THE HOSPITAL FOR SICK CHILDREN 555 University Avenue Toronto, Ontario Canada M5G 1X8 Phone (416)
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1 THE HOSPITAL FOR SICK CHILDREN 555 University Avenue Toronto, Ontario Canada M5G 1X8 Phone (416) EXECUTIVE EMPLOYMENT AGREEMENT THIS AGREEMENT is effective as of the 1st day of August, BETWEEN: The Hospital for Sick Children (the Employer ) - and - Mary Jo Haddad (the Executive ) WHEREAS the Executive was offered, and assumed, the position of President and Chief Executive Officer with the Employer effective November 18, 2004; AND WHEREAS the Employer and Executive wish to continue the employment of the Executive on the terms and conditions set out in this Agreement; NOW THEREFORE, in consideration of the mutual terms and conditions contained in this Agreement, the parties agree to the following:
2 1. Position The Corporation will employ the Executive, and the Executive will serve the Corporation in the office set forth in Schedule A, with effect from the date contained in Schedule A. The Executive shall be responsible for providing the assigned duties as set forth in Schedule A. The Employer may amend the Executive s assignment, duties, and responsibilities as its sole discretion without causing termination of this Agreement provided that the Executive s remuneration is not reduced, her benefits remain substantially the same, her duties are not substantially changed, and her reporting relationships remain unchanged. 2. Term The Executive is appointed for an indefinite term which may be terminated by either party pursuant to the terms of this Agreement. 3. Duties of Employment The Executive shall be responsible for providing the assigned duties as set forth in Schedule A, with power and authority to manage, supervise and direct the Employer s business and affairs, and to undertake such other duties as may, from time to time, be assigned to or vested in the Executive by the Board of Trustees of the Employer, subject always to control and direction of the Board of Trustees of the Employer. The Executive agrees, during the term of this Agreement, to devote substantially the Executive s full working time, attention and abilities to the business and affairs of the Employer and to serve the Employer faithfully and use her best efforts to promote the interests of the Employer. The Executive shall be free to engage in volunteer, community service or charitable work and personal investment activities, provided that these activities do not conflict with the interests of the Employer and provided that the Executive s participation in such activities do not impair the performance of her duties and responsibilities hereunder. 4. Executive Compensation The Executive Compensation Program provides the Executive with a competitive total compensation package that is made up of four elements; Base Salary, Executive Incentive Program (EIP), Benefits and Pension, as well as a Perquisite Program. a) Base Salary The Executive shall be paid a Base Salary as outlined in Schedule A, attached, less statutory deductions, payable in installments in accordance with the Employer s normal payroll practices. The Employer shall annually review the Executive s Base Salary in order to ensure that the base salary is competitive with similar positions in the marketplace. Any further increases shall be made in the absolute discretion of the Employer. Subject to any legislation then in effect and to the discretion of the Board of 2
3 Trustees, the Executive will be eligible for an increase to her base salary effective April 1, b) Executive Incentive Program (EIP) The Executive shall be entitled to participate in the Executive Incentive Program as approved by the Board of Trustees at an incentive target as indicated in Schedule A, attached. The Executive Incentive Plan is based on the achievement of goals that will be established by the Board of Trustees prior to the commencement of each plan year. Incentives shall be calculated based on figures and calculations prepared by the Compensation Management Resources Committee, and the Executive agrees to be bound by those figures and calculations. For ease of administration the Executive Incentive Plan, as approved and amended by the Board of Trustees from time to time, shall govern the employee s participation and rights in the plan. c) Benefits The Employer shall, at its expense, provide the Executive with group benefits for which senior management at the executive level are eligible, including any applicable changes in such benefits made from time to time. In the alternative, the Executive may make her own arrangements to secure private life insurance and disability insurance that is comparable to the coverage provided by the Employer. If this is the case, the Employer will reimburse the Executive for reasonably comparable premiums related to such coverage. d) Pension Plan The Executive shall be entitled to participate in the Pension Plan as defined in Schedule A. e) Automobile The Executive shall be provided with a leased vehicle by the Employer for the use of the Executive in carrying out her duties. All expenses in connection with use of the automobile in carrying out Executive s duties shall be paid by the Employer, including insurance, gas, maintenance and repair expenses subject to the limits approved by the Board of Trustees, from time to time. The Executive is permitted to use the vehicle for personal matters as appropriate. The Executive s T4 will include an amount for personal use of the automobile, including operating expenses, which will be reflected as a taxable benefit pursuant to the Income Tax Act. In the event that the Executive s employment ceases for any reason other than termination for just cause, the Executive will be entitled to continue using the vehicle for a period of six (6) months, at the conclusion of which the Executive must return the vehicle as directed by 3
