Exhibit (e)(13)
SERVICE AGREEMENT FOR
MEMBERS OF THE BOARD OF MANAGEMENT
between
CELANESE XX
Xxxxxxxxxxx Xxxxxxx 000
00000 Xxxxxxxx i. Ts.
represented by the Chairman of the Supervisory Board of Celanese AG,
Xx. Xxxxxx Xxxx
- hereinafter referred to as "CELANESE AG" or the "COMPANY" -
and
XX. XXXXXXX XXXXXX
- hereinafter Xx. Xxxxxx and the Company together referred to as the "PARTIES"
or each of them individually referred to as the "PARTY" -
Xx. Xxxxxx has been re-appointed a Member of the Board of Management of Celanese
AG by a resolution of the Supervisory Board on May 15, 2002. With effect as of
October 22, 2002, the following service agreement (hereinafter referred to as
the "SERVICE AGREEMENT" or the "AGREEMENT") shall be agreed between the Company
and Xx. Xxxxxx by replacing at the same
Service Agreement of Xx. Xxxxxxx Xxxxxx 2
time all earlier agreements, except agreements regarding already existing Long
Term Incentive Plans:
I. DUTIES OF THE MEMBER OF THE BOARD OF MANAGEMENT
1. Xx. Xxxxxx will perform his activity as a Member of the Board of Management
in accordance with the provisions of the law, the Articles of Association
of the Company and the Rules of Procedure for the Board of Management. Xx.
Xxxxxx will devote his professional energies exclusively to the Company.
The following provisions of this Section of this Agreement do not affect
legally justified restrictions of other activities Xx. Xxxxxx may perform.
2. The acceptance of any other activity outside the private area (privater
Bereich) - irrespective of whether it is paid or pro xxxx - requires the
prior approval of the Chairman of the Supervisory Board which may be
withdrawn at anytime. This applies in particular to the acceptance of
mandates to other supervisory boards, managing director activities
(Geschaftsfuhrungstatigkeiten) and similar positions, as well as regarding
expert reports, publications and lectures to the extent that the Company's
interests may be affected.
3. Should the Supervisory Board wish so, Xx. Xxxxxx will accept supervisory
board mandates and similar positions without any remuneration in companies
in which Celanese AG is directly or indirectly participated, as well as any
activity in associations and similar bodies to which Celanese belongs owing
to the nature of its business activity. Xx. Xxxxxx undertakes, that on the
termination of this Service Agreement or, in case the Supervisory Board
wishes at an earlier time, Xx. Xxxxxx will retire from aforementioned
mandates that he has accepted in the interest of the Company.
4. During the appointment Xx. Xxxxxx will not participate in any company that
competes with Celanese AG or which maintains essential business relations
with Celanese AG. A shareholding which allows no influence regarding the
executive bodies of the relevant company is not considered as participation
within the meaning of this clause. A possibility to influence listed
companies shall be understood for purposes of this Agreement when having
reached 5 % of the voting rights.
5. Xx. Xxxxxx is obliged not to use any knowledge he obtains as a result of
his Board of Management activity for stock exchange or other speculative
transactions.
Service Agreement of Xx. Xxxxxxx Xxxxxx 3
6. Xx. Xxxxxx is further obliged to assign to the Company the entire results
of his work as the exclusive property of the Company without special
remuneration.
7. The confidentiality obligation of Section 93 of the German Stock
Corporation Act (Aktiengesetz) applies after the end of Xx. Xxxxxx'x
service term.
8. Xx. Xxxxxx will treat all documentation relating to the Company, as well as
all business memoranda including electronic data as the Company's property.
Xx. Xxxxxx will preserve them carefully and at the termination of his
service term Xx. Xxxxxx will hand them over to the Chairman of the
Supervisory Board or his appointee or delete them without being specially
requested to do so. In reasonable cases the Supervisory Board may release
Xx. Xxxxxx from this obligation, e.g. in case he needs such documentation
as regards governmental or other regulatory inquiries.
