Exhibit 10.250
November 4, 2002
Xx. Xxxxxxx X. Xxxxxx
000 Xxxxx Xxxxx Xxxx
Xxxxx Xxxxx, Xxx Xxxx 00000
Dear Xxxx:
The purpose of this letter is to confirm our understanding of, and agreement to,
the following terms regarding your recent change in position. We recognize that
you have been terminated as Chairman and Chief Executive Officer of U.S. Trust
and have the right to leave at any time hereafter prior to May 31, 2003 with or
without Good Reason and have it treated as a termination of your employment
without Cause by us. Any termination by you or us (whether with or without
Cause) hereafter and on or prior to May 31, 2003, including termination as a
result of your death or Disability, shall be treated as a "Protected
Termination" entitling you to the compensation, benefits, and perquisites set
forth in your Employment Agreement and as expanded herein. (Any terms not
defined in this letter shall have the meanings given to them in your Employment
Agreement.)
Position
--------
As announced, you will chair the Affluent Client Strategy and Policy Committee
and continue to serve on Xxxxxx'x Executive Committee.
Salary
------
Your annual salary will continue to be paid at the rate of $565,000, until the
end of calendar year 2002. Beginning January 1, 2003, you will be paid in
accordance with the Schwab Executive Committee members who lead a similar
function to the Affluent Client Strategy and Policy Committee (e.g., Corporate
Strategy). However, all of your non-pay-related benefits and perquisites will
continue at the same amounts and levels currently in effect. Your pay-related
benefits will reflect your 2003 base salary. Xxxxx Xxxxxxxx, in good faith, in
accordance with the above principles and after consultation with you, will
establish your base salary, bonus and long-term incentive targets for 2003 by
December 1, 2002.
In addition, assuming your employment terminates as a result of a Protected
Termination, you will receive two (2) times your annual base salary of $565,000,
totaling $1,130,000, which shall be payable within two weeks of your Protected
Termination date in a lump sum cash payment (less customary withholding).
Bonus
-----
You will receive a cash payment equal to your 2001 bonus (170% of your 2001 base
salary) payable on the first business day of January 2003. You will also receive
any bonus due for Xxxxxx'x fiscal year 2002 in accordance with the pay-out
received by other Executive Committee members; provided that this bonus shall be
calculated and paid as if you had worked for all of fiscal year 2002 even if you
have a Protected Termination prior to the end of the 2002 fiscal year. You will
also receive a full or pro-rated 2003 bonus upon termination of your employment
during or after 2003. The EIP waiver under the Split Dollar Agreement will not
apply.
Assuming you have a Protected Termination, you will receive a payment equal to
two (2) times your current targeted bonus. Although this target is now 125%, for
purposes of this termination payment only, the target will be 170%, or an amount
of $960,500 per year. The total payment will be two (2) times that amount or
$1,921,000, less applicable taxes and withholding. You will receive these
amounts within two (2) weeks of your Protected Termination date in a lump sum
cash payment (less applicable withholding).
Stock Grants
------------
Upon a Protected Termination, you will receive full and immediate vesting of any
outstanding stock options and other equity based awards effective as of such
termination date. The exercise period for all vested and exercisable Incentive
Stock Options ("ISOs") will be no later than three (3) months after the
termination date (or expiration date, whichever is earlier) and for all vested
and exercisable Non-Qualified Stock Options ("NQSOs") will be no later than two
(2) years after the termination date (or expiration date, whichever is earlier).
Non Compete/Non-Solicitation
-----------------------------
In the event of a Protected Termination, the non-compete and non-solicitation
clauses described in Section 8 of your Employment Agreement will begin to run on
the earlier of your Protected Termination date or October 4, 2002 and will cease
one (1) year thereafter, provided that Sections 8(b)(i) and (iii) of your
Employment Agreement will continue to apply until one (1) year after the earlier
of January 1, 2003 or your Protected Termination date. We also agree that the
non-compete in your Employment Agreement will not apply to financial services
departments of corporate conglomerates.
Other
-----
The remaining provisions in the Employment Agreement will remain in full force
and effect, including, but not limited to, the provisions addressing Media
Communication and Non-Disparagement. Furthermore, no member of the Schwab or
U.S. Trust Control Group (as defined below) will make any public statements to
any third parties intended to disparage or damage your reputation, nor will any
member of the Control Group or anyone acting on the Control Group's behalf as an
entity, issue any press releases or media communications intended to disparage
or damage your reputation, provided that the foregoing is not intended to
prevent truthful testimony by any members of the Control Group in connection
with any statutory or contractual reporting obligations, in any judicial
proceeding, or as a defense to any claim, action or allegation raised by you.
For purposes of this agreement, Control Group shall mean Xxxxxxx Xxxxxx, Xxxx X.
Xxxxx, Xxxxx Xxxxxxxx, and Xxxx X. XxXxxx. In addition, we further agree that
the non-disparagement provisions in section 11 of your Employment Agreement
shall not affect your ability to respond truthfully and professionally to any
disparaging statements made by any executive employee of Schwab or U.S. Trust.
Nothing in this paragraph is intended to prevent you from engaging in
"competitive puffery" regarding the Company's products or services providing no
disparaging comments are made regarding Schwab or U.S. Trust in connection with
the same.
