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EXHIBIT 10.1
May 9, 1997
Mr. Xxxx Xxxxxx
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxx, Xxxx 00000
Dear Lars:
In connection with the spin-off of XXX Xxxxxxxxxxx ("NCR") from AT&T
Corp. ("AT&T"), NCR and AT&T entered into an Employee Benefits Agreement
allocating between the two companies the primary responsibility for payment of
certain items of compensation and benefits, including compensation and benefits
described in letter agreements between you and AT&T dated April 19, 1995 and
June 7, 1996 (the "AT&T Letter Agreements").
This letter agreement (the "Agreement") documents the compensation and
benefits which NCR agreed to pay to you pursuant to the Employee Benefits
Agreement.
1. As of January 1, 1997, you will continue to be employed by NCR as Chairman of
the Board and Chief Executive Officer ("CEO"). You will report to the Board of
Directors of NCR. Your base salary will be established by the Board of
Directors, and will be increased annually to reflect individual performance and
base salary structure changes applicable to similarly situated senior
executives. You will receive annual and long-term incentive payments as
established by the Board of Directors. It is anticipated that, at least
initially, long term incentives provided to you by NCR after its spin-off from
AT&T will be generally comparable to those provided to you by NCR prior to the
spin-off.
2. You will receive an annual cash payment of up to $10,000 to address education
costs for your son in Sweden payable each December during the time he is a
student. Any payment will include an additional tax reimbursement amount
sufficient to pay the income and employment taxes that you incur with respect to
both the educational reimbursement and the tax reimbursement itself.
3. In addition to the compensation and benefits described in this Agreement, you
are entitled to severance benefits as described in the Change-in-Control
Agreement between you and NCR. You are also eligible to participate in the NCR
employee benefit plans available to U.S. based senior executives, including the
benefits listed on Attachment A.
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4. You will be provided a Completion Bonus by NCR based solely on your continued
employment by NCR as follows:
June 1, 1997 $ 375,000
June 1, 1998 $ 375,000
June 1, 1999 $3,875,000
Pursuant to the AT&T Letter Agreements, you received payment of a Completion
Bonus from AT&T of $375,000 as of June 1, 1996.
5. In the event of your (1) death, (2) "Disability" (as defined below), (3)
involuntary termination for other than "Cause" (as defined below), or (4)
"Termination for Good Reason" (as defined below), you (or your estate in the
event of your death) will be provided a one-time payment within 45 days of such
termination or death, equal to $5,000,000 offset by what you have already
received under the schedule of payments set forth in paragraph 4, including the
June 1, 1996 payment from AT&T.
For purposes of this Agreement, "Cause" shall be defined as follows:
(1) your conviction (including a plea of guilty or nolo contendere) of a felony
or any crime of theft, dishonesty, or moral turpitude; or (2) gross omission or
gross dereliction of any statutory or common law duty of loyalty to your
employer. "Disability" shall be defined as your termination of employment for
disability with eligibility to receive long term disability benefits under the
terms of an NCR plan. "Termination for Good Reason" shall be defined as
voluntary termination by you on or before June 1, 1999 following (a) a reduction
in annual total compensation (i.e., base salary, target annual incentive, "Long
Term Incentive" as valued below) to less than $3,000,000, or (b) your ceasing to
hold the position of CEO of NCR. For purposes of these definitions only, the
dollar value of your annual "Long Term Incentive" grants shall be determined by
valuing Performance Shares, Performance Units, Stock Units, Restricted Stock,
Restricted Stock Units, etc., at the market price at grant and assuming 100%
performance achievement if such grants include performance criteria, and Stock
Options and SARs will be valued at 50% of the market price of the shares or
related shares at grant, as applicable.
6. If (1) you continue to be employed as CEO of NCR, and (2) you are asked and
you agree to sign an employment contract for an additional two year period
beyond June 1, 1999, upon the later of (1) execution of that employment contract
or (2) June 1, 1999, you will be paid a Re-enlistment Bonus of $2,000,000.
7. NCR has established a Rabbi Trust with assets sufficient to fund the portion
of the Completion Bonus that was unpaid at the time of the spin-off, as well as
the Re-Enlistment Bonus. Under current IRS regulations, establishment of
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the Trust does not result in immediate taxable income to you. Benefits payable
from the Trust, however, would be taxable income to you at the time of payment.
