[LOGO OMITTED]
EXHIBIT 10.24
Xxxx X. Xxxxxx
Chairman, President & CEO
Corporate Headquarters
X. X. Xxxxx & Co.
0000 Xxxxx Xxxxx
Xxxxxxxx, XX 00000
May 7, 1999 (000) 000-0000
Fax: (000) 000-0000
Xx. Xxxxxxx X. Xxxxxxxx
00 Xxxxx Xxx Xxxxx
Xxxxxxx, XX 00000
Dear Xxxx,
This letter agreement specifies the terms of your employment with X. X. Xxxxx &
Co. (the "Company") as Vice President, Public Relations, Communications,
Governmental and Environmental Affairs, which will be presented for approval to
the Company's Board of Directors (the "Board") and/or the Compensation
Committee of the Board, as applicable, at its next meeting. The Board is
extremely pleased that you will be joining the Company and believes you will
make a valuable contribution to the Company's future.
If you agree with the terms of this letter agreement, please sign where
indicated below and return one fully executed copy to me. An additional copy of
this letter is also enclosed for your records.
RESPONSIBILITIES
Your employment with the Company is subject to Board approval and will begin as
of June 1, 1999. Your title will be "Vice President, Public Relations,
Communications, Governmental and Environmental Affairs" of the Company, and you
will report to me.
Your principal obligations, duties and responsibilities will generally be to
serve as the "chief spokesperson" for the Company. In this role you will plan,
direct and implement public relations and communications programs for the
external and internal audiences. You will also advise senior management
concerning the political environment and identify, monitor and influence
legislative affairs which impact the Company as well as direct environmental
health and safety projects and Grace "legacy" liabilities. Your office will be
located at the Company's Headquarters in Columbia, Maryland.
TERM OF AGREEMENT
The term of your employment under this agreement will be for a period of three
years, beginning on the date your employment with the Company commences, June
1, 1999 and ending on May 31, 2002 (such period is referred to in this
agreement as your "Employment Term").
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If your employment as Vice President, Public Relations, Communications,
Governmental and Environmental Affairs of the Company (or in any other
position) continues after the Employment Term, and no other contrary
arrangements have been mutually agreed in writing between you and the Board,
then the arrangements described in this agreement will be discontinued and you
will be an employee of the Company "at will" subject to the same requirements
as similarly situated employees of the Company at that time, except as provided
under the following sections entitled "Severance Pay Arrangement" and "Special
Supplemental Retirement Payment Arrangement".
COMPENSATION
1. Your initial annual base salary as Vice President, Public Relations,
Communications, Governmental and Environmental Affairs will be
$250,000.00. Thereafter, your base salary will be subject to periodic
reviews on the same basis and at the same intervals as are applicable to
other senior officers of the Company.
Your salary will cease to accrue immediately upon your termination of
employment with the Company, whether you voluntarily cease performing
services or otherwise. (Note, however, the provisions below under
"Severance Pay Arrangement".)
2. You will be eligible to participate in the Company's Annual Incentive
Compensation Program. Cash awards under this Program are contingent upon
individual performance, and will be determined by the financial results of
the Company as a whole. As a Vice President at your level, under the
current provisions of the Program, you will be eligible for a targeted
award of 37% of your annual base salary; however, your actual award for
1999 will be no less than $92,5000. All annual incentive compensation
awards are subject to approval by the Compensation Committee and the Board
and will be contingent upon your remaining with the Company through the
date of payment (except with respect to the special provision for the 1999
award described in this paragraph). However, the payment for 1999
described above will be made in March 2000 (reduced, if applicable, on a
prorate basis to exclude any duplicate payments that may be payable to you
under your severance arrangement) even in the event your employment is
terminated by the Company without "Cause" before the date of payment,
including termination of employment without "Cause" following a
change-in-control of the Company. You will not, however, be entitled to
that payment if you voluntarily resign, or are terminated for "Cause",
prior to March 2000.
3. Management will recommend that you be granted a stock option at its next
meeting, covering 32,500 shares of Grace Common Stock at the "Fair Market
Value" on such date, which will vest in three approximately equal
installments of 10,883, 10,883 and 10,884 on the date following each
anniversary of the date of your grant, in 2000, 2001 and 2002,
respectively; provided, however, all such installments would vest
immediately upon termination of employment by the Company without "Cause"
including termination of employment without "Cause" following a
change-in-control of the Company. The stock option will be granted under
the Company's 1998 Stock Incentive Plan, which will govern the terms of
that option, except as otherwise provided by this letter agreement.
