Exhibit (10)(iii)(A)21
July 29, 2003
Mr. Xxx Xxxxxx
Dear Xxx:
This letter agreement ("the Agreement") will establish an individual
non-qualified pension arrangement ("Individual Pension"), which, subject to the
terms and conditions below, will provide you a benefit payable from AT&T Corp.
(the "Company") operating assets upon your retirement from the Company, and
supercedes all other oral and written communication on the subject. This
Individual Pension will vest on January 1, 2008 contingent upon continued
employment with the Company, provided, however, that the Individual Pension will
immediately vest for Company-initiated terminations for other than "Cause" (as
defined), for terminations due to death, disability, or Good Reason (as defined)
occurring on or after the effective date of this Agreement, or if the Company is
subject to a Change in Control ("CIC"), as defined in the AT&T 1997 Long Term
Incentive Program. Only for termination for Cause or in the event of your
voluntary termination prior to vesting will this Individual Pension be null and
void in its entirety. In addition, this Individual Pension is subject to the
provisions of the AT&T Non-Competition Guideline.
With respect to the amount payable under this Individual Pension at
your retirement/termination, the single life annual annuity amount payable will
be determined as (a) minus (b) as set forth in the charts below:
(a) the single life annual pension annuity benefits calculated in
accordance with the table set forth below:
Percentage of Final 3 Year
Average Total Cash Compensation
Year of Retirement/ Termination (Base Pay plus Actual Bonus Paid in Year)
------------------------------- -----------------------------------------
2003 4.00%
2004 6.00%
2005 8.00%
2006 10.00%
2007 12.00%
2008 14.00%
2009 16.00%
2010 18.00%
2011 20.00%
2012 22.00%
2013 24.00%
2014 26.00%
2015 28.00%
2016 30.00%
2017 32.00%
2018 34.00%
2019 36.00%
2020 38.00%
2021 40.00%
2022 42.00%
2023 44.00%
2024 46.00%
2025 48.00%
2026 50.00%
(b) any single life annual annuity benefits payable from AT&T, i.e.
pension benefits under the AT&T Management Pension Plan (AT&TMPP),
AT&T Non Qualified Pension Plan (AT&TNQPP), AT&T Excess Benefit
and Compensation Plan (AT&TEBCPP), minimum retirement benefits
under the AT&T Senior Management Long Term Disability and Survivor
Protection Plan (AT&TSMLTD&SPP) if applicable, as well as by any
qualified and nonqualified pension benefits from prior employers.
Joint and survivor benefits on your death, whether your death occurs as an
active employee or following your termination, will be governed by the
administrative guidelines applicable to this Agreement.
In the event of your involuntary termination within two years following
a CIC, for reasons other than for Cause or if you terminate employment for Good
Reason within two years following a CIC, your benefit under this Individual
Pension will be calculated by accelerating the Individual Pension schedule above
by adding three years to the schedule, i.e. the applicable percentage will be
that associated with the "Year of Retirement/Termination" three years from your
actual termination year. In addition, the cash compensation used in calculating
the final three year average cash compensation will not use cash compensation
for years in which you did not hold the position of Chief Financial Officer.
For purposes of this Agreement:
a) "Cause" shall mean:
i. your conviction (including a plea of guilty or nolo
contendere) of a crime including theft, fraud,
dishonesty or moral turpitude;
ii. violation by you of the Company's Code of Conduct or
Non-Competition Guideline;
iii. gross omission or gross dereliction of any statutory,
common law or other duty of loyalty to the Company or
any of its affiliates; or
iv. repeated failure to carry out the duties of your
position despite specific instruction to do so.
