EXHIBIT(10)(iii)(A)18
AT&T Form 10-K
7/31/91
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of August 1, 1991, by and between the
American Telephone and Telegraph Company, A New York Corporation with its
headquarters at 550 Madison Avenue, New York, New York 10022 (hereinafter
called the "Company"), and Alex J. Mandl (hereinafter called the
"Employee").
WHEREAS the Employee was employed as a senior executive with
another company; and
WHEREAS the Employee has accepted employment with the
Company; and
WHEREAS the Company has assigned and appointed the Employee to a
Senior Management position as Chief Financial Officer and Group Executive.
In such capacity, Employee would report to the Chairman and be a member of
the Company's Executive Committee; and
WHEREAS, it is of special importance for the Company to mitigate
the impact of early departure from the Employee's prior employer;
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NOW, therefore, for and in consideration of the promises and the
mutual agreements hereinafter contained, the Company and Employee do hereby
agree as follows:
1. Employment. Subject to the provisions set forth elsewhere
in this Agreement, the Company hereby employs the Employee and the Employee
hereby accepts employment with the Company as a Senior Manager for the term
set forth in Section 2 of this Agreement. Employee represents and warrants
that there are no agreements or arrangements, whether written or oral, in
effect which would prevent him from rendering exclusive services to the
Company during the term hereof, and that he has not made and will not make
any commitment, agreement or arrangement, or do any act in conflict with
this Agreement. Such employment shall be upon the terms and conditions
hereinafter contained.
2. Term of Agreement. The term of employment hereunder shall
be at the will of each party to this Agreement and subject to the terms and
conditions thereof commencing on August 1, 1991. Except as expressly set
forth herein, the Employee shall have no further rights or entitlements
beyond the terms of this Agreement, including but not limited to the right
of continued employment.
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3. Employee's Compensation and Benefits. Except as otherwise
provided in this Agreement and as more fully set forth hereinbelow, the
Employee shall be treated in the same manner as and be entitled to such
benefits and other perquisites and terms and conditions of employment as
other Senior Managers of the Company at a similar level and with comparable
responsibilities.
(a) Base Salary. The Company agrees to pay and the
Employee agrees to accept for services to be rendered hereunder and during
the term of this Agreement a base salary of not less than $450,000.00 per
year, payable in installments on a monthly or other periodic basis in
accordance with the prevailing payroll practices of the Company.
(b) Perquisites. During the term of this Agreement, the
company shall (i) provide the Employee with perquisites of employment as
are commonly provided to an Employee of the Company at a similar level and
with comparable responsibilities, and (ii) reimburse the Employee for
reasonable and necessary business expenses incurred in connection with his
employment, in accordance with employee business expense practices
applicable to employees of the company at a similar level and with
comparable responsibilities.
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(c) Benefits. Subject to the terms and provisions of this
Agreement, the Employee shall be entitled to coverage under or benefits in
accordance with those employee and Senior Management benefit plans and
programs as are made available or which may subsequently become applicable
to other Senior Managers of the Company at comparable levels. The Employee
shall be entitled to five (5) weeks of annual vacation applicable to 1991
and subsequent years. The Employee shall also be entitled to relocate
under the terms of the AT&T Management Relocation Plan. Moreover, the AT&T
Management Relocation Plan provision which calls for a participant to
complete his relocation within 12 months of his employment date will be
extended to 24 months for Employee.
(d) Incentive Plans. During the term of this Agreement, the Employee
will be eligible for consideration for both long and short term awards
pursuant to the terms of the Company's 1987 Long Term Incentive Program and
short-term annual incentive arrangements, respectively, (the "Incentive
Plans") under the terms of such Incentive Plans as are in effect from time
to time. Short-term annual incentives for AT&T Senior Managers currently
take the form of AT&T Performance Awards (APA) and Merit Awards (MA).
Award levels under the APA program are predicated on overall corporate
performance and award levels under the MA program are determined by
individual and team contributions. The Company cannot make any definitive
representations regarding the continuation of the APA/MA incentive format,
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or the size of Employee's APA and MA awards in any given year, if any. The
following information, however, will provide a frame of reference regarding
the potential size of Employee's annual incentive opportunity. Employee's
1991 Standard APA is $201,000 and Standard MA is $72,000. Actual APA and
MA awards paid to individual Senior Managers are determined with reference
to such Standard Awards. For example, the APA payouts for performance
years 1988, 1989 and 1990 were 117%, 119.9% and 126.6%, respectively.
