WeightWatchers 2004 Annual Report Download - page 54

Executive Savings and Profit Sharing Plan
We sponsor a savings plan for salaried and eligible hourly employees. This defined contribution
plan provides for employer matching contributions up to 100% of the first 3% of an employee’s eligible
compensation. The savings plan also permits employees to contribute between 1% and 13% of eligible
compensation on a pre-tax basis.
The savings plan also contains a profit sharing component for full-time salaried employees that are
not key management personnel, which provides for a guaranteed monthly employer contribution for
each participant based on the participant’s age and a percentage of the participant’s eligible
compensation. In addition, the profit sharing plan has a supplemental employer contribution
component, based on our achievement of certain annual performance targets, and a discretionary
contribution component.
We also established an executive profit sharing plan, which provides a non-qualified profit sharing
plan for key management personnel who are not eligible to participate in our profit sharing plan. This
non-qualified profit sharing plan has similar features to our profit sharing plan.
Continuity Agreements
Purpose; Covered Executives
The Board of Directors has determined that it is in the best interests of our stockholders to
reinforce and encourage the continued attention and dedication of our key executives to their duties
with us, without personal distraction or conflict of interest in circumstances that could arise in
connection with any change of ownership or control of the Company. Therefore, in October 2003, we
entered into continuity agreements with the following executives: Linda Huett, Ann Sardini, Robert
Hollweg, and certain other executive officers. These agreements contain terms that are substantially
similar to each other, except where described below.
Term of Agreements
These agreements have an initial term of three years from the date of execution, and continue to
renew annually thereafter unless either party provides 180-day advance written notice to the other party
that the term of the agreement will not renew. However, upon the occurrence of a ‘‘change in control’’
(as defined in the agreements), the term of the agreement may not terminate until the second
anniversary of the date of the change of ownership or control of the Company.
Severance Payments and Benefits.
If, within two years following a change of ownership or control of the Company, an executive’s
employment is terminated without cause by us or for good reason by the executive (as such terms are
defined in the agreements), the following executives will receive the following payments and benefits:
• Ms. Huett, Ms. Sardini and Mr. Hollweg are entitled to receive the following:
(i) A lump sum cash payment equal to three times the sum of (x) the executive’s annual base
salary on the date of the change in control (or, if higher, the annual base salary in effect
immediately prior to the giving of the notice of termination) and (y) the executive’s target annual
bonus (the ‘‘target bonus’’) in respect of the fiscal year of the Company (a ‘‘fiscal year’’) in which
the termination occurs (or, if higher, the average annual bonus actually earned by the executive in
respect of the three full fiscal years prior to the year in which the notice of termination is given)
under our bonus plan;
(ii) A lump sum cash payment equal to the sum of (w) the executive’s unpaid base salary and
vacation days accrued through the date of termination, (x) the unpaid portion, if any, of bonuses
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