Exhibit 10 (iii)(v)
January 25, 2000
Mr. Randy Smith
Dear Randy:
I am pleased to offer you the position of President, Security
and Safety Sector of Ingersoll-Rand Company and intend to
recommend your election as an Officer of the Company to the
Board of Directors.
The following is an outline of our offer:
1. Your starting base salary will be at an annual rate of
$400,000 paid monthly.
2. You will be eligible for an annual incentive award,
targeted at 90% of salary depending upon your performance and
Ingersoll-Rand Company performance.
3. You have been recommended for an award of 50,000 non-
qualified stock options (a 10,000 share non-recurring sign-on
award and a 40,000 share regular annual award). These awards
are subject to approval by Ingersoll-Rand's Board of Directors
and to the terms and conditions of awards made under our
Incentive Stock Plan. Your award recommendation will go
before the Compensation Committee of Ingersoll-Rand's Board at
their first meeting following your first day of employment.
These options will be priced after the stock market closes on
the day they are approved by the Board at the Fair Market
Value of Ingersoll-Rand stock. Thereafter, you will be
considered a full participant in the Plan and eligible to
receive awards under the Plan in future years as administered
by the Compensation Committee of the Board. All stock option
awards vest ratably over a three-year period, one-third each
year.
4. Upon acceptance of this offer and commencement of
employment, you will be awarded 4,000 performance shares of
Ingersoll-Rand stock. These shares vest according to
achievement of Ingersoll-Rand earnings per share (EPS) annual
growth targets, which, for performance year 2000, are
currently set at 12%. These shares are distributed each
February following the Board's approval of the Company's EPS
performance. In subsequent years, you will be eligible for
additional annual awards of similar value.
5. You will be eligible for the complete program of employee
benefits offered to all Ingersoll-Rand salaried employees in
accordance with the terms and conditions of those Plans.
Further, as an Officer of the Company, you will be nominated
for membership in the company's Elected Officer Supplemental
(Pension) Plan, under the terms and conditions of that Plan,
except as modified below:
The Elected Officer Supplemental Plan (EOSP) provides
retirement benefits at normal retirement age, which for
Officers is 62, based on a percentage of your defined final
earnings (final salary plus the average of the highest five
of your last six bonuses). In your case, Ingersoll-Rand
will establish your target percentage at 50% of final pay at
age 62, taking into account Ingersoll-Rand's Qualified and
Non-qualified Defined Benefit Pension Plans (Plan One and
the Excess Plan), and your other vested retirement benefits
from previous employment. Once we know the precise details
of your age, employment date, and previously vested
benefits, we will provide an exhibit showing the estimated
value of this arrangement. While some of these provisions
are tailored to your personal circumstances and therefore
are outside of the strict provisions of the EOSP, except as
provided for here, the provisions of the EOSP will govern
all determinations.
6. You are eligible for the Company's Relocation Program, a
copy of which is attached.
7. You will be provided a company car in accordance with our
company car policy and club membership appropriate to
support business effectiveness.
8. This offer is condition upon satisfactorily passing a drug
test and fulfilling the requirements of the Immigration
Reform and Control Act of 1986.
Randy, I believe this offer represents an excellent
opportunity for you to immediately become a valuable addition
to our Company. My colleagues who have had a chance to meet
with you share this belief, and we look forward to your
joining us on February 1, 2000.
Welcome!
Sincerely,
/s/ Herb Henkel
Herb Henkel
Chief Executive Officer
Enclosures
cc: D. Rice
R. Butler