II. COMPENSATION
1. From October 22, 2002 onwards, Xx. Xxxxxx receives the following income:
a) a fixed annual salary of EUR 830.000,-- gross (in words: Euro
eighthundredthirtythousand), to be paid monthly in arrears;
b) an annual bonus which is subject to reaching the economic and personal
objectives agreed by the Personnel and Compensation Committee of the
Supervisory Board with Xx. Xxxxxx and which amounts to 80% of the
annual salary at target performance. The bonus is to be paid once a
year according to a separate regulation to be resolved by the
Personnel and Compensation Committee of the Supervisory Board in each
case. Should Xx. Xxxxxx leave during a year, a pro-rata bonus payment
will be made for the period served.
2. Should Xx. Xxxxxx die during the term of this Service Agreement, his widow
and his unmarried legitimate children, if and as long as they have not
reached the age of 21 or if and as long as they are in education and have
not reached the age of 27, have a right as joint and several creditors to
an unreduced granting of monthly installments of the annual salary
according to Section II.1.a.) of this Agreement for the three months
following the month in which the death occurred, however, at the latest
until the planned end of the Service Agreement; and in addition a pro rata
amount of the annual bonus earned according to Section II.1.b.) of this
Agreement.
Service Agreement of Xx. Xxxxxxx Xxxxxx 4
3. Xx. Xxxxxx'x xxxxx compensation shall be reduced by the amount of the gross
income Xx. Xxxxxx receives in respect of supervisory board mandates or
similar positions in companies in which the Company has a direct or
indirect holding.
4. Xx. Xxxxxx will participate in the existing Long Term Incentive Plans of
the Company, which have been or will be introduced in the form of stock
appreciation rights/stock options. The scale of the rights/options granted
to Xx. Xxxxxx will be determined by the Supervisory Board periodically.
III. DURATION OF THE CONTRACT
1. The Service Agreement becomes effective on October 22, 2002 and shall apply
until October 31, 2004.
2. During this term the Agreement may be terminated by either Party only for
cause. However, Xx. Xxxxxx may terminate the Agreement with a 6 months'
notice when having reached the age of 60.
3. No later than 10 months prior to the end of his Service Agreement it shall
be discussed with Xx. Xxxxxx whether and under which conditions the
contractual relationship and the activity as Member of the Board of
Management will be continued. At least 6 months prior to the expiry of the
Service Agreement, a statement regarding the reappointment of Xx. Xxxxxx as
Member of the Board of Management shall be made to Xx. Xxxxxx by the
Chairman of the Supervisory Board.
4. In case the appointment of Xx. Xxxxxx is withdrawn prior to October 31,
2004, the Service Agreement with Xx. Xxxxxx ends at the same time with the
expiry of the appointment. In this case Xx. Xxxxxx'x claims are governed by
Section IV. of this Agreement. In case the Service Agreement due to expiry
on October 31, 2004 is not extended, the claims of Xx. Xxxxxx are likewise
governed by Section IV. of this Agreement. Following the revocation of the
appointment, the Supervisory Board is entitled to release Xx. Xxxxxx.
IV. SEVERANCE
1. SEVERANCE PAYMENT
a.) In the event that
Service Agreement of Xx. Xxxxxxx Xxxxxx 5
the Service Agreement with Xx. Xxxxxx is not extended by the
Supervisory Board of the Company,
or the Service Agreement with Xx. Xxxxxx is terminated prematurely by
revocation of Xx. Xxxxxx'x appointment as Member of the Board of
Management without cause,
or Xx. Xxxxxx is entitled to terminate the Service Agreement for cause,
the Company shall pay Xx. Xxxxxx a gross severance sum equivalent to two
total annual remuneration payments (hereinafter referred to as the
"SEVERANCE").
b.) In case Xx. Xxxxxx is required to relocate in order to perform his activity
as Member of the Board of Management in the interest of the Company during
the term of this Agreement and this leads to an unreasonable hardship for
his personal, family or financial situation (hereinafter referred to as
"HARDSHIP") the Company will consider under good faith a relocation or
transferal to his original office. In case the Parties are unable to find a
solution for this Hardship, such Hardship shall be considered as cause
under the termination provision of this Section IV.1.a.).