4 the Employer. During the period of six (6) months, the Employer shall also continue to pay reasonable insurance, maintenance and repair expenses associated with the vehicle. Aside from the benefits described in this paragraph, the Executive will not claim any amounts or damages arising from the loss of use of the vehicle following the cessation of her employment, for any reason. 5. Reimbursement of Expenses The Executive shall be entitled to reimbursement by the Employer for reasonable expenses incurred by her in the course of her Employment in accordance with any current and applicable Employer s expense policy. The Executive will submit her expenses claim together with an itemized account of such expenses and together with appropriate receipts. All expenses claimed, and any other reimbursed costs claimed pursuant to Schedule A of this agreement shall be subject to review, at least annually, by the Chair of the Board of Trustees. 6. Vacation The Executive shall be entitled to vacation with pay annually in accordance with the attached Schedule A. 7. Confidentiality The Executive acknowledges that all material and information made available to the Executive by the Employer in the performance of her duties, is of confidential nature and the Executive agrees that she will not disclose any such information or materials to any person other than the Executives of the Employer who need to be aware of the information, or as the Employer may otherwise direct. Upon termination of employment with the Employer, the Executive will deliver to the Employer any and all devices, records, data, notes, reports, proposals, client lists, correspondence, materials, equipment, or other documents or property belonging to the Employer or its clients or related affiliates/association, etc., which may have come into the Executive s possession during the course of employment. 8. Non-Solicitation The Executive agrees for a period to coincide with the Severance Period, as defined in in Paragraph 11, from the effective date of termination of employment, she shall not solicit or entice, or attempt to solicit or entice, any of the executives of the Employer or the Hospital for Sick Children Foundation to enter into the employment of, or service with, any other employer. 9. Reasonableness of Restrictions The Executive acknowledges and agrees that the breach by her of paragraphs 7 and 8 will cause irreparable damage to the Employer, and that upon any such breach, the 4
5 Employer shall be entitled to equitable relief from a court of competent jurisdiction, including injunctive relief and specific performance, without the necessity of proving actual damages, and shall be further entitled to an accounting of all earnings, profits or other benefits acquired by the Employee as a result of such breach, and to any other remedy now or hereafter provided at law for such breach. The Executive further agrees that the covenants contained in paragraphs 7 and 8 shall survive the termination of this Agreement and the employment relationship with the Employer. 10. Permanent Incapacity Subject to the provisions contained in the Ontario Human Rights Code, if the Executive is absent for more than 180 days in any twelve month period, and there is no reasonable likelihood that the Executive will be able to resume her full-time duties within thirty days, then her employment may be terminated. The Employer will then pay the termination and severance payments set out in this Agreement, as if the Executive s employment had been terminated without just cause and any other individual plan benefits to which the Executive may be entitled. 11. Termination For Cause This Agreement and the Executive s employment may be terminated by the Employer without notice at any time for just cause. In the event of such termination for just cause, the Employer will pay the Executive any base salary owing to her up to and including the date of termination of employment together with accumulated vacation pay and reimbursement of any outstanding expenses incurred on behalf of the Employer to which she is entitled, and nothing more. In the event of termination for just cause, the Executive shall not be entitled to receive any incentive or pro-rated incentive for the fiscal year in which the Executive s active employment ceases. Without Cause The Employer shall have the right to terminate this Agreement and the Executive s employment hereunder at any time without just cause by providing the Executive with written notice to that effect and the Employer shall, at the same time, do the following: i. Pay to the Executive an incentive for the fiscal year in which the Executive s active employment ceases, pro-rated to the date of termination, based upon the higher of: 1) the incentive payment received by the Executive in the fiscal year immediately preceding the termination of her employment, and 2) the average incentive payment received by the 5
6 Executive in the three complete fiscal years immediately preceding the termination of her employment. ii. iii. iv. Provide to the Executive continuance of compensation as set out herein a lump-sum payment equal to the Executive s base salary and the higher of: 1) the incentive payment received by the Executive in the fiscal year immediately preceding the termination of her employment, and 2) the average incentive payment received by the Executive in the three complete fiscal years immediately preceding the termination of her employment for a period of 24 months (the Severance Period ) either by lump sum payment or by salary continuance, at the Executive s option. Continuation of medical and dental benefits only on the same basis prior to termination throughout the Severance Period, and, if applicable, continued reimbursement of the Executive s premiums for private life and disability insurance throughout the Severance Period. Continuation of pension benefits throughout the Severance Period (except that, in the supplemental pension plan, the Executive shall earn only 1 year of pension credit for each year of the Severance Period). v. In consideration of the foregoing payment and benefits continuance, the Executive fully releases and forever discharges the Employer, its agents, servants, successors and assigns of and from any and all actions, claims and demands howsoever arising in respect of the employment of the Executive and in respect of the Employment Agreement. The Executive further acknowledges that the foregoing payments and benefit continuance are in full and complete satisfaction of her entitlement to reasonable notice at common law or under any applicable statute. 12. Voluntary resignation The Executive agrees to provide the Employer with a minimum of six (6) months notice should she decide to voluntarily resign her position as President and Chief Executive Officer, which notice may be waived by the Employer at its sole discretion. In the event that the Employer waives such notice, the Employer will nevertheless continue to provide the Executive with her base salary, benefits, and other compensation under this Agreement, including accrued incentive, until the conclusion of the six (6) month period. In the event of resignation, and provided the Executive complies with the requirements set out in paragraph 12 of this Agreement, the Executive shall be entitled to receive an incentive for the fiscal year in which the Executive s active employment ceases, prorated to the date of termination, based on the higher of 1) the incentive payment received by the Executive in the fiscal year immediately preceding the effective date of her resignation, and 2) the average incentive payment received by the Executive in the three complete fiscal years immediately preceding the effective date of her resignation. 6