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You will be eligible to receive periodic stock option grants in the future
at the same times as other officers of the Company, and covering a number
of shares consistent with your position as an officer of the Company.
4. Management will recommend that you will be granted a restricted stock
award covering 10,000 shares of Grace Common Stock on the date of the next
Board Meeting, with the provision that you will vest in all of the shares
and the restrictions will lapse at the end of 3 years, i.e., the
expiration of the Employment Term on May 31, 2002; provided, however, any
such shares will vest immediately upon the termination of your employment
by the Company, without "Cause" (including termination of employment by
the Company without "Cause" following a "change-in-control" of the
Company, within the meaning of your "Executive Severance Agreement"
described below), or upon your death or disability as defined under the
Company's Long-Term Disability Income Plan.
5. Consistent with your election as an officer of the Company, the Board will
be requested to authorize the Company to enter into an Executive Severance
Agreement or a so-called "golden parachute" with you. In general, the
terms of that agreement would provide for a severance payment of 3 times
the sum of your annual base salary plus your targeted annual incentive
compensation award, and certain other benefits, in the event your
employment terminates under certain conditions following a
change-in-control of the Company.
The form and provisions of your Executive Severance Agreement will be the
same as applicable to other elected officers of the Company.
SEVERANCE PAY ARRANGEMENT
If your employment is terminated by the Company without "Cause" during your
Employment Term, you will be entitled to the severance payment described in the
next sentence. The severance payment will be 2 times a dollar amount equal to
137% of your annual base salary at the time your employment is terminated. The
severance payment may be made to you in installments, at the same time and in
the same manner as salary continuation payments, over a period of two years
beginning as of the date you are terminated. However, at your option, the
entire severance payment may be paid to you in a single lump-sum as soon as
practical after your termination (if approved by the Compensation Committee).
At the end of the day your Employment Term expires (i.e., May 31, 2002), this
severance pay arrangement will no longer be applicable to you, and your
continued employment with the Company will be as an employee "at will",
provided, however, you will, as of the day immediately after that date, become
entitled to a severance payment of one times a dollar amount equal to 137% of
your annual base salary, if you are terminated by the Company without "Cause",
at any time after May 31, 2002.
You will not, in any event, however, be entitled to the severance payment
described above if, at the time your employment terminates, your employment
terminates as the result of your death, or you are entitled to payments under
your Executive Severance Agreement described above, or to disability income
payments under the Grace "LTD Plan" and/or "ESP Plan" described below.
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Also, if you receive a severance payment under this agreement, you will not be
entitled to any other severance pay from the Company.
SPECIAL SUPPLEMENTAL RETIREMENT PAYMENT ARRANGEMENT
Management will recommend that the Board approve a special retirement
arrangement to recognize, in part, your service with prior employers and to
provide you with meaningful mid-career accrual of retirement benefits. As
described below, the Company will provide you with additional years of credited
service, with a maximum of 4 additional years, in determining your total
retirement benefits from the Company. The benefit associated with those
additional years would be calculated as if that additional benefit would be
payable under the X. X. Xxxxx & Co. Retirement Plan for Salaried Employees and
the Supplemental Executive Retirement Plan ("SERP") formulas (as described in
items 2 and 3 below).
Basically, the additional service would be credited to you as follows:
1. You would be credited with a minimum of 4 years of credited service on
your date of employment.
2. Following your date of employment, you will be credited with an additional
one-half year of credited service under this supplemental arrangement for
each year of credited service you earn under the Grace Salaried Retirement
and Supplemental Executive Retirement Plans.
For example, if you were employed for 2 years after your date of
employment, your total retirement benefit (i.e., from the plans plus the
supplemental arrangement) would be based on the minimum of 4 years of
credited service since your accumulated service (i.e., service under the
plans plus under the supplemental arrangement) would be less than the
minimum, i.e., 3 years ( 2 x 1.5). If you were employed for 4 years, you
would receive a total retirement benefit based on 6 years of credited
service since your credited service under the plans and the supplemental
arrangement would exceed the minimum number (i.e., 4). After 6 years, your
total retirement benefit would be based on 9 years of credited service;
and if you are employed for 8 years, your total retirement benefit would
be based on 12 years of credited service.
