Summary
This 8-K filing from Aon Corporation, dated September 25, 2008, primarily reports on amendments to change-in-control severance agreements for certain named executive officers and a new arrangement for the former Chairman. The key change to the severance agreements reduces the cash payout from three times the highest annual base salary to two times the sum of the current base salary plus the average incentive compensation over the previous two years. Additionally, the duration of continued health and welfare benefits and credited years for age/service/contributions has been reduced from three years to two years.
Key Highlights
- 1Aon Corporation amended its standard form of Change in Control Severance Agreement for certain key executives.
- 2The cash severance payment in case of termination without cause or resignation for good reason following a change in control was reduced.
- 3The new severance calculation is two times the sum of current base salary plus average incentive compensation for the prior two years (previously three times highest annual base salary).
- 4The period for continued health and welfare benefits and credited years (age, service, plan contributions) post-termination has been reduced from three years to two years.
- 5These amendments aim to retain executive talent and ensure objectivity during potential change-in-control scenarios.
- 6Gregory C. Case's existing change-in-control agreement severance benefits remain unchanged by these amendments.
- 7Former Chairman Patrick G. Ryan will receive secretarial assistance, office space, and equipment for life, with an estimated actuarial value of $1.6 million.
Frequently Asked Questions
The primary purpose is to ensure the continued service and dedication of key executive officers by providing them with severance benefits in the event of a change in control of the Company, while also adjusting the terms of these benefits to be more aligned with current company policy and practices.
Previously, the cash severance was calculated as three times the executive's highest annual base salary in the 12 months before termination. The amended agreement calculates it as two times the sum of the executive's current annual base salary plus the average incentive compensation paid over the previous two years.
No, the amendments apply to the standard form of agreement for certain key executive officers, specifically naming Andrew M. Appel, Stephen P. McGill, and Michael D. O’Halleran. Gregory C. Case's individual change in control agreement remains unaffected.
Patrick G. Ryan, the former Chairman, will receive secretarial assistance, office space, and office equipment for the remainder of his life. The estimated actuarial value of this arrangement is approximately $1.6 million.