8-KLeadership ChangesExhibits & Filings

Aon plc 8-K Report, Executive Changes (Mar 30, 2012)

Filed March 30, 2012For Securities:AON

Summary

This 8-K filing from Aon Corporation, dated March 30, 2012, primarily details amendments to the employment agreements of two key executives: Christa Davies (Executive Vice President and Chief Financial Officer) and Gregory J. Besio (Executive Vice President and Chief Human Resources Officer). The amendments extend their employment terms through March 31, 2017, and include updated compensation and severance provisions. For Christa Davies, her base salary remains $800,000, and she receives an additional long-term incentive award valued at $6 million. Her severance benefits in case of termination without cause by Aon have been reduced to two years' pay, aligning with standard executive provisions. The definition of 'good reason' for her to terminate employment has also been modified. For Gregory J. Besio, his base salary is $650,000 with a target bonus of 100% of base salary (a reduction from 150%). He also receives an additional long-term incentive award valued at $1,750,000. His employment agreement outlines specific severance provisions for various termination scenarios, including a 365-day notice period and payment if terminated by Aon without cause. Both executives also entered into amended Change in Control Agreements that significantly reduce financial protections in such events, notably eliminating gross-up payments for excise taxes and capping payments to a 'safe harbor' amount.

Key Highlights

  • 1Aon plc amended employment agreements for CFO Christa Davies and CHRO Gregory J. Besio, extending their terms to March 31, 2017.
  • 2Christa Davies received an additional long-term incentive award valued at $6 million, with her base salary remaining $800,000.
  • 3Gregory J. Besio's base salary is $650,000, with a reduced target bonus of 100% of base salary, and he received an additional long-term incentive award valued at $1.75 million.
  • 4Severance benefits for Christa Davies were reduced to two years' pay in case of termination without cause by Aon.
  • 5Gregory J. Besio's employment agreement details specific severance and notice provisions for termination by Aon.
  • 6Both executives' Change in Control Agreements were amended to significantly reduce severance protection, including the elimination of excise tax gross-ups and capping payments.

Frequently Asked Questions

The primary changes involve extending their employment terms through March 31, 2017, and modifying their compensation and severance packages. Ms. Davies receives an additional $6 million long-term incentive award, while Mr. Besio gets an additional $1.75 million long-term incentive award. Both executives' severance benefits in certain termination scenarios, particularly related to change in control events, have been reduced.

For Christa Davies, her severance in case of termination without cause by Aon is now capped at two years' pay, aligning with standard executive provisions. For Gregory J. Besio, the agreement details specific notice periods and payments if terminated by Aon without cause. Both also have significantly reduced protections under their amended Change in Control Agreements, notably the removal of excise tax gross-ups and a cap on 'excess parachute payments'.

The amended Change in Control Agreements significantly reduce the financial payouts to Ms. Davies and Mr. Besio if their employment is terminated in connection with a change in control of Aon. Specifically, Aon will no longer provide 'gross-up' payments to cover excise taxes on parachute payments, and the total payments are capped to ensure they do not exceed the 'safe harbor' amount defined by tax regulations (Code Section 280G).

Christa Davies' base salary remains unchanged at $800,000. Gregory J. Besio's base salary also remains unchanged at $650,000, but his target bonus has been reduced from 150% to 100% of his base salary.