3. After 10 years of employment with the Company, credited service would
accrue each year under the Grace Retirement and Supplemental Retirement
Plans only, because you would already have been credited with the maximum
number of additional years of credited service under the supplemental
arrangement - 4. For example, after 9 years of employment with the
Company, your total retirement benefit would be based on 13 years of
credited service.
The supplemental retirement payment would not be offset by any benefits payable
to you from any of your previous employers, and would be payable from the
general assets of the Company -- it would not be pre-funded in any manner.
This supplemental retirement arrangement would apply only if your employment
with the Company ceases on or after the date your Employment Term expires
(i.e., May 31, 2002), or if you are terminated during that Term, without
"Cause", including termination without "Cause" following a change-in-control of
the Company. However, in any event, this arrangement would not be applicable if
you voluntary terminate your employment before
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your Employment Term expires, or if you are terminated for "Cause" prior to the
expiration of that Term. In the event of your death while you are entitled to a
supplemental benefit, that benefit will be payable as governed by the terms of
the Salaried Retirement Plan and the Supplemental Executive Retirement Plan.
For purposes of determining any supplemental retirement benefit that may be
payable to you, if you leave the Company after the expiration of your
Employment Term or you are terminated by the Company without "Cause", your
"final average compensation" will be determined in accordance with the formula
provided under the basic Salaried Retirement Plan, i.e., your final average
compensation would be determined by the number of months you are employed if
less than 60 months.
Note, if the Grace Salaried Retirement Plan is amended in a manner that affects
the calculation of benefits, while you are employed by the Company, then this
supplemental retirement payment may be adjusted in an equitable manner
consistent with such amendment. Any such adjustment will be determined by the
actuary for the Salaried Retirement Plan; but such adjustment may not in any
event decrease your supplemental retirement payment below an amount that would
be calculated based on your years of service and "final average compensation"
as of the day before the effective date of such amendment.
DEFINITION OF CAUSE
"Cause", for purposes of this agreement, means:
(i) Commission by you of a criminal act (i.e., any act which, if successfully
prosecuted by the appropriate authorities would constitute a crime under
State or Federal law) or of significant misconduct, which has had or will
have a direct material adverse effect upon the business affairs,
properties, operations or results of operations or financial condition of
Company,
(ii) Refusal or failure of you to comply with the mandates of the Board, or
failure by you to substantially perform your duties hereunder, other than
such failure resulting from your total or partial incapacity due to
physical or mental illness, which refusal or failure has not been cured
within 30 days after notice has been given to you, or
(iii) Breach of any of the terms of this agreement by you, which breach has not
been cured within 30 days after notice has been given to you.
RELOCATION ASSISTANCE
The Company will provide relocation assistance to you under the Headquarters
Official Relocation Policy for current employees with the following features of
the current "Productivity Efficiency Plan" relocation policy: a monthly
renters/commuters allowance of $2,500 per month, for up to 12 months (total of
$30,000); and, if you elect to purchase a home in Maryland within one year of
your start date, a miscellaneous relocation allowance equal to 2 months of base
salary, grossed up for income taxes; and a maximum $75,000 new home purchase
allowance, up to the difference between your new home price and your old home
selling price, less total renters/commuters expenses. The allowance will be in
the form of an interest-free loan, forgiven over five years, and will be
taxable as income to you.
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OTHER BENEFIT PROGRAMS
As a senior officer of the Company, you will also be eligible to participate in
the following benefit plans and programs (subject to the actual provisions of
the plans and programs, and as amended from time to time):
1. The Grace Deferred Compensation Program provides that you may elect to
defer a portion of your base salary (from a minimum of $200 per month to a
maximum of 25% of base salary) and all or a portion of your annual
incentive compensation. Deferred amounts are credited with interest equal
to the greater of (i) the prime rate plus 2 percentage points or (ii) 120%
of the prime rate.
2. The X. X. Xxxxx & Co. Retirement Plan for Salaried Employees ("Grace
Salaried Retirement Plan") is a "tax qualified" plan that provides a
pension at retirement equal to 1.50% of final average compensation (as
defined by the Plan, which includes annual base salary and annual
incentive compensation in the sixty (60) consecutive highest-paid months
during the last 180 months of employment), less 1.25% of the primary
Social Security benefit, multiplied by years of credited service.