Other Terms, Benefits & Perquisites
-----------------------------------
In addition, listed below are the benefits you would be eligible to receive upon
a Protected Termination. Please note, we have assumed a December 31, 2002
termination date for purposes of these calculations; however, we assume this
will not be the actual date and therefore, the calculations may change
consistent with the actual date.
Retirement Plan Benefit - You can retire on January 1, 2003 and begin receiving
a monthly pension benefit of $6,237.47 assuming a 50% Joint & Survivor form of
pension. If you defer receipt of your pension benefits until August 1, 2007 (age
60), this amount will increase to $8,060.55. Under the 50% Joint & Survivor form
of pension you would receive the stated monthly amount for your lifetime and, at
your death, your surviving spouse would begin to receive half of this monthly
benefit for her lifetime. Forms of payment other than the 50% Joint & Survivor
are available with spousal consent. In addition, we agree that, in the event of
your Protected Termination, you will be entitled to receive from the Company, on
your termination date, a single sum payment in an amount equal to the excess of:
(x) the present value of your accrued benefit, expressed in the form of a single
life annuity, under the U.S. Trust Corporation Employees' Retirement Plan ("UST
Pension Plan"), with such accrued benefit to be calculated at the time of your
Protected Termination by adding two (2) additional years of age and Credited
Service and (y) the present value of your accrued benefit, expressed in the form
of a single life annuity, under the UST Pension Plan calculated at the time of
your Protected Termination.
401K/ESPOP - Beginning in January 2003, you can elect to receive a full
distribution of your account balance during any month; however, you must request
a distribution by the end of the year in which you attain age 65.
Non-Qualified Plans - Your account balances in the EDCP and BEP will fully vest
and be paid in 10 annual installments. The first installment will be in March
2003. The September 30, 2002 balances for the BEP and EDCP are $539,871.00 and
$701,425.00, respectively. The EDCP amount includes the 2000 EIP Mandatory
Deferred portion which was scheduled to vest in 2006, but will now vest
immediately. Within the next few days these balances will be updated on
XxxxxxXxxx.xxx to reflect the September 30, 2002 values. Upon a Protected
Termination, your account balance under the BEP will be credited with amounts as
if you had remained employed by U.S. Trust for two (2) years beyond the
Protected Termination date. In addition, the value of two additional years of
Credited Service under the U.S. Trust Corporation Employees' Retirement Plan
will be credited to your account under the EDCP.
Retirement Medical Plan - You are eligible to participate under the Retirement
Medical Plan when your active employee coverage ends. You are also entitled,
upon a Protected Termination, to two (2) additional years of coverage under the
medical plan(s) in which you currently participate and, following the expiration
of this period, you may elect to commence coverage under the Retirement Medical
Plan, to the extent this is more beneficial to you.
Retirement Life Insurance - After your active coverage ends you are eligible for
retirement life insurance equal to an initial amount of your active life amount
or $100,000, whichever is less. This initial amount is reduced by 10% during the
first 5 years of your coverage. You are currently enrolled for $10,000 of active
life insurance; therefore, you may want to consider increasing this amount
during the next open enrollment period to maximize this benefit. Any increase in
life insurance coverage is subject to evidence of good health acceptable to
Metropolitan Life. Upon a Protected Termination, you will continue to be covered
under all insurance arrangements as if you had remained actively employed for
two (2) additional years, except under the Split Dollar Insurance Agreement,
currently in effect. With respect to said Split Dollar Insurance Agreement, the
following terms will apply: (1) U.S. Trust will not be under any obligation to
make the additional premium payments otherwise required under said Agreement;
(2) U.S. Trust will assign all of its rights and benefits in the insurance
policy subject to such Agreement to you; and (3) U.S. Trust will waive its right
to receive the "Corporation's Recovery Amount" as defined in said Agreement.
Dental - You can elect COBRA continuation for 18 months after your active
employee coverage ends. In the event of a Protected Termination, you will
receive two (2) additional years of active employee coverage and then may elect
COBRA coverage.
Vacation - You will be paid for any unused vacation days through the date of
your Protected Termination; such payment will be made in a lump sum cash payment
(less applicable withholding) promptly after your Protected Termination date.
280G Gross-Up - Your rights under Section 12(j) of the Employment Agreement
shall in all events, whether your termination is a Protected Termination or
otherwise, continue in full force and effect.
Legal Fees - We will pay the reasonable legal fees incurred by you in connection
with the negotiation and finalization of this letter and the new arrangement.
Xxxx, we very much look forward to working with you in your new position at
Schwab. Please review the terms set forth above. If any of the terms are
contrary to your understanding of our agreement, please let me know as soon as
possible. If the terms are consistent with your understanding of our agreement,
please sign below. This letter will serve as a modification to the Employment
Agreement entered into as of January 12, 2000.
Sincerely,
/s/ Xxxxx Xxxxxxxx /s/ Xxxx X. XxXxxx
------------------------------- ------------------------------
Xxxxx Xxxxxxxx Xxxx X. XxXxxx
President and Co-CEO Executive Vice President
The Xxxxxxx Xxxxxx Corporation; Human Resources
Member, Board of Directors
U. S. Trust
/s/ Xxxxxxx X. Xxxxxx 11/7/02
------------------------------ ------------------------------
Xxxxxxx X. Xxxxxx Date
