Amendment ID: S2418-5-R1

Redraft Amendment 5

Garden Leave Clause

Ms. Spilka moves to amend the amendment in section 3, by inserting after the definition of “Garden leave clause” the following definition:- ““Long term compensation plan”, a plan offered by an employer for acceptance by an employee that includes compensation linked to the long term results of the business entity, that may include stock options, restricted or performance stock units, or other consideration and variable payment terms offered by the employer for acceptance by an employee and shall include notice of the terms of the compensation plan as it relates to payments to the employee for termination of employment with and without cause. The combination of any severance payments and the value of long term compensation initially offered to an employee that is subsequently terminated without cause shall be equal to or exceed payments applicable under a garden leave clause.”; and

in said section 3, by striking out, in lines 181 to 196, inclusive, proposed clause (10) of proposed subsection (b) of proposed section 24L of chapter 149, and inserting in place thereof, the following words: - “(10) The noncompetition agreement shall be supported by a garden leave clause or other mutually-agreed upon consideration between the employer and the employee, provided that such consideration is offered in connection with a long term compensation plan; provided, however, that if the employee’s annual earnings by the employer in the 12 calendar months immediately preceding the date of termination of employment exceeds $600,000, the employer shall not be required to provide garden leave or other mutually-agreed upon consideration between the employer and the employee offered in connection with a long term compensation plan. To constitute a garden leave clause within the meaning of this section, the agreement shall (i) provide for the payment, consistent with the requirements for the payment of wages under section 148, on a pro-rata basis during the entirety of the restricted period, of at least 50 per cent of the employee’s highest annualized base salary paid by the employer within the 2 years preceding the employee’s termination or other mutually agreed-upon terms in a long term compensation plan; and (ii) except in the event of a breach by the employee, not permit an employer to unilaterally discontinue or otherwise fail or refuse to make the payments; provided, however, if the restricted period has been increased beyond 12 months as a result of the employee’s breach of a fiduciary duty to the employer or the employee has unlawfully taken, physically or electronically, property belonging to the employer, the employer shall not be required to provide payments to the employee during the extension of the restricted period.”.”