7 If the Executive does not comply with the requirements set out in paragraph 12 of the Agreement, she shall not receive any incentive or pro-rated incentive for the fiscal year in which her active employment ceases. 13. Arbitration Subject to the Employer s rights in paragraph 9 of this Agreement, any other dispute arising from the Executive s employment hereunder, including but not limited to matters of validity, interpretation, and application, shall be determined exclusively by and through final and binding arbitration in Toronto, each party hereto expressly and conclusively waiving its right to proceed to a judicial determination with respect to the merits of such arbitrable matters. Such arbitration shall be conducted pursuant to the provisions of the Arbitration Act (Ontario) then in effect. It is expressly understood and agreed by the parties that a party may compel arbitration pursuant to his section and that any award entered by the arbitrators may be enforced, without further evidence or proceedings, in any court of competent jurisdiction. 14. Entire Agreement and Amendments This agreement constitutes the entire agreement between the parties pertaining to the Executive s employment and supersedes all prior agreements, negotiations, discussions and understandings, written or oral, between the parties. No amendment to this Agreement shall be valid unless made in writing and signed by both parties. 15. Severability In the event that any provision or part of a provision of this Agreement shall be deemed void, invalid, illegal or unenforceable by a court of competent jurisdiction, the remaining provisions or parts of the provision shall remain valid and enforceable. 16. Notices Any notice required or permitted to be given under this Agreement shall be in writing and shall be delivered personally or by registered mail, and shall be deemed to have been given on the earlier of receipt or the fifth day after mailing by registered mail, addressed to the Executive at her last residential address known to the Employer, and addressed to the Employer at its head office to the attention of the Chair of the Board of Trustees. 17. Governing Law and Attornment The validity, interpretation construction and performance of this Agreement shall be governed by the laws of the Province of Ontario, and each of the parties to this Agreement hereby irrevocably attorns to the jurisdiction of the courts of Ontario. 7
8 18. Independent Legal Advice The Executive acknowledges that she has the right to obtain independent legal advice before signing this Agreement. The Executive hereby acknowledges that either such advice has been obtained or that the Executive does not wish to seek or obtain such independent legal advice. The Executive further acknowledges that the Executive has read this Agreement and fully understands the terms of the Agreement, and further agrees that all such terms are reasonable and that the Executive is signing this Agreement freely, voluntarily and without duress. In witness whereof the parties hereto have executed this Agreement as of the day and year first written above. 8
9 SCHEDULE A Effective date August 1, 2011 Mary Jo Haddad 1. Position The Executive shall be employed in the position of President and Chief Executive Officer effective July 19, 2004, and will be responsible for the strategic and tactical operations of the Hospital for Sick Children as directed and defined from time to time by the Board of Trustees. 2. Base Salary The Employer agrees that the Executive s Base Salary shall be C$520, Incentive The Executive will be eligible to participate in the annual Executive Incentive Program (EIP), at an incentive target at 30% of Base Salary. The full EIP range for the Executive is 0-40% and will be determined and approved by the Board of Trustees, based on the Executive s personal performance as well as organizational results. Participation in the program shall be governed and administrated in accordance with the Plan Document, which will be approved and administered by the Board of Trustees, and may be amended from time to time in its sole discretion (except for the amount of the annual incentive target, which shall be 30% of Base Salary). 4. CEO Perquisite Program The CEO shall be eligible to participate in the Hospital for Sick Children s CEO Perquisite Program, as outlined in the Executive Programs Overview. The goal of the CEO Perquisite Program is to cover business-related expenses for the effective performance of the CEO s duties. 5. Pension Plan The Executive shall continue her uninterrupted participation in The Hospital for Sick Children s regular Pension Plan and supplemental pension plan subject to the plans participation rules. The Executive will continue to earn 2 years of pension credit for every year of service as President and CEO. This 2 for 1 pension credit shall not apply during the Severance Period. 6. Deferred Paid Administrative Leave Irrespective of the reason for departure, at the completion of the Executive s employment, the Employer will provide the Executive with, in addition to any applicable severance allowance, a further full salary continuation of 3 months which will include uninterrupted benefits and perquisites. 7. Vacation The Executive is entitled to six (6) weeks vacation per year, accrued based on regular hours worked throughout the year. If vacation is not taken during the relevant period, the right to such vacation will not be lost and, for greater certainty, it is agreed that with the prior written approval of the Chair of the Board of Trustees, the vacation entitlement may be carried over from one period into the following period subject to the needs of the hospital being served. 8. Outplacement The Employer shall pay for outplacement assistance following the termination of the Executive s employment without cause, with a provider of the Executive s choice, to a maximum of $25,000, plus HST.
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