Participation in this Plan is effective the beginning of the month
following one (1) year of employment with credited service retroactive to
the first of the month beginning on or following the date of hire. A
participant becomes 100% vested upon the earlier of (1) reaching five
years of service or (2) attaining age 55.
3. The X. X. Xxxxx & Co. Supplemental Executive Retirement Plan ("SERP") is
an unfunded Company plan that supplements benefits under the Grace
Salaried Retirement Plan. The SERP pays retirement benefits which would
otherwise be paid under the terms of the Salaried Retirement Plan, but for
limits and exclusions imposed by tax law. For example, pension benefits
related to base salary or incentive compensation awards, which an
executive elects to defer, will be paid under the provisions of the SERP
(not the Grace Salaried Retirement Plan). The SERP also pays any pension
benefits that an executive accrues in excess of the "tax qualified" plan
limits (currently $130,000 per year) and compensation limit (currently
$160,000 per year). Participation, vesting and payment options in the SERP
follow the same rules as the Grace Salaried Retirement Plan.
4. The X. X. Xxxxx & Co. Salaried Employee Savings & Investment Plan ("S&I
Plan"). At the beginning of the month following one (1) year of
employment, the S&I Plan permits you to save a portion of your
compensation up to a maximum permitted by law by contributing such amount
to the Plan by payroll deduction. With respect to the first 6% you
contribute, the Company will match $1 of Grace stock for each $2 you save.
Your contributions are invested in one or more of seven funds at your
option. Xxxxx's S&I Plan is a so-called "401(k) plan" and, therefore, a
portion of your contribution can, at your election, be treated as deferred
income for tax purposes. Amounts of allowable contributions are subject to
certain Internal Revenue Code limits, one of which limits annual
before-tax savings amounts (for 1999, this limit is $10,000). The S&I Plan
currently permits an 8% maximum savings rate for before-tax amounts.
5. The X. X. Xxxxx & Co. Savings & Investment Plan Replacement Payment
Program is designed to "make-up" matching Company contributions that are
not paid due to the compensation threshold limit under the Internal
Revenue Code. To be eligible to receive a "make-up" payment each year, an
executive must participate in the S&I Plan
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at a rate of at least 6% during the entire year until he or she reaches the
compensation limit. The replacement payment then equals 3% of the year's
plan compensation in excess of the legally-imposed compensation limit
(which is $160,000 for 1999).
You may elect to receive your replacement payment by check at the time
annual incentive compensation awards are paid or credited (which is
currently in March of the year following the year to which the payment
relates), or you may elect to defer the replacement payment you would
otherwise receive. If you choose to defer the payment, you will receive
earnings credited under the Deferred Compensation Program.
6. The X. X. Xxxxx & Co. Long-Term Disability Income Plan ("LTD Plan"). You
will become eligible to participate in the LTD Plan on a voluntary and
contributory basis on the first of the month following or coincident with
your date of employment. Generally, the LTD Plan provides for a monthly
income of 60% of base monthly earnings should you become disabled, within
the meaning of the Plan. The maximum monthly benefit under the Plan is
$30,000.
7. Executive Salary Protection Plan ("ESP Plan"). Consistent with your status
as a senior officer of the Company, beginning with the first date of your
employment with the Company, you will commence participation in the ESP
Plan. Under the ESP Plan, in the event of your death while employed by the
Company and prior to age 70, the Company will continue to pay a portion of
your base salary to your beneficiary(ies) for a period of time depending
upon your age at death. This Plan also provides certain disability
benefits which are supplemental to the Company's LTD Plan.
8. The X. X. Xxxxx & Co. Voluntary Group Accident Insurance Plan. You will
become eligible to participate in this Plan effective on the first date of
employment. Participation is voluntary and requires employee
contributions. Under the terms of the Plan, you may elect coverage of
$10,000 through $500,000. Coverage is available on an individual basis or
under a family plan.
9. The X. X. Xxxxx & Co. Business Travel Accident Insurance Plan. You will
become a participant in this Plan effective on the first date of your
employment with the Company. The Plan provides protection against death,
permanent total disability or dismemberment. The principal sum is 5 times
your annual base salary (with a maximum principal sum of $1,500,000). In
your case, as in the case of other executives, the usual requirements that
you be away from home or normal place of work and that you be on Company
business do not apply in order to be eligible for coverage.
10. The X. X. Xxxxx & Co. Group Term Life Insurance Program. You will
participate in the Company's basic group term life insurance plan under
which coverage is 1.5 times your annual base salary.