The foregoing should not be considered tax advice to you, for which you should
consult your own tax advisor.
8. Pursuant to the AT&T Letter Agreements, in September, 1995 AT&T granted you a
Special Equity Grant of 400,000 AT&T Leveraged Stock Options and 35,000 AT&T
Restricted Stock Units. The AT&T Leveraged Stock Options were replaced with a
grant of options for an equivalent number of shares of NCR common stock under
the same terms and conditions on January 2, 1997. In the event of your (1)
involuntary termination from NCR for other than Cause or (2) Termination for
Good Reason from NCR, such replacement options will continue to become
exercisable as applicable in accordance with the terms and conditions of the
option grant, as if you continued to be actively employed by NCR. In the event
of your death or Disability, such options will become immediately exercisable.
The 35,000 AT&T Restricted Stock Units remain denominated in AT&T stock and
remain the responsibility of AT&T, and are not assumed by NCR pursuant to this
Agreement.
9. Pursuant to the AT&T Letter Agreements, effective January 2, 1997, NCR
provided to you an NCR stock option grant with a $5,000,000 "face value" and a
grant of NCR restricted stock units with a $5,000,000 "face value." These
options and restricted stock units will become exercisable or xxxxx xxxx, as
applicable, in September, 1999. In the event of your (1) involuntary termination
from NCR for other than Cause or (2) Termination for Good Reason from NCR, these
options and restricted stock units will continue to become exercisable or vest,
as applicable, in accordance with the schedule under which these awards were
granted, subject to their terms and conditions, as if you continued to be
actively employed by NCR. In the event of your death or Disability, such options
and restricted stock units will become immediately exercisable or released of
restricted, as applicable.
10. All of your unexercised AT&T stock options and all of your
undistributed/unvested AT&T restricted stock units outstanding on the spin-off
date, other than the 35,000 AT&T restricted stock units granted by AT&T to you
in September, 1995, were replaced with comparable awards based on NCR stock with
share numbers and exercise prices, as applicable, adjusted to preserve the value
(including any aggregate spread) of such awards at spin-off.
11. This letter is not an employment contract and should not be construed or
interpreted as containing any guarantee of continued employment. The employment
relationship at NCR is by mutual consent ("employment-at-will"). NCR reserves
the right to discontinue your employment with or without cause at any time and
for any reason.
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12. Payments and benefits under NCR plans and programs, as well as other
payments referred to in this Agreement, are subject to Internal Revenue Service
rules and regulations with respect to tax withholding and reporting, and will
not be grossed-up for taxes unless specifically stated otherwise. NCR reserves
the right to discontinue or modify any plans, programs and practices.
13. For purposes of NCR employee benefit plans, the definition of compensation
is as stated in the plans. Currently, benefits under the NCR Pension Plan, the
NCR Savings Plan and the NCR Group Benefits Plan for Active Associates are based
on base salary and bonuses, excluding retention and work completion bonuses and
moving expenses. All other compensation and payments reflected in this
Agreement, e.g., the Completion Bonus, Re-enlistment Bonus, educational
reimbursement and tax-gross-up, stock options and restricted stock units, are
not included in the calculation of employee benefits.
14. This Agreement documents NCR's willingness to pay you certain compensation
and benefits described in the AT&T Letter Agreements. Any rights that you
continue to have under the A&T Letter Agreements are not affected by execution
of this Agreement.
If you agree with the foregoing, please sign this Agreement in the
space provided below and return the executed copy to me.
Sincerely,
/Xxxxxxx X. Xxxxx/
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Xxxxxxx X. Xxxxx
Senior Vice President
Global Human Resources
/Xxxx Xxxxxx/ May 20, 1997
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Acknowledged and Agreed to Date
X. Xxxxxx
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Attachment A
Xxxx Xxxxxx Participation in NCR Employee Benefit Plans
1. NCR Pension Plan
2. NCR Savings Plan
3. NCR Employee Stock Purchase Plan
4. NCR WorldShares Plan
5. The Retirement Plan for Officers of NCR ("SERP II")
6. Group Benefits Plan for Active Associates of NCR (includes Personal Choice
selection of available options for health care, dental care, life
insurance, short term and long term disability coverage, and other group
benefits)
7. NCR Workforce Redeployment Plan
8. NCR Executive Financial Planning
9. Change-in-Control Agreement between NCR and Xxxx Xxxxxx, effective January
1, 1997
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