Moreover, based on annualized Company performance through the end of the
second quarter, the projected 1991 APA Award for a Senior Manager with a
$201,000 Standard APA Award would be $260,300 (i.e., 129.5% of such
Standard APA Award). A Senior Manager's actual MA is determined by his/her
supervisor. Although there are no specified minimum or maximum amounts
governing the size of such individual awards, the pool of funds available
for such awards in 1991 is limited to 36% of the sum of actual APA awards
made to each Senior Manager. Employee's actual 1991 APA and MA, if any,
will not be prorated to reflect partial service in such year.
The Company will award 8,195 Performance Shares to the Employee
as of the effective date of the Agreement under the Company's 1987 Long
Term Incentive Program covering the 1991-1993 performance period. In
addition and in accordance with the terms of this award, the Employee shall
receive quarterly Dividend Equivalents. Distributions of Long Term
Performance Shares will be in accordance with the applicable 1987 Long Term
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Incentive Program and award provisions. Also, as of the effective date of
this Agreement, 19,987 Stock Options will be granted to the Employee under
the Company's 1987 Long Term Incentive Program. In addition to the above
awards of Performance Shares and Stock Options which represent the 1991
standard grants to a Senior Manager at Employee's level, the Company's
Compensation Committee of the Board will be asked at their next meeting
(scheduled for October 16, 1991) to approve a special grant of Company
Stock Options and Performance Shares. Specifically, such special grant
would include: (1) 7,766 Performance Shares attributable to the 1989-1991
performance period and 6,070 Performance Shares attributable to the 1990-92
performance period. Employee shall receive quarterly Dividend Equivalents
on these special Performance Share Awards. (2) 77,000 Stock Options, which
will become fully vested ("cliff" vesting) three years after such special
grant.
(e) Within thirty business days of his employment with the
Company, Employee will be provided a one-time lump sum hiring bonus of
$200,000. This hiring bonus will not be included in the base for
calculating any employee or Senior Management benefits.
(f) Successor Plans and Programs. In the event that after
the date of this Agreement the Company establishes any new, replacement or
additional pension, retirement, disability or annuity plans, programs or
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practices of incentive compensation for Senior Managers of the Company at
comparable levels, the Employee shall also be eligible, at the Company's
discretion, for coverage under such pension, retirement, disability and
annuity plans, programs or incentive compensation practices in accordance
with the terms thereof.
4. Special Pension Arrangement
In the event the Employee's employment is terminated for any
reason other than for a Company-initiated termination for "Cause" (as
hereinafter defined) on or after Employee's 55th birthday, the Company
agrees to provide an immediate pension benefit based on (1) the greater of
the pension amounts reflected in Appendix A or (2) actual Company Net
Credited Service and calculated under the then-existing Company qualified
and non-qualified pension formulas, but without reference to age and
service eligibility requirements. Non-qualified pensions affected by these
practices would include those provided under the AT&T Non-Qualified Pension
Plan, the AT&T Mid-Career Pension Plan but specifically would exclude the
Minimum Retirement Benefit and Surviving Spouse Benefit payable under the
AT&T Senior Management Long-Term Disability and Survivor Protection Plan.
Special pension payments shall be paid to the Employee from company
operating income. The total pension amount which results from application
of this Section 4 will be reduced by all amounts actually received by
Employee under any other AT&T or subsidiary or affiliated company's
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qualified or non-qualified pension, retirement, disability or annuity plan,
program or practice, except the AT&T Long-Term Savings Plan for Management
Employees and the AT&T Senior Management Incentive Award Deferral Plan.
Pension benefits payable under this Section 4 will be afforded the same "ad
hoc" inflation adjustments as may be applicable to the AT&T Non-Qualified
Pension Plan from time to time. Moreover, Employee's Company-paid senior
Management Basic Life Insurance Program ("SMBLIP") benefit, equal to one
times base salary, will be maintained after such termination as if Employee
was eligible for a Service Pension under the AT&T Management Pension Plan.
All other terms and conditions of the SMBLIP will continue to apply.
Moreover and pursuant to a termination under this Section 4, Employee will
be entitled to the following post-termination ancillary entitlements,
administered in a manner consistent with the then-current treatment of
service Pension eligible Senior Managers and in accordance with the terms
and conditions applicable to each Senior Management plan or practice:
- COBRA entitlements (as mandated by Federal statutes)
- 1 - 1-1/2 times base salary Senior Management Individual
Life Insurance (Split Dollar - contributory)
- Continuation of outstanding Company Stock Options and
Performance Shares
- Continuation of Senior Management Telephone Concession
Service
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5. Powers and Duties. The Employee shall devote his full time,
interests and abilities to the performance of duties under this Agreement,
it being understood in connection therewith that he may, in his discretion
and subject to not interfering with his duties and responsibilities
hereunder, devote time to civic, public and professional activities and may
serve as a Director of other business corporations not engaged in
competition with the Company or any subsidiary or affiliate of the Company;
provided, however, that he shall not accept directorships on more than
three boards of other business corporations; and provided, further, that
for purposes of the immediately preceding clause, directorships on the
boards of two or more companies with at least 50% common ownership shall
count as a single company.
