ITT Corporation
Special Senior Executive Severance Pay Plan
(amended and restated as of December 31, 2008)
The purpose of
this ITT Corporation Special Senior Executive Severance Pay Plan
(“ Plan ”) is to assist in occupational
transition by providing Severance Benefits, as defined herein, for
employees covered by this Plan whose employment is terminated under
conditions set forth in this Plan.
Covered employees
under this Plan (“ Special Severance Executives
”) are active full-time, regular salaried employees of ITT
Corporation, (“ ITT ”) and of any subsidiary
company (“ ITT Subsidiary ”) (collectively or
individually as the context requires “ Company
”) (including Special Severance Executives who are short term
disabled as of a Potential Acceleration Event within the meaning of
the Company’s short term disability plans) (other than
Special Severance Executives on periodic severance as of a
Potential Acceleration Event) who are in Band A or B or were
in Band A or B at any time within the two year period
immediately preceding an Acceleration Event and such other
employees of the Company who shall be designated as covered
employees in Band A or B under the Plan by the Compensation
and Personnel Committee of ITT’s Board of
Directors.
“ Bands A
and B ” shall have the meaning given such terms under the
executive classification system of the ITT Human Resources
Department as in effect immediately preceding an Acceleration
Event. After the occurrence of an Acceleration Event, the terms
“ITT”, “ITT Subsidiary” and
“Company” as used herein shall also include,
respectively and as the context requires, any successor company to
ITT or any successor company to any ITT Subsidiary and any
affiliate of any such successor company.
An “
Acceleration Event ” shall occur if (i) a report
on Schedule 13D shall be filed with the Securities and
Exchange Commission pursuant to Section 13(d) of the
Securities Exchange Act of 1934 (the “ Act ”)
disclosing that any person (within the meaning of
Section 13(d) of the Act), other than ITT or a subsidiary of
ITT or any employee benefit plan sponsored by ITT or a subsidiary
of ITT, is the beneficial owner directly or indirectly of twenty
percent (20%) or more of the outstanding Common Stock $1 par value,
of ITT (the “ Stock ”); (ii) any person
(within the meaning of Section 13(d) of the Act), other than
ITT or a subsidiary of ITT, or any employee benefit plan sponsored
by ITT or a subsidiary of ITT, shall purchase shares pursuant to a
tender offer or exchange offer to acquire any Stock of ITT (or
securities convertible into Stock) for cash, securities or any
other consideration, provided that after consummation of the offer,
the person in question is the beneficial owner (as such term is
defined in Rule 13d-3 under the Act),
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directly or
indirectly, of twenty percent (20%) or more of the outstanding
Stock of ITT (calculated as provided in paragraph (d) of
Rule 13d-3 under the Act in the case of rights to acquire
Stock); (iii) the stockholders of ITT shall approve
(A) any consolidation, business combination or merger
involving ITT, other than a consolidation, business combination or
merger involving ITT in which holders of Stock immediately prior to
the consolidation, business combination or merger (x) hold
fifty percent (50%) or more of the combined voting power of ITT (or
the corporation resulting from the merger or consolidation or the
parent of such corporation) after the merger and (y) have the
same proportionate ownership of common stock of ITT (or the
corporation resulting from the merger or consolidation or the
parent of such corporation), relative to other holders of Stock
immediately prior to the merger, business combination or
consolidation, immediately after the merger as immediately before,
or (B) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or
substantially all the assets of ITT, (iv) there shall have
been a change in a majority of the members of the Board of
Directors of ITT within a 12-month period unless the election or
nomination for election by ITT’ stockholders of each new
director during such 12-month period was approved by the vote of
two-thirds of the directors then still in office who (x) were
directors at the beginning of such 12-month period or
(y) whose nomination for election or election as directors was
recommended or approved by a majority of the directors who where
directors at the beginning of such 12-month period or (v) any
person (within the meaning of Section 13(d) of the Act) (other
than ITT or any subsidiary of ITT or any employee benefit plan (or
related trust) sponsored by ITT or a subsidiary of ITT) becomes the
beneficial owner (as such term is defined in Rule 13d-3 under
the Act) of twenty percent (20%) or more of the Stock.
“
Cause ” shall mean action by the Special Severance
Executive involving willful malfeasance or gross negligence or the
Special Severance Executive’s failure to act involving
material nonfeasance that would tend to have a materially adverse
effect on the Company. No act or omission on the part of the
Special Severance Executive shall be considered
“willful” unless it is done or omitted in bad faith or
without reasonable belief that the action or omission was in the
best interests of the Company.
