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EXHIBIT NO. 10.14
EMPLOYMENT CONTRACT
BETWEEN
XXXXXXX X. XXXXX
AND
ALCAN ALUMINUM CORPORATION
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THIS EMPLOYMENT AGREEMENT entered into at Cleveland, Ohio, as of the 1st day of
April 1999.
BETWEEN: Xx. Xxxxxxx X. Xxxxx
AND: ALCAN ALUMINUM CORPORATION, a company incorporated under the laws of
the United States of America, having its Head Office in Cleveland,
Ohio (hereinafter referred to as "ALCAN").
AND WHEREAS ALCAN agrees to maintain Xx. Xxxxxxx X. Xxxxx in the position of
President: Alcan Global Fabrication Group, evaluated at least at job grade 54A,
or in another mutually agreed position which will carry at least job grade 54A,
for the duration of this Agreement, subject to the terms and conditions of this
Agreement.
AND WHEREAS Xx. Xxxxxxx X. Xxxxx agrees to serve as President: Alcan Global
Fabrication Group or in another position which will carry at least job grade
54A.
THE PARTIES AGREE AS FOLLOWS:
1.0 TERM AND TERMINATION
1.1 The term of this agreement shall run from the 1st day of April 1999 to
31 December 2002 (3.75 years) and therewith terminate unless extended
by mutual written agreement.
1.2 Both parties have the intention to extend this Agreement beyond the
termination date at terms and conditions mutually acceptable to the
parties.
1.3 On or about 1 July 2002 (6 months prior to expiry date), the parties
intend to start outlining the terms and conditions of a new
Agreement, should the mutual decision be to extend the current
Agreement.
2.0 UNDERTAKING AND DECLARATIONS
2.1 For the Term of this Agreement, Xx. Xxxxxxx X. Xxxxx hereby agrees not
to accept employment offers by any other Corporation.
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3.0 COMPENSATION (all amounts are in US dollars unless stated otherwise)
3.1 BASE SALARY
For the duration of this Agreement, the Base Salary is set as follows:
ESTIMATED ANNUAL
FROM: E.R.* BASE SALARY
----- --------- -----------
1 April 1999 to 31 March 2000 $470,000 $410,000
1 April 2000 to 31 March 2001 $494,000 $465,000
1 April 2001 to 31 March 2002 $518,000 $518,000
1 April 2002 to 31 December 2002 $545,000 $545,000
[FN]
* estimated on basis of a 5% p.a. increase in mid-point. If the
increase of the E.R. is significantly higher, the Annual Base
Salary will be reviewed and adjusted accordingly.
3.2 EXECUTIVE PERFORMANCE AWARD (EPA)
The total guideline amount defined under the Plan is set at 65% of
the mid-point salary for grade 54A, based on Alcan's US Salary Scale,
with each component as defined under the approved salary scale.
3.3 MEDIUM TERM INCENTIVE PLAN ("MTIP")
Under the MTIP, two performance periods ("cycle") will be
established. The first 3-year cycle will cover the period from 1
January 1999 to 31 December 2001. The payout, if at all, for the first
3-year cycle, will be made in February 2002 on the basis of
achieving Alcan's Full Business Potential (FBP-II) and specific
strategic initiatives and having completed the full 3-year term of
employment. Performance objectives for the 3-year cycle is defined in
Schedule-A.
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The minimum, target and maximum payouts for the first performance cycle
are shown in TABLE 1 below:
TABLE 1
MEDIUM TERM INCENTIVE
PERIOD 1 JANUARY 1999 TO 31 DECEMBER 2001
DEGREE OF ACHIEVEMENT OF "FBP-II"
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LESS THAN
US$215M US$290M US$330M US$350M US$380M
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(1) (1) (1) (1) (1)
Performance 0 125% 200% 250% 300%
Rating
Award US$'000 $0 $375 $600 $750 $900
Results between US$215 Million and US$380 Million will be prorated.
(1) The target, as well as the payout formula, will be adjusted as
outlined in Schedule A.
For the second performance cycle covering the period from 1 January
2002 to 31 December 2002 (12 months), the CEO will establish, in
December 2001, the objective to be achieved as well as the payout formula.
The target amount will be set on the basis of the competitive Total Cash
level (US market data), for the period. The target MTIP award when added
to base salary and target epa will equal the total cash target for the
period. the payout, if at all, for the 2nd cycle will be made in February
2003 on the basis of achieving the objective set by the CEO and
having completed the full 45 month term of employment. In any event, the
target amount of the MTIP for the 2nd cycle will not be less than $100,000
per year, which is the amount set for the first cycle.