6. Operation of Agreement. Notwithstanding any other term or
provision to the contrary, all rights, benefits and entitlements available
under and in accordance with the terms of this Agreement, except for those
provided in Sections 4 and 8, are contingent and dependent upon the
Employee maintaining and continuing employment as a Senior Manager of the
Company.
7. Restrictive Covenants.
(a) Competition. Notwithstanding any other provisions of
this Agreement, any and all payments (except those made from Company-
sponsored Tax Qualified Pension or Welfare Plans), benefits or other
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entitlements to which the Employee may be eligible in accordance with the
terms hereof, may be forfeited, whether or not in pay status, at the
discretion of the Company, if the Employee, at any time without the consent
of the Company is employed by, becomes associated with, renders service to,
or owns an interest in any business that is competitive with the Company,
any subsidiary or affiliate of the Company, or any business in which the
Company or any such subsidiary or affiliate has a substantial interest
(other than as a shareholder with a non-substantial interest in such
business), all as determined by the Company. Appendix B is a copy of the
Non-Competition Guideline.
(b) Confidentiality. The Employee agrees that he will not,
at any time during his employment pursuant to this Agreement or thereafter,
disclose or use any trade secret, proprietary or confidential information
of the Company or any subsidiary or affiliate of the Company, obtained
during the course of his employment, except as required in the course of
such employment or with the written permission of the Company or, as
applicable, any subsidiary or affiliate of the Company. Further, the
Employee agrees not to disclose or discuss the terms and provisions of this
Agreement with anyone except for his legal and financial advisors and
members of his immediate family.
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The Employee agrees that at the time of the termination of his
employment with the Company, whether at the instance of the Employee or the
Company, and regardless of the reasons therefore, he will deliver to the
Company, and not keep or deliver to anyone else, any and all notes, files,
memoranda, papers and, in general, any and all physical matter containing
information, including any and all documents significant to the conduct of
the business of the Company or any subsidiary or affiliate of the Company,
except for any documents for which the Company or any subsidiary or
affiliate of the company has given written consent to removal at the time
of the termination of the Employee's employment.
(c) Violation by the Employee of any of the provisions of
this Section 7 may result, at the discretion of the Company, in the
cancellation of all rights and entitlements of the Employee hereunder and
shall give the Company any other rights it may have under applicable law to
restrict the use of any information and/or documents and/or for the return
of any such information and/or documents.
8. Termination Provisions.
(a) If at any time during the period beginning from the
effective date of this Agreement and ending on the day prior to the
Employee's 55th birthday, Employee is terminated by the Company for any
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reason other than Cause, the Employee will be entitled to the greater of
(1) $450,000 or (2) 200% of Employee's annual base salary rate in effect as
of the date of Employee's termination.
(b) The Company may terminate the Employee for Cause after
written notice specifying the cause of such action shall have been given to
Employee by the Company. For purposes of this Agreement, Cause shall mean:
(i) Employee's breach of any of the terms of this
Agreement;
(ii) Employee's commission of act(s) or omission(s)
which have, have had, or are likely to have a
material adverse effect on the business,
operations, financial conditions or reputation of
the Company, its subsidiaries or affiliates;
(iii) Employee's conviction (including a plea of guilty
or nolo contenders) of a felony or any crime of
theft, dishonesty or moral turpitude;
(iv) Gross omission or gross dereliction of any
statutory or common law duty of loyalty to the
Company.
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(c) If the Employee terminates his employment with the
Company at any time for personal or other reasons or if Employee dies or is
terminated because of long-term disability or is terminated by the Company
for Cause, as specified in Section 8(b) hereinabove, and except as provided
in Section 4 of this Agreement, he will be treated in the same manner as
any other Senior Manager of the Company without reference to any provision
of this Agreement.
(d) Any payments made pursuant to this Section 8 are: (1)
subject to the provisions, restrictions and limitations of section 7 above,
(2) payable in twelve (12) equal monthly installments commencing the month
after the month of termination and (3) subject to Employee signing a
standard Release and Agreement not to sue the Company then in use by the
Company in connection with terminated Senior Managers.
