EXHIBIT 10.19.: EMPLOYMENT AGREEMENT
31 December 2001
PERSONAL & CONFIDENTIAL
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Dear ▇▇▇▇▇:
I wish to confirm my discussion with you pertaining to the position of Executive
Vice President of Alcan Inc. and a member of the Office of the President,
effective on 1 January 2002. You will report to me and you will be located in
Montreal. This offer letter contains two sections. The first deals with the
on-going annual compensation package while the second section deals with
transfer and relocation issues.
SECTION 1
SALARY
Your base salary will be US$575,000 per annum, effective 1 January 2002. Your
salary will be reviewed annually on the basis of competitive US compensation
data. Your job grade will be administered at 55 under Alcan's structure.
ANNUAL BONUS
You will participate in Alcan's Executive Performance Award Plan (EPA) with a
guideline bonus of 75% of the mid-point salary (US$588,000). Under the modified
EPA program, award payment will be related to the global performance of Alcan
Inc. as well as your own personal performance.
LONG TERM INCENTIVE (STOCK OPTION AND RELATIVE TSR PROGRAM)
At this point in time, we cannot provide you with all the specific details of
the new Long Term Incentive Program. These should be available to you over the
next few months.
On the other hand we can confirm that the combined target compensation value of
the two Plans (Stock Option and TSR Performance Plan) will be equal to
approximately $1,750,000 for 2002 with half this value provided in stock options
and the other half provided under the new TSR Performance Plan. The compensation
value of $1,750,000 will be revised annually on the basis of competitive US
compensation data. The Awards under both Plans are subject to approval by the
Personnel Committee of the Board.
1
PENSION PLAN
We are currently reviewing the pension coverage of senior executives and may
propose some modifications pertaining to the different top hat programs in
existence. Changes, if any, will be effective from 1 January 2002, but are not
likely to be known before the end of the 1st Quarter 2002.
Thus, on an interim basis, from 1 January 2002, you will continue to participate
in your current pension plan, at the pensionable earnings level in existence on
31 December 2001. As soon as we complete the design of the executive top hat
plan and its valuation, we will communicate the proposed changes. We intend to
have this work completed by the end of the 1st Quarter 2002.
TAX EQUALIZATION
While working in Canada, we will provide you with a tax equalization payment to
compensate for the tax differential between Canada and Cleveland (federal, state
and local income taxes). The tax equalization will be applied to Base Salary,
the EPA bonus payment and payments under the TSR Performance Plan. Recognizing
that there are potentially different tax treatments on TSR's and stock options
in the US and Canada, the intent is that the net affect be tax neutral to you
compared to the US. In order to achieve this result you will be tax equalized on
any excess taxes due from exercising TSR's in Canada offset by the savings, if
any, of exercising stock options during the same tax year.
PAY DISBURSEMENT AND BENEFITS
We intend to maintain you as an employee of Alcan Management Services Limited
(USA) as we assume that you will continue to be a resident of the USA. Our US
payroll will disburse all payments. As such, you will continue to participate in
all Employee Benefits and Pension programs available to US based employees. If
you are deemed to be a resident of Canada these arrangements will be reviewed.
SECTION II
IMMIGRATION REQUIREMENTS
You will be required to obtain the proper work permit from the Canadian
authorities. ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ will work with you to achieve this.
HOUSING AND TRAVELLING
Your move will be handled under Alcancorp's Relocation Policy. Alcan will be
responsible for the cost of selling your Cleveland property (customary costs)
and for shipping your household goods and personal effects to South Carolina.
While in Montreal, the Company will make available to you its executive
apartment. During the length of this assignment, personal airfare transportation
from Montreal to South Carolina (return) will be for your account.
2
TERMINATION
Should your employment be terminated without cause, Alcan will pay you a
termination allowance equal to 24 months base salary and EPA guideline,
calculated at the date of termination, tax-equalized to Cleveland, Ohio if need
be. The amount will be paid as a lump sum or as salary continuance at your
choice. In the event you elect salary continuance, you will continue to
participate in the benefit programs for the period of salary continuance except
that the long-term disability plan and the accrual of vacation cease on
termination date. No option grants are made during the salary continuance
period.