b) "Good Reason" prior to a CIC shall mean the occurrence without
your express written consent of any of the following events:
i. Your demotion to a position which is not of a rank
and responsibility comparable to members of the
current Operations Group or those of a
similar/replacing governance body; provided, however,
that the Company's decision not to continue the
Operations Group shall not be Good Reason, and
provided, further, that (1) changes in reporting
relationships shall not, alone, constitute Good
Reason and/or (2) a reduction in your business unit's
budget or a reduction of your business unit's head
count, by themselves, do not constitute Good Reason;
or
ii. A reduction in your "Total Annual Compensation"
(defined as the sum of your Annual Base Salary Rate,
Target Annual Incentive and "Target Annual Long Term
Incentive Grants") for any calendar or fiscal year,
as applicable, to an amount that is less than the
Total Annual Compensation that existed in the prior
calendar or fiscal year, as applicable. For purposes
of this Paragraph (b)(ii) the dollar value of the
"Target Annual Long Term Incentive Grants" shall
exclude the value of any special one-time or periodic
long-term incentive grants, and shall be determined
by valuing Performance Shares, Stock Units,
Restricted Stock, Restricted Stock Units, etc., at
the market share price utilized in valuing the annual
Senior Management compensation structures in the
materials presented to the Compensation and Employee
Benefits Committee of the Company's Board of
Directors ("the Committee") when authorizing such
grants, and assuming 100% performance achievement if
such grants include performance criteria. Stock
Options and Stock Appreciation Rights will be valued
by the Black-Scholes methodology (and related share
price) as utilized in the materials presented to the
Committee when authorizing such grants.
c) "Good Reason" within two years following a CIC shall be in
accordance with the October 23, 2000 CIC Board Resolutions,
which include reduction in authority or responsibility,
reduction in compensation, and business relocation beyond a
reasonable commuting distance.
Notwithstanding the foregoing, the Company may require you to change to
an equivalent executive position within the Company with substantially
similar levels of duties or responsibilities without causing Good
Reason to occur.
You must notify the Company within 60 days following knowledge of an
event you believe constitutes Good Reason, or such event shall not
constitute Good Reason hereunder.
This agreement may not be amended or waived, unless the amendment or
waiver is in a writing signed by you and the Company's Executive Vice
President-Human Resources.
It is understood and agreed that you will not talk about, write about,
or otherwise publicize the terms or existence of this Agreement or any fact
concerning its execution or implementation unless required by law or to enforce
the terms of this Agreement. You may, however, discuss its contents with your
spouse, legal and/or financial counselor,
provided that you advise them of your obligations of confidentiality and that
any disclosures made by any of them may be treated by the Company as disclosures
made by you for purposes of this provision.
THIS AGREEMENT IS NOT AN EMPLOYMENT CONTRACT AND SHOULD NOT BE
CONSTRUED OR INTERPRETED AS CONTAINING ANY GUARANTEE OF CONTINUED EMPLOYMENT.
THE EMPLOYMENT RELATIONSHIP WITH THE COMPANY IS BY MUTUAL CONSENT
("EMPLOYMENT-AT-WILL"). THIS MEANS THAT EMPLOYEES HAVE THE RIGHT TO TERMINATE
THEIR EMPLOYMENT AT ANY TIME FOR ANY REASON. LIKEWISE, THE COMPANY RESERVES THE
RIGHT TO DISCONTINUE YOUR EMPLOYMENT WITH OR WITHOUT CAUSE AT ANY TIME AND FOR
ANY REASON.
You understand that the terms of this Agreement shall apply to the
Company and its successors. The Company specifically reserves the right to
assign the terms of this Agreement to any successor, whether the successor is
the result of a sale, purchase, merger, consolidation, asset sale, divestiture
or spin-off or any combination or form thereof. No sale, purchase, merger,
consolidation, asset sale, divestiture or spin-off or any combination or form
thereof by the Company shall be construed as a termination of your employment
and will not be considered a termination for purposes of this Agreement.
The construction, interpretation and performance of this Agreement
shall be governed by the laws of the State of New Jersey, without regard to its
conflict of laws rule.
In addition, all of the benefits provided under this Agreement are
subject to forfeiture if you violate the AT&T Non-Competition Guideline, a copy
of which has been previously provided to you.
Xxx, I am happy to present this special pension arrangement to you. It
recognizes the extraordinary contributions that we expect you to continue to
make to our business. If you agree with the terms and conditions detailed above,
sign and date this Agreement in the spaces provided below and return the
original executed copy to me.
Sincerely,
/s/ Xxxxxx X. Xxxxxxxx-Xxxx
Acknowledged and Agreed to:
/s/ Xxxxxx X. Xxxxxx 8/4/2003
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Xxxxxx X. Xxxxxx Date