c.) The total annual remuneration used to determine Severance consists of the
sum of the fixed annual remuneration applicable to the year of Xx. Xxxxxx'x
leaving, the annual Bonus calculated at Target for the business year in
which the Service Agreement is terminated and the value of the most
recently granted Long Term Incentives (hereinafter referred to as the
"LONG TERM INCENTIVES"). Value of Long Term Incentives in the meaning of
this Section IV.1.c.) shall be determined as the net present value
according to the Black Scholes methodology and calculated at the date of
termination on a pro rata 12 months basis.
d.) Sums which shall be set off against the Severance are payment obligations
arising out of the Service Agreement with Xx. Xxxxxx until the originally
agreed expiration of this Service Agreement, benefits from the Pension
Scheme for the Board of Management to be paid over a period of one year
following the leaving after reaching the age of 60, as well as benefits
from any other compensation and severance payments arising from any other
employment with any company of the Celanese Group. However, the voluntary
deferred compensation, exercise of vested SARs or SOPs or medical benefits
of Xx. Xxxxxx shall not be offset against the severance payment.
e.) The annual bonus for the business year in which the termination of the
Service Agreement occurs shall be paid in addition to the Severance on a
pro rata basis for the lapsed period of
Service Agreement of Xx. Xxxxxxx Xxxxxx 6
time of the corresponding year. Remuneration claims according to Section
II.1.b.) stay untouched until the leave.
f.) Claims arising out of the Long Term Incentives that are taken into account
in the calculation of the Severance expire as soon as a severance payment
is made under this Section IV.1.
2. CHANGE IN CONTROL
a.) In the event that
a person other than a person holding already at least 25% of the
shares in the Company at the time of signing this Service Agreement
takes over the Company by reaching the actual, on the basis of the
last General Meeting determined majority in the General Meeting,
or a person other than a person holding already at least 25% of the
shares in the Company at the time of signing this Service Agreement
takes over 30% or more of the shares in the Company,
or the General Meeting of the Company approves the merger with another
company outside of the Celanese Group
(all events together hereinafter referred to as the "CHANGE IN CONTROL
- EVENT")
and due to the Change in Control - Event
the Service Agreement is not extended by the Supervisory Board of the
Company,
or the Service Agreement is terminated prematurely by revocation of Xx.
Xxxxxx'x appointment as Member of the Board of Management without
cause,
or Xx. Xxxxxx is entitled to terminate the Service Agreement for cause
the Company is obliged to pay Xx. Xxxxxx a Change in Control-Severance.
b.) In case of a Change in Control - Event "cause" shall apply regarding a
termination by Xx. Xxxxxx if the conditions change unreasonably, in
particular if his place of employment is relocated, if his remuneration is
reduced or if his scope of duties are limited.
c.) In this respect the Change in Control-Severance shall be measured and
included in a separate Cancellation Agreement as follows:
Service Agreement of Xx. Xxxxxxx Xxxxxx 7
(1) At the time of Xx. Xxxxxx'x leaving the Company, Xx. Xxxxxx receives
in a Change in Control -Event a lump-sum gross severance payment in
the amount of four times his total annual cash remuneration for the
loss of his mandate as Member of the Board of Management. The total
annual cash remuneration consists of the average of the fixed annual
remuneration paid over the last three years and the average of the
bonus payments paid over the last three years. The payment of this
amount shall be made after tax deductions according to the tax
regulations in force at that time. The claims arising out of the
current Long Term Incentives, as long as they have not yet been
exercised, shall be made according to the regulations in the
corresponding Long Term Incentive Plan Documents. Whether a Change in
Control - Event applies shall be governed according to this Service
Agreement for the Long Term Incentives as well. The exercise, however,
shall be governed by the Long Term Incentive Plan Documents.
(2) Should Xx. Xxxxxx, after having been notified of the intention to not
extend this Service Agreement, wish to prematurely withdraw from his
employment prior to expiration of this Service Agreement, Xx. Xxxxxx
may terminate his employment with giving a six weeks' notice to the
end of the month. No payment shall be made for the remaining term of
the of the Service Agreement which was originally agreed.
(3) Section IV.2.a.) of this Service Agreement shall not apply, in case
Xx. Xxxxxx enters an employment with an affiliated company of the
Celanese Group.