Supplemental life insurance coverage, which is voluntary, is also
available at moderate rates based on your age, up to an additional 3 times
your annual base salary (with a maximum of $1,500,000 of supplemental
coverage). Dependent life insurance is also available to your spouse and
unmarried dependent children to age 19 (or to age 23 if the child
regularly attends school full-time).
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11. Personal Excess Liability Insurance is effective on the first day of
employment, as an officer of the Company, for a $4,000,000 limit of
liability. Coverage is for personal liability claims made against you or a
family member for bodily injury, property damage, and personal injury. The
policy extends liability coverage over and above what is covered by the
primary underlying liability coverage contained in your homeowners,
automobile, watercraft and recreational vehicle insurance policies.
12. The X. X. Xxxxx & Co. Group Medical Plan is effective on the first day of
employment and offers protection to you, your spouse and unmarried
children to age 19 (age 23 if the child regularly attends a qualified
school on a full-time basis). The Baltimore/ Washington network medical
plan utilizes an established network of doctors and hospitals in the area.
Employees have a choice of two different plan options and a total of four
different providers of coverage. The Point of Service (POS) option allows
you the choice to use a network provider or the freedom to go outside the
network for medical care; an HMO option requires that you use network
providers only. The POS option is provided by Aetna U.S. Healthcare and
the three local HMO options are provided by Freestate Health Plans, M.D.
IPA and Xxxxxx Permanente. Employees and their family members must choose
a primary care physician who will oversee all of their medical needs. Your
cost for participation in 1999 and hereafter, under the current plan
provisions, will be 40% of the monthly premium
You will also have the opportunity to contribute to a flexible spending
account up to $5,000 per year.
An employee hired after January 1, 1993, qualifies for post-retirement
medical coverage if he or she has at least 10 years of service at
retirement (age 55 or later). Qualification for this coverage gives the
retiree access to medical coverage in the Grace plan, but the retiree is
expected to pay 100% of the premium cost of this coverage. Premium cost is
determined annually based on experience. Actual claims dollars are paid by
the Company.
13. The X. X. Xxxxx & Co. Dental Plan is fully paid for by the Company and
provides coverage for you and your eligible family members from on the
first day of employment. Benefits under the plan reflect whether dental
services are obtained from an in-network or out-of-network provider.
14. Executive Registry Program. Under this Program you will have access to a
network of medical services offered by leading hospitals and medical
centers in large cities throughout the U.S. and abroad. These hospitals
and medical centers serve as sources where members can obtain high-quality
emergency medical care while traveling or temporarily living away from
home either in the U.S. or abroad.
FINANCIAL COUNSELING PROGRAM
As an officer of the Company, you will be eligible to participate in the
Company's Financial Counseling Program. This Program provides you with
financial and estate planning and income tax preparation assistance. The
Company will pay up to $4,000 per calendar year for reasonable, supportable
expenses, except that the maximum amount for the first year of your
participation will be $9,000.
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COMPANY CAR
The Company will arrange for you to lease, at the Company's expense, an
automobile for use on Company business and for your personal use. The terms of
the coverage will be the same as those provided for other officers of the
Company, including a purchase price cap of $35,000.
EXECUTIVE PHYSICAL PROGRAM
As an officer of the Company, you will be eligible to receive a Company-paid
annual executive physical examination.
VACATION
As an officer of Grace, you will be entitled to four weeks paid vacation per
full calendar year during your Employment Term.
MISCELLANEOUS
This Agreement may be amended, superseded or canceled only by a written
instrument specifically stating that it amends, supersedes or cancels this
Agreement, executed by you and the Company.
You and the Company acknowledge that this agreement supersedes any other
agreement between you and the Company concerning the subject matter hereof.
If you have any questions regarding any expectations of your new position,
please call me.
If you have any questions regarding the compensation and Company benefit plans
and programs, please feel free to call Xxxx Xxxxxx, Vice President, Human
Resources, at (000) 000-0000.
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Xxxx, we are very excited about your joining the Grace organization and look
forward to a productive and mutually rewarding relationship.
Sincerely,
Xxxx X. Xxxxxx
Chairman, President
& Chief Executive Officer
Attachment
cc: X. X. XxXxxxx
X. X. Xxxxxx
M. N. Xxxxxxxxxx
AGREED AND ACCEPTED:
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Xxxxxxx X. Xxxxxxxx
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Date
