Exhibit 10(ii)(28)
SEARS, XXXXXXX AND CO.
0000 Xxxxxxx Xxxx
Xxxxxxx Xxxxxxx, XX 00000
June 4, 1998
XXXXXX X. XXXXXXXX
Chairman of the Board
and Chief Executive
Officer
000-000-0000
Xxxxxxx X. Xxxxxxxxx
0000 Xxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Dear Xxxxxxx:
I would like to extend to you our offer to join Sears, Xxxxxxx and Co. as
President - Home Services. In this position you will be reporting directly to
me. While this letter does not constitute an employment contract, I thought
it important that we put our offer in writing to clarify the terms of your
employment. This offer is contingent upon the approval of the Sears Board of
Directors.
Your compensation package will consist of the following:
* Annual base salary of $500,000 with periodic increases based on
performance. Periodic and competitive-base salary increases can be expected
annually based on individual performance. Merit increases are effective each
January 1 and are granted in accordance with standards approved by the Board
of Directors' executive compensation committee. The budget pool for increases
in 1999 is expected to be in the 3-4% range.
* Participation in the Sears Annual Incentive Plan with a current bonus
target equal to 85% of base salary for 1998. Based on your current salary,
the bonus target amount equals $425,000 on an annualized basis. We will
guarantee a minimum annual incentive for 1998 of $425,000. The annual
incentive performance objective for your position will be based 50% on the
achievement of Company earnings per share goals and 50% on achievement of
Home Services income goals as well as your performance on your specific
individual performance priorities which we will agree to. Currently the
Company performance portion of the plan pays for performance above and below
the target objective as follows:
-- Threshold(90% of prior year E.P.S.)pays 25% of target
-- Target (110% of prior year E.P.S.) pays 100% of target
-- Maximum(130% of prior year E.P.S.)pays 230% of target
* A sign-on bonus of $200,000 payable within 30 days following the beginning
of your employment.
Xxxxxxx X. Xxxxxxxxx
June 4, 1998
Page 2
* A stock option grant of 100,000 shares of Sears Stock, which will vest in
three equal annual installments from the date of grant and include a reload
feature and tax withholding rights.
* 1,666 shares of restricted stock which will vest in three annual
installments from the date of grant, and also have tax withholding rights.
* Participation in the Sears Long-Term Incentive Plan with an incentive
target of 125% of base pay. Your long-term incentive target will be conveyed
70% in the form of Sears stock options and 30% earned through a Performance
Incentive Plan that is paid out in the form of Sears common stock. The
Performance Incentive Plan awards will be determined based on achievement of
our Total Performance Indicator objectives. The Performance Plan award can
range from between 50%-150% of the target award. We will guarantee the
Performance Incentive Plan portion of your long-term incentive
at target for the 1997-1999 cycle which would equal approximately $187,500
and be paid in the form of Sears common stock.
* Sears has established share ownership guidelines for the top 200 executives
of the corporation. Your position qualifies for these ownership guidelines.
You will be required to own Sears shares equal in value to three times your
base salary within five years of employment.
* Participation in standard Company benefits commensurate with your position.
Your annual vacation will be 4 weeks. Welfare benefit coverage begins on the
first day of the month following your employment date, unless your employment
date is the first day of the month.
* A five year service enhancement to your final pension benefit will be
provided through the non-qualified pension plan. The service enhancement will
be accrued to you as a 2 year-for-1 year service credit over the first five
years of your employment with Sears. All other provisions of the Sears
pension plan will apply to this benefit.
* Relocation assistance in accordance with Sears Relocation Policy which
includes a $10,000 moving allowance, reimbursement for temporary living up to
six months, reimbursement for home visits and house hunting, a home appraisal
and purchase program available through Coldwell Banker Relocation and
reimbursement of customary closing costs for your new residence. In addition,
we agree to provide round-trip travel reimbursement for a reasonable number
of trips between Chicago and your home in Jacksonville, grossed up (at the
maximum Federal tax rate) to cover the additional taxes related to this
income.
Xxxxxxx X. Xxxxxxxxx
June 4, 1998
Page 3
* Nothing contained in this letter shall limit the right of you or Sears to
terminate your employment with or without cause at any time. However, in the
event that Sears should involuntarily terminate you other than for cause, you
will receive two year's base salary plus two year's target annual incentive.
This will constitute the entire damages you may claim against Sears should
termination occur under the circumstances outlined above. In exchange for
this severance protection, you will be required to sign our standard
non-compete agreement.
* We will also reimburse you for a reasonable and customary legal fees
incurred for advice on your employment offer up to a maximum of $10,000.
This offer of employment is contingent upon your satisfactorily passing a
pre-employment drug test which can taken prior to your reporting to work at
Xxxxxxx Estates.
We have enclosed a copy of the non-compete agreement that includes the
severance benefits that you discussed with Xxxx Xxxxx.
Xxxxxxx, we have great confidence in your ability to significantly contribute
to the future success of Sears, I look forward to working with you to build
that success.
/s/ Xxxxxx Xxxxxxxx
Accepted: /s/ Xxxxxxx X. Xxxxxxxxx Date 6/8/98
Xxxxxxx X. Xxxxxxxxx
cc: Xxxx Xxxxx