MTIP amounts paid are non pensionable earnings.
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4.0 ALCAN EXECUTIVE SHARE OPTION PLAN (AESOP)
During the term of this Agreement, Mr. Xxxxxxx Xxxxx will be granted
annually, an option to purchase shares under the AESOP. The number of
shares will be based on the regular yearly grant formula determined by the
Option Committee. For the year 1999, an amount of 51,000 options will be
granted.
5.0 TERMINATION OF EMPLOYMENT
In the event that Alcan terminates this Agreement without cause, prior to
the end of its term (31 March 2003), Mr. Xxxxxxx Xxxxx will be entitled to
the following termination settlement.
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MULTIPLIED BY
ii. the monthly equivalent of the annual compensation described in
paragraphs 3.1 (base salary), 3.2 (EPA at guideline amount) and 3.3
(MTIP at guideline amount, 100%).
In addition, should Mr. Xxxxxxx Xxxxx not be a fully vested member under
the Alcancorp Pension Plan (ACPP), at the time of termination of
employment, the Company will pay Mr. Xxxxxxx Xxxxx a lump sum equal to the
excess of (A) over (B) where:
a) is the actuarial present value of the accrued pension at the time of
his termination of employment, and
b) is the actuarial present value of the actual pension entitlement under
ACPP.
6.0 CHANGE OF CONTROL
A separate "Change of Control Agreement" has been signed between Mr.
Xxxxxxx Xxxxx and Alcan Aluminium Limited and forms part of this employment
contract.
7.0 DISABILITY
In the event that Xx. Xxxxx becomes disabled prior to the end of the term
and cannot perform the duties of his position, Alcan shall maintain full
payment of the amounts under paragraph 3.1 for a period of 6 months after
the date deemed disabled. Regular EPA amounts will also be payable during
the period. After the period of pay continuance Xx. Xxxxx will receive
regular LTD benefits.
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In addition to the pay continuation stated above, the CEO may at his
discretion recommend that a portion of the MTIP payment (paragraph 3.3) be
made even though through no fault on Xx. Xxxxx' part, he was not able to
complete the performance period.
8.0 DEATH
In the event of death prior to the end of this Agreement, Xx. Xxxxx' Estate
will be entitled to, in addition to the regular benefits payable under the
term of the life assurance program and the death benefits payable under the
Alcancorp Pension Plan, the following amounts:
1. the EPA guideline amount prorated to the date of death;
2. a discretionary amount deemed by the CEO to be a just and equitable
payment for the progress toward achieving the objectives under the
MTIP program (paragraph 3.3).
9.0 OTHER EXECUTIVE BENEFITS AND PERQUISITES
All other benefits and perquisites currently available to Xx. Xxxxxxx X.
Xxxxx will continue as per the provisions of such programs, which are
subject to change for all participants.
10.0 CHANGE IN RESPONSIBILITIES
If during the term of this agreement your job grade is evaluated at a level
higher than 54A as a result of an increase in your responsibilities, then
the monetary provisions of this agreement (sections 3.0 and 4.0) will be
reviewed and adjusted as appropriate by the CEO.
11.0 APPLICABLE LAW
This contract is governed and interpreted according to the internal law of
the State of Ohio without giving effect to any provisions relating to the
conflict of laws. Any dispute arising under this contract shall be resolved
in a court of competent jurisdiction in the Northern District of Ohio. Both
parties consent to venue and jurisdiction in said district and agrees not
to raise any challenge to such venue.
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IN WITNESS WHEREOF the Parties have signed these presents as at the place and
date first hereinabove written.
ALCAN ALUMINIUM LIMITED
BY: /s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx
Chief Executive Officer
WITNESS: /s/ Xxxxxx Xxxxx
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Xxxxxx Xxxxx
/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
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SCHEDULE A
FOR XXXXXXX X. XXXXX
The CEO has the discretion, during a cycle, to adjust performance measures set
for that period in order to reflect changes in accounting principles and
practices, mergers, acquisitions or divestitures or extraordinary non-recurring
or unusual items.
FULL BUSINESS POTENTIAL (II) OBJECTIVES (GLOBAL FABRICATION GROUP)
By the end of 2001, improve the run rate of pre-tax earnings by $310 Million
over 3 years (EVA neutral).
ASSUMPTIONS:
(bullet) Base year: 1998
(bullet) Major strategic investment, acquisition or merger not included in
FBPII plan
TARGET:
US$310 Million (pre-tax income)
ADJUSTMENTS:
(bullet) For major strategic initiatives
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