Exhibit 10A
-----------
May 8, 1997
Mr. Paul Liska
1048 Ashland Avenue
River Forest, IL 60305
Dear Paul:
The purpose of this letter is outline your compensation
package for your employment in the position of
Executive Vice President, Chief Financial Officer for
The St. Paul Companies, Inc., reporting to Doug
Leatherdale, Chairman, CEO and President, effective
beginning employment with the Company. The following
sets forth the terms originally set forth in the letter
of December 26, 1996 as subsequently modified:
Up Front Bonus A one time payment
-------------- of $400,000, minus
applicable taxes to be paid
upon starting employment
with The St. Paul.
Special Stock Option Grant You will participate in a
-------------------------- special one time stock option
grant of 120,000 options with
strike prices of $58.75 which
expire December 2, 2001.
These options have time and
performance conditions. In
order for these to vest, you
must be here until December 2,
2000. In addition the 20 day
average of our stock price
must reach $100 per share in
order for 50% of the grant to
vest. If the 20 day average
of our stock price reaches
$110 an additional 50% will
vest. At a stock price of
$110, this grant when vested
would be worth $6.2M.
Salary $600,000 per annum,
------ to be reviewed in 1998 and
annually thereafter. Annual
salary change date is March
for all officers.
Annual Award Incentive The annual target award
---------------------- opportunity for this position
is 60% of base salary. Awards
are based solely on corporate
earnings for our top
executives. Upon annual Board
approval, an over-performance
incentive may be granted,
thereby increasing the maximum
award potential to 90% of base
salary.
We will guarantee your
first annual award payment of
$300,000 to be paid, minus
applicable federal and state
income taxes, in February
1997.
Stock Options You will
------------- participate in the annual
program starting in 1997.
Upon Board approval, you will
be awarded 40,000 options in
February 1997. Based on our
average stock growth of 10.79
since 1986, and assuming
40,000 annual stock options
through the year 2005, the
future value for the program
is approximately $60M. This
is estimated and is only
intended to illustrate the
financial value of this
component of our Executive
Compensation Package.
Restricted Stock Your
---------------- award, upon board approval, at
no cost to you except
applicable taxes, is 15,000
shares of The St. Paul
Companies stock. Vesting is
over four years at 3,750
shares per year on the
anniversary of your employment
date.
You will also participate
in our executive stock
purchase program which
provides, at no cost to you
except taxes, a 15% stock tip
upon purchase of company
stock. You become eligible
for this program upon
achieving 3X your annual
salary in direct St. Paul
Companies stock ownership.
Tax/Financial Counseling You
------------------------ are eligible for executive
tax/financial counseling
service, which is worth
$15,000 for the first year and
$12,500 per year thereafter.
Physical Exam You are
------------- eligible for an annual
executive physical exam to be
administered, at your choice,
by Mayo Clinic, Rochester, MN
or Park Nicollet Clinic,
Minneapolis, MN.
Executive Benefits You are
------------------ eligible for executive
benefits that supplement our
qualified benefit plans such
as the retirement plan and the
401(K). This involves a
Benefit Equalization Plan for
highly compensated employees
which contains an Executive
Retirement Plan and an
Executive Savings Plan.
Details will be provided to
you upon starting with the
company.
Other Considerations Within the next three years,
-------------------- if you are terminated from The
St. Paul Companies, for any
reason other than malfeasance,
you will be paid three times
your normal annual cash
compensation. This
compensation is consistent
with the current St. Paul
Companies change of control
protection.
Long Term Cash Incentive In
------------------------ addition you will be paid: i)
$255,000, if you are employed
by the company after December 2,
2000 and after the 20-day
average price of a share of
stock exceeds $100 per share
(if the price target is met
before December 3, 2001); and
ii) an additional $255,000, if
you are employed by the
company after December 2, 2000
and after the 20-day average
price of a share of stock
exceeds $110 per share (if the
price target is met before
December 3, 2001). These
amounts will automatically be
paid to you as soon as
administratively possible
after the vesting conditions
are met.
If you are in agreement that the terms of this letter
reflect the terms of your employment with the company
as ultimately agreed to, please indicate your
acceptance by signing below.
Sincerely yours,
/s/ Greg A. Lee
- ------------------
Greg A. Lee
Sr. Vice President
Human Resources
Accepted
/s/ Paul J. Liska
- ------------------
GAL/ala
Attachments
cc: Doug Leatherdale