9. Dispute Resolution. At the option of the Employee or the
company, any dispute, controversy, or question arising under, out of or
relating to this Contract or the breach thereof, shall be referred for
decision by arbitration in the State of New Jersey by a neutral arbitrator
selected by the parties hereto. The proceeding shall be governed by the
Rules of the American Arbitration Association then in effect or such rules
last in effect (in the event such Association is no longer in existence).
If the parties are unable to agree upon such a neutral arbitrator within
thirty (30) days after each party has given the other written notice of the
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desire to submit the dispute, controversy or question for decision as
aforesaid, then either party may apply to the American Arbitration
Association for the appointment of a neutral arbitrator, or, if such
Association is not then in existence or does not desire to act in the
matter, either party may apply to the Presiding Judge of the Superior court
of any county in New Jersey for the appointment of a neutral arbitrator to
hear the parties and settle the dispute, controversy or question, and such
Judge is hereby authorized to make such appointment. In the event that
either party exercises the right to submit a dispute arising hereunder to
arbitration, the decision of the neutral arbitrator shall be final,
conclusive and binding on all interested persons and no action at law or in
equity shall be instituted or, if instituted, further prosecuted by either
party other than to enforce the award of the neutral arbitrator.
In the event that the Employee is successful in pursuing any
claim or dispute arising out of this Contract, the Company shall pay all of
the Employee's attorneys' fees and costs, including the compensation and
expenses of any Arbitrator, unless (1) the Arbitrator, or any court in
which litigation is filed finds the Company to be without liability on
material issues raised or (2) the dispute or lawsuit is frivolous in
nature. In any other case, the Employee and the Company shall each bear
all their own costs and attorney fees, except that the Company shall pay
the costs of any Arbitrator appointed hereunder.
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10. Assignment.
(a) Employee. This Agreement is a personal contract and
the rights and interests of the Employee hereunder may not be sold,
transferred, assigned, pledged or hypothecated by him.
(b) Company. This Agreement shall inure to the benefit of
and be binding upon the Company, its successors and assigns, including but
not limited to any subsidiary or affiliate of the Company to which the
Employee may be employed or assigned, by or with the consent of the
Company. If the Employee is assigned to or becomes employed by any
subsidiary or affiliate of the Company during the term of this Agreement,
such subsidiary or affiliate shall be considered to have been assigned all
rights of the Company and accepted all obligations of the Company
hereunder.
11. Taxes. It is understood that all payments and benefits
provided under this Agreement are subject to withholding for applicable
federal, state and local income (or similar) taxes.
12. Entire Agreement; Amendments. This Agreement comprises 16
pages, 13 Sections and two (2) attached Appendices which represents the
entire Agreement between Employee and the Company in respect of the subject
matter contained herein and supersedes all prior agreements, promises,
covenants, arrangements, communications, representations or warranties,
whether oral or written, by any officer, employee or representative of any
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party hereto. No amendments or modifications to this Agreement may be made
except in writing signed by the Company, through its authorized
representative, and the Employee.
13. Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of New Jersey.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement and the Company has affixed its corporate seal as of the day and
year first above written.
Company:
By: H. W. Burlingame
Date: August 21, 1991
Witnessed: Ailene Durham
Date: August 21, 1991
Employee: Alex J. Mandl
Date: August 15, 1991
Witnessed: Mary Blessing
Date: August 15, 1991
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Appendix A
MINIMUM PENSION SCHEDULE
(Amounts Assume 50% Joint and Survivor Pension is not declined)*
Retirement Age# Total Monthly Pension**
--------------- ---------------------
55 $30,432
56 33,280
57 36,396
58 39,802
59 43,528
60 47,602
61 52,057
62 56,930
63 62,258
64 68,086
65 74,459
* If survivor annuity is declined, amounts will be increased to reflect
practices in effect upon employee's termination.
** The above Minimum Pension Schedule will be offset by the following:
(1) All AT&T or subsidiary or associated company's qualified and non-
qualified pension plans (e.g., AT&T Non-Qualified Pension Plan, AT&T
Mid-Career Pension Plan, AT&T Senior Management Long-Term Disability
and survivor Protection Plan), (2) any pensions payable from former
employers (i.e., Boise Cascade, CSX Corporation [and subsidiaries]).
If such offsets exceed the Minimum Pension amount, no benefit under
this schedule is payable. Qualified and non-qualified savings plans
are not offsets to the Minimum Pension Schedule, e.g., AT&T Long-Term
Savings Plan and AT&T Senior Management Incentive Award Deferral Plan.
# Minimum Pension amounts will be prorated to the nearest whole month.
7/31/91