EXHIBIT (10)(iii)(A)41
July 29, 2003
Xx. Xxxx Xxxxxxx
Dear Xxxx:
This letter agreement ("the Agreement") is an amendment to your transfer
letter dated September 7, 2001 detailing your special individual pension
arrangement (as amended by Board resolutions in October 2002), and supercedes
all other oral and written communication on the subject.
This 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. This Individual Pension
will be immediately vested and only for termination for "Cause" (as defined)
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 (Base Pay
Year of Retirement/Termination plus Actual Bonus Paid in Year)
------------------------------ -------------------------------
2003 17.25%
2004 19.30%
2005 21.35%
2006 23.40%
2007 25.45%
2008 27.50%
2009 29.55%
2010 31.60%
2011 33.65%
2012 36.40%
2013 39.15%
2014 41.90%
2015 44.65%
2016 47.40%
2017 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 termination within two years following a Change in
Control ("CIC"), as defined in the AT&T 1997 Long Term Incentive Program, for
reasons other than for Cause or if you terminate employment for Good Reason (as
defined) 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 CEO- Consumer.
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.
Xxxx, 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/ Xxxx Xxxxxxx 7/30/2003
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Xxxx Xxxxxxx Date