(4) Any bonus Xx. Xxxxxx is entitled to according to this Service
Agreement shall be paid on a pro-rata basis in case of a termination
of his employment prior to the end of the calendar year. The payment
shall be made at the time when bonus payments usually are made for the
lapsed business year according to Section II.1.b).
(5) Sums which shall be set off against the severance payment are payment
obligations arising out of Xx. Xxxxxx'x Service Agreement until the
originally agreed expiration of his Service Agreement, benefits from
the Company Pension Scheme applicable to Xx. Xxxxxx that are to be
paid over a period of one year following his leaving after having
reached the age of 60, as well as benefits from any other compensation
and severance payments arising from any other employment with any
company of the Celanese Group. However, the voluntary deferred
compensation, exercise of vested SARs or SOPs or medical benefits of
Xx. Xxxxxx shall not be offset against the severance payment.
Service Agreement of Xx. Xxxxxxx Xxxxxx 8
(6) Any claims for entering a Cancellation Agreement with the above
mentioned basic regulations can only be asserted within a period of
180 days following the Change in Control - Event as described under
Section IV.2.
(7) The remaining provisions of the Cancellation Agreement to be entered
into are subject to this separate agreement.
(8) Any claims against the Company are compensated with the Cancellation
Agreement.
3. OTHER PROVISIONS REGARDING SEVERANCE PAYMENTS
a.) Provisions under Section IV. of this Agreement expire one day following the
termination of Xx. Xxxxxx'x Service Agreement at the latest. Any claims
arising from Section IV. shall remain unaffected.
b.) In case the preconditions defined under Section IV.1. regarding Severance
Payment and the preconditions defined under Section IV.2. regarding Change
in Control occur simultaneously, Xx. Xxxxxx is entitled to the higher
compensation. The other claim becomes extinct. Insofar neither Party shall
have a right to choose.
c.) The Company reserves the right to pay with Xx. Xxxxxx'x consent a part of
the payment resulting out of this Agreement by way of compensation for a
post-contractual competition ban (nachvertragliches Wettbewerbsverbot) or
for subsequent consultancy services. In these cases a separate agreement
will be agreed with Xx. Xxxxxx.
d.) The Company will try to achieve an arrangement which, complying with all
statutory regulations, contains favorable tax provisions for Xx. Xxxxxx.
V. INVENTIONS / UNDERTAKING TO REFRAIN FROM COMPETITIVE ACTIVITY
1. Xx. Xxxxxx will report to and offer to the Company his inventions
attributable to work following his appointment to the Board of Management
as long as he is receiving a salary or benefits (Versorgungsleistungen)
from the Company. The inventions will be treated by the Company in
accordance with the regulations of the law on employee inventions.
2. The Company reserves the right to agree with Xx. Xxxxxx post-contractual
competition ban (nachvertragliches Wettbewerbsverbot).
Service Agreement of Xx. Xxxxxxx Xxxxxx 9
VI. EQUITY PARTICIPATION
Xx. Xxxxxx is obliged to acquire shares in Celanese AG to a value equivalent to
his gross annual base salary and not to dispose of these shares in accordance
with the provisions of the Equity Participation Plan of the Company. More
detailed particulars on arrangements are to be found in the Company's Equity
Participation concept under observing Insider rules.
VII. PENSION
1. The promised company pension (Firmenpension) is paid in full after the
Member of the Board of Management leaves the Board and reaches the age of
60.
2. The amount of the company pension is calculated as the product of the
escalation factor of 2%, the number of qualifying years of service and the
pensionable income. In this calculation the number of qualifying years of
service is limited to 30. Consequently, the maximum figure is 60% of the
pensionable income.
Qualifying years of service are all complete years of service spent in the
Company, in the Hoechst Aktiengesellschaft and their subsidiaries.
The pensionable income is calculated as the sum of
- the average basic annual salary of the last three calendar years
prior to retirement and
- the average annual bonus of the last three calendar years prior
to retirement
insofar as these shall be qualifying years of service.