CHANGE IN ORGANIZATIONAL STRUCTURE
In the event that the Board makes a change in the current Office of the
President structure, which impacts on your future role in the organization, you
will have the right to resign from Alcan if there is no mutually acceptable
position for you in the new organization structure. You will have up to 3 months
from the date of the organizational change to make the decision to resign. In
this eventuality you shall be entitled to the termination provisions outlined
above.
CHANGE OF CONTROL/CONFIDENTIALITY/NON-COMPETITION
Your current Change of Control Agreement continues to be in force. The amounts
payable, if any, will be tax-equalized to Cleveland, Ohio. Furthermore, you are
asked to sign the attached confidentiality and non-competitive agreement.
ACCEPTANCE
Please sign and return a copy of this letter indicating your acceptance of the
terms and conditions described in it.
The terms and conditions outlined in this letter replace any previous
contractual arrangements and constitute the full terms and conditions of
employment.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------
▇▇▇▇▇▇ ▇▇▇▇▇
Chief Executive Officer
I accept the terms and conditions described above.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 8 January 2002
------------------------------------ --------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ date
3
CONFIDENTIALITY AGREEMENT
To Alcan Inc.
In consideration of your agreeing to employ him as your Executive Vice
President, the undersigned Employee acknowledges and agrees that his employment
by the Employer under this Agreement necessarily involves his understanding of
and access to certain trade secrets and confidential information pertaining to
the business of the Employer. Accordingly, the Employee agrees that during the
Employment Period and for a period of two (2) years following the Date of
Termination, he will not, directly or indirectly, without the prior written
consent of the Employer, disclose or use for the benefit of any person,
corporation or other entity, or for himself any and all files, trade secrets or
other confidential information concerning the internal affairs of the Employer
or its subsidiaries or affiliates, including, but not limited to, information
pertaining to its clients, services, products, earnings, finances, operations,
methods or other activities; provided, however, that the foregoing shall not
apply to information which is of public record or is generally known, disclosed
or available to the general public or the industry generally. Notwithstanding
the foregoing, the Employee may disclose such information as required by law
during any legal proceeding or to the Employee's personal representatives and
professional advisers and, with respect to such personal representatives and
professional advisers, the Employee agrees to inform them of his obligations
hereunder and take all reasonable steps to ensure that such professional
advisers do not disclose the existence or substance hereof. Further, the
Employee agrees that he shall not, directly or indirectly, remove or retain,
without the express prior written consent of the Employer, and upon termination
of employment for any reason shall return to the Employer, any records, computer
disks, computer printouts, business plans or any copies or reproductions
thereof, or any information or instruments derived therefrom, arising out of or
relating to the business of the Employer or obtained as a result of his
employment by the Employer.
Signed by the Employee as of 8 January, 2002.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
4
NON-COMPETITION UNDERTAKING
To Alcan Inc.
In consideration of your agreeing to employ me as your Executive Vice President,
I acknowledge and undertake that until the expiry of two (2) years following the
termination of my employment with the Company, I will not be entitled to act as
an employee, director of or officer of, advisor to or material investor in any
corporation, partnership, person or other entity which carries on any business
which is materially competitive with the Company's principal lines of business.
Entities which carry on businesses which are so materially competitive include
without limitation, those which carry on any business which relates to the
mining or refining of bauxite, the production and sale of alumina or primary
aluminum, the production and sale of aluminum products and aluminum fabricated
products (such as can sheet, foil, litho sheet and other flat rolled products,
wire and cable, castings and extrusions), the trading of aluminum, the
production and sale of packaging products for tobacco, pharmaceutical,
cosmetics, health care, food or beverage products or any line of business
carried on by the Company and accounting for at least five percent (5.0%) of its
consolidated assets or gross revenues at the time of the termination of my
employment. Nevertheless, no such business shall be considered to be materially
competitive unless it is carried on in any of the jurisdictions in which the
Company carries on business at the time of the termination of my employment.
I acknowledge that in view of the position of extreme trust and confidence
attached to my position as Employee of the Company, this undertaking is
reasonable in all respects and essential to the protection of the Company and
its shareholders. I shall continue to be bound by its terms of this undertaking
notwithstanding the termination of my employment for any reason.
For the purposes of the foregoing: the "Company" means Alcan Inc. as well as its
subsidiaries, affiliates and joint ventures, and "Material Investor" means the
holder of more than five per cent (5.0% ) of the outstanding voting or equity
shares, units or similar interests.
Signed by the Employee as of 8 January, 2002.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
5