“ Good
Reason ” shall mean (i) without the Special
Severance Executive’s express written consent and excluding
for this purpose an isolated, insubstantial and inadvertent action
not taken in bad faith and which is remedied by the Company or its
affiliates within 30 days after receipt of notice thereof
given by the Special Severance Executive, (A) a reduction in
the Special Severance Executive’s annual base compensation
(whether or not deferred), (B) the assignment to the Special
Severance Executive of any duties inconsistent in any material
respect with the Special Severance Executive’s position
(including status, offices, titles and reporting requirements),
authority, duties or responsibilities, or (C) any other action
by the Company or its affiliates which results in a material
diminution in such position, authority, duties or responsibilities;
(ii) without the Special Severance Executive’s express
written consent, the Company’s requiring the Special
Severance Executive’s work location to be other than within
twenty-five (25) miles of the location where such Special
Severance Executive was principally working immediately prior to
the Acceleration Event; or (iii) any failure by the Company to
obtain the express written assumption of this Plan from any
successor to the Company; provided that “Good
Reason” shall cease to exist for an event on the 90
th day following the later of its occurrence or the
Special Severance Executive’s knowledge thereof, unless the
Special Severance Executive has given the Company notice thereof
prior to such date.
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“
Potential Acceleration Event ” shall mean any
execution of an agreement, the commencement of a tender offer or
any other transaction or event that if consummated would result in
an Acceleration Event.
4. Severance
Benefits Upon Termination of Employment
If, a Special
Severance Executive’s employment with the Company is
terminated due to a Qualifying Termination, he or she shall receive
the severance benefits set forth in Section 5 hereof (“
Severance Benefits ”). For purposes hereof, (i) a
“Qualifying Termination” shall mean a termination of a
Special Severance Executive’s employment with the Company
either (x) by the Company without Cause (A) within the
two (2) year period commencing on the date of the occurrence
of an Acceleration Event or (B) prior to the occurrence of an
Acceleration Event and either (1) following the public
announcement of the transaction or event which ultimately results
in such Acceleration Event or (2) at the request of a party
to, or participant in, the transaction or event which ultimately
results in an Acceleration Event; or (y) by a Special
Severance Executive for Good Reason within the two (2) year
period commencing with the date of the occurrence of an
Acceleration Event and (ii) a determination by a Special
Severance Executive that he or she has “Good Reason”
hereunder shall be final and binding on the parties hereto unless
the Company can establish by a preponderance of the evidence that
“Good Reason” does not exist.
Severance Benefits
for Special Severance Executives (i) in Band A at the
time of a Qualifying Termination or at any time during the
two (2) year period immediately preceding the Acceleration
Event or (ii) designated as a covered employee in Band A
in accordance with Section 2 hereof:
•
Accrued Rights - The Special Severance
Executive’s base salary through the date of termination of
employment, any annual bonus earned but unpaid as of the date of
termination for any previously completed fiscal year, reimbursement
for any unreimbursed business expenses properly incurred by the
Special Severance Executive in accordance with Company policy prior
to the date of the Special Severance Executive’s termination
of employment and such employee benefits, if any, as to which the
Special Severance Executive may be entitled under the employee
benefit plans of the Company, including without limitation, the
payment of any accrued or unused vacation under the Company’s
vacation policy.
•
Severance Pay – The sum of
(x) three (3) times the highest annual base salary
rate paid (whether or not deferred) to the Special Severance
Executive at any time during the three year period immediately
preceding the Special Severance Executive’s termination of
employment, and (y) three (3) times the highest
annual bonus paid or awarded (whether or not deferred) to the
Special Severance Executive in respect of either (i) the
three (3) years preceding an Acceleration Event or
(ii) the three (3) years preceding the Special Severance
Executive’s termination of employment.
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•
Benefits and Perquisites
>
Continued health and life insurance
benefits and perquisites (including, without limitation, any
Company-provided automobile and any tax or financial advisory
services) for a three (3) year period following the Special
Severance Executive’s termination of employment at the same
cost to the Special Severance Executive, and at the same coverage
levels, as provided to the Special Severance Executive (and the
Special Severance Executive’s eligible dependents)
immediately prior to his or her termination of
employment.