3. The following are offset against this company pension:
a.) social security pensions acquired during qualified years of service at
a rate of 50% while in case the beneficiary was exempt from social
security pension insurance (Rentenversicherung), the claims for social
security insurance regarding missing years of contribution within the
qualifying years of service shall be projected for the time of
beginning of the pension payments according to the then applicable
approaching proceedings;
b.) all claims which have been gained during the service years regarding
the company pension scheme (betriebliche Altersvorsorge) which has
been financed by the Company;
c.) equivalent annuities (Altersrenten) for capital payments from company
or supra-company savings schemes or pension schemes to the extent that
they are financed by
Service Agreement of Xx. Xxxxxxx Xxxxxx 10
the Company and are in respect of qualifying years of service. Capital
payments deferring from the start of pension payments are adjusted
upwards until the beginning of pension payments by applying an
appropriate rate of interest geared to the capital market.
4. In the event of an early disability, which must be confirmed by a medical
practitioner nominated by the Supervisory Board of the Company, the company
pension is paid as from the occurance of disability and for as long as it
continues. From the age of 60 onwards, the payment is continued at the same
level as an old-age pension in case the disability persists.
The amount of the benefit is calculated by the same formula as for the
company pension (see Section VII.2.). All other Company-financed benefits
granted in this instance - not only the benefits mentioned in Point 3 but
also in particular insurance benefits in the form of pension or capital -
are offset against this company pension.
5. In the event of death, survivors' pensions are paid to the spouse and
unmarried children entitled to maintenance, provided that the latter have
not yet reached the age of 21 or as long as they are undergoing education
and have not yet reached the age of 27.
In the event of death of a pensioned Member of the Board of Management the
spouse's pension is 60%, the pension for half-orphans is 15% and the
pension for orphans (those with neither parent still living) is 30% of the
company pension last paid, subject to the provision that the sum of the
spouse's pension and the orphans' pension shall not exceed 80% of the full
company pension. In case the pension payments jointly amount to a larger
sum, they shall be proportionally reduced. When any of these pensions
ceases during the period of payment the remaining pensions are increased
again to the maximum sum.
The spouse is not entitled to a pension if the marriage takes place only
after the beneficiary's retirement or only after the beneficiary reaches
the age of 60 and
- if the marriage existed for less than five years or
- if the spouse is more than 20 years younger than the beneficiary.
No claim for a spouse's pension shall exist in case it can be concluded
from the circumstances that the marriage was entered into solely in order
to procure a pension for the survivor.
In the event of a remarriage of the surviving spouse the claim to a
spouse's pension ceases at the end of the month in which remarriage takes
place.
Service Agreement of Xx. Xxxxxxx Xxxxxx 11
In the event of death of the Member of the Board of Management during
Service Agreement, survivors' pensions are provided according to the same
principles as those applying on the death of a pensioned Member of the
Board of Management. The starting basis for calculating the survivors'
pensions, however, is the company pension which would have been paid if the
beneficiary had suffered disability at the time of death (see Section
IV.4.).
All other Company-financed benefits granted in this case - in addition to
the benefits stated under Section IV. 3. and, in particular, insurance
benefits in the form of pension or capital sum - are offset against this
survivors' pension.
6. The pension payments are paid in monthly installments in arrears, starting
at the end of the time for which the salary has been paid or the
transitional payment under Section II.2 has been made.
The pension is adjusted annually, the adjustment being based on the
cost-of-living index in the country from which the pension payment is made.
The annual adjustment rate is the change in the cost-of-living index,
maximum 5% per annum. The basis taken for the cost-of-living index in
Germany is the index for a household of four persons on a medium income; in
the US the Consumer Price Index - All Urban Consumers.
7. A vested right to a pension is granted in the case of premature termination
of employment according to Section 1 of the Law for Improving Company
Old-Age Benefits (Gesetz zur Verbesserung der betrieblichen
Altersversorgung) but no longer than 10 countable service years. The level
of the acquired right is determined in accordance with the terms and
conditions of Section 2 of the Law for Improving Company Old-Age Benefits.
The vested benefits are due to be paid as an old age pension after the
beneficiary reaches the age of 60, as a disability pension
(Sozialversicherungstrager) if the requirements of the social security
disability pension are met or as survivor pension at the death of the
beneficiary according to Section VII.5. of this Agreement .
