as soon as possible.
13. We will continue to review additional compensation-related issues
associated with your transition: tax equalization, lease commitment,
repatriation commitments and commuting expenses.
14. Your employment with Cardinal Health is terminable with or without notice
at the will of either you or the Company at any time for any reason. There
shall be no contract, express or implied, of employment.
15. This offer is subject to formal approval by the Compensation and Executive
Committees of our Board of Directors.
Jeff, I understand you may have some follow up questions once you have had the
opportunity to review the details of this offer. Please feel free to call Tony
Rucci or me to discuss any specific questions on the offer.
Sincerely,
/s/ Robert D. Walter
Robert D. Walter
Chairman and Chief Executive Officer
cc: Tony Rucci
Carole Watkins
I accept the above offer of employment:
/s/ Jeff Henderson 4/13/05
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Jeff Henderson Date