>
Payment of a lump sum amount
(“ Pension Lump Sum Amount ”) equal to the
difference between (i) the total lump sum value of the Special
Severance Executive’s pension benefit under the ITT Salaried
Retirement Plan and, as applicable, Excess Pension Plan IA,
Excess Pension Plan IB and/or Excess Pension Plan II of
the Company or any successor plan; provided that the
benefits under such successor plan is no less favorable than the
benefits under the plans set forth herein (or corresponding pension
arrangements outside the United States) (“ Pension
Plans ”) as of the Special Severance Executive’s
termination of employment and (ii) the total lump sum value of
the Special Severance Executive’s pension benefit under the
Pension Plans after crediting an additional three (3) years of
age and three (3) years of eligibility and benefit service to
the Special Severance Executive and applying the highest annual
base salary rate and highest bonus determined above under
“Severance Pay” with respect to each of the additional
three (3) years of service so credited for purposes of
determining Final Average Compensation under the Pension Plans. The
above total lump sum values shall be determined in the manner
provided in the Excess Pension Plans of the Company for
determination of lump sum benefits upon the occurrence of an
Acceleration Event, as defined in said Plans. This provision shall
apply to any Special Severance Executive having a pension benefit
under any of the Pension Plans as of the Special Severance
Executive’s termination of employment. An example of the
calculation of benefits set forth in this paragraph is set forth on
Schedule A .
>
Crediting of an additional
three (3) years of age and three (3) years of eligibility
service for purposes of the Company’s retiree health and
retiree life insurance benefits. This provision shall apply to any
Special Severance Executives covered under such benefits any time
during the three (3) year period immediately preceding the
Special Severance Executive’s termination of
employment.
>
Payment of a lump sum amount
(“ Savings Plan Lump Sum Amount ”) equal to
three (3) times the following amount: the highest annual base
salary rate determined above under “Severance Pay”
times the highest percentage rate of Company Contributions
(not to exceed three and on-half percent (3
1 / 2
%) with respect to the Special
Severance Executive under the ITT Investment and Savings Plan for
Salaried Employees and/or the ITT Excess Savings Plan (or
corresponding savings plan arrangements outside the United States)
(“ Savings Plans ”) (including matching
contributions and floor contributions) at any time during the
three (3) year period immediately preceding the Special
Severance Executive’s termination of employment or the
three (3) year period immediately preceding the Acceleration
Event. This provision shall apply to any Special Severance
Executive who is a member of any of the Savings Plans at any time
during such three (3) year period.
•
Outplacement – Outplacement services for
one (1) year.
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Severance Benefits
for Special Severance Executives (i) in Band B at the
time of a Qualifying Termination or at any time during the
two (2) year period immediately preceding the Acceleration
Event or (ii) designated as a covered employee in Band B
in accordance with Section 2 hereof; provided , that a
Special Severance Executive who is in Band B at the time of a
Qualifying Termination but was in Band A anytime during the
two (2) year period immediately preceding the Acceleration
Event shall be entitled to Severance Benefits as a Special
Severance Executive in Band A and shall not be entitled to the
Severance Benefits set forth below:
•
Accrued Rights - The Special Severance
Executive’s base salary through the date of termination of
employment, any annual bonus earned but unpaid as of the date of
termination for any previously completed fiscal year, reimbursement
for any unreimbursed business expenses properly incurred by the
Special Severance Executive in accordance with Company policy prior
to the date of the Special Severance Executive’s termination
of employment and such employee benefits, if any, as to which the
Special Severance Executive may be entitled under the employee
benefit plans of the Company, including without limitation, the
payment of any accrued or unused vacation under the Company’s
vacation policy.
•
Severance Pay – The sum of
(x) two (2) times the highest annual base salary
rate paid (whether or not deferred) to the Special Severance
Executive at any time, during the three (3) year period
immediately preceding the Special Severance Executive’s
termination of employment, and (y) two (2) times
the highest annual bonus paid or awarded (whether or not deferred)
to the Special Severance Executive in respect of either
(i) the three (3) years preceding an Acceleration Event
or (ii) the three (3) years preceding the Special
Severance Executive’s termination of employment.
•
Benefits and Perquisites
>
Continued health and life insurance
benefits and perquisites (including, without limitation, any
Company provided automobile and any tax or financial advisory
services) for a two year period following the Special Severance
Executive
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