IX. TERMINATION BONUS
1. .Xx. Xxxxxx receives a termination bonus for his long activities for
Celanese AG at the end of his Service Agreement in the amount of two annual
remuneration payments (hereinafter referred to as the "TERMINATION BONUS").
2. The total annual remuneration used to determine this Termination Bonus
consists of the sum of the fixed annual remuneration applicable to the year
of Xx. Xxxxxx'x leaving, the
Service Agreement of Xx. Xxxxxxx Xxxxxx 12
annual Bonus calculated at Target for the business year in which the
Service Agreement is terminated and the value of the most recently granted
Long Term Incentives. Value of Long Term Incentives in the meaning of this
Section IX. shall be determined as the net present value according to the
Black Scholes methodology and calculated at the date of termination on a
pro rata 12 months basis.
3. The Termination Bonus shall not be reduced by benefits from the Pension
Scheme for the Board of Management, benefits from any other compensation
and severance payments arising from any other employment with any company
of the Celanese Group. However, the voluntary deferred compensation,
exercise of vested SARs or SOPs or medical benefits of Xx. Xxxxxx shall not
be offset against the Termination Bonus.
4. In case the preconditions defined under Section IV.1. regarding Severance
or the preconditions defined under Section IV.2. regarding Change in
Control and the preconditions defined under Section IX. regarding
Termination Bonus occur simultaneously, Xx. Xxxxxx is entitled to the
higher compensation. The other claim becomes extinct. Insofar neither Party
shall have a right to choose.
5. In case Xx. Xxxxxx makes use of one of his claims under Section IV.1.
regarding a Severance or under Section IV.2. regarding a Change in
Control-Severance or under Section IX. regarding a Termination Bonus, the
other claims become extinct.
X. MISCELLANEOUS
1. For the duration of his employment the Company will provide Xx. Xxxxxx with
an upper-range BMW/Mercedes or equivalent make of company car with a
chauffeur, and will pay the tax chargeable for providing this as a benefit
with monetary value.
2. The Company will pay the costs of Xx. Xxxxxx'x tax consultant.
3. The Company concludes for the Members of the Board of Management a
Directors & Officers Insurance and bears the costs of this insurance. This
insurance covers the activity of Xx. Xxxxxx as Member of the Board of
Management of Celanese AG as well as further activities, which Xx. Xxxxxx
performs in the interest of the Company. Such activities of Xx. Xxxxxx
could be e.g. board memberships in companies of the group or activities in
other companies in the meaning of Section I.3., in associations or a
service in an honorary capacity (ehrenamtliche Tatigkeit).
4. For the duration of the Service Agreement the Company will conclude an
accident insurance for Xx. Xxxxxx with the following insured sums:
Service Agreement of Xx. Xxxxxxx Xxxxxx 13
EUR 1.022.583,76 for death
EUR 1.022.583,76 for invalidity
EUR 10.225,84 for medical treatment costs
XI. CONCLUDING PROVISIONS
1. If any provision of this Agreement should be partly or wholly invalid or
subsequently loose its legal validity, this shall not affect the validity
of the remaining provisions. The invalid provision shall, as far as legally
permissible, be replaced by another, appropriate, provision whose economic
effect comes closest to what the Parties wished or would have wished if
they had taken into consideration the invalidity of the original provision.
2. Amendments and additions to this Agreement need to be in writing. This
requirement cannot be replaced by oral agreements. The German version of
this Agreement shall be authoritative for interpreting this Agreement.
3. This Agreement shall be governed by German law.
4. The place of fulfillment for all performances deriving out of this
Agreement is the seat of the Company. The seat of the Company under
Section 38 Subsec. 3 No. 2 of the German Civil Procedure Code
(Zivilprozessordnung) shall be agreed as the place of jurisdiction.
Kronberg i. Ts., September 5, 2002
Celanese AG
/s/ Xx. Xxxxxx Xxxx /s/ Xxxxxxx Xxxxxx
------------------------------ --------------------------------
Xx. Xxxxxx Xxxx Xxxxxxx Xxxxxx
(Chairman of the Supervisory Board)
