June 19, 1998
PERSONAL AND CONFIDENTIAL
Mr. Donald D. Davis
Senior Vice President-Employee Relations
CSX Transportation
500 Water Street
Jacksonville, FL 32202
Dear Don:
Thank you for the many courtesies during my recent visit to CSX and your letter
of June 11, 1998.
I am most anxious to begin my employment with CSX and look forward to seeing you
on Monday, June 22, 1998, to begin what I am confident will be a very
challenging and rewarding experience with CSX.
This letter will confirm my understanding of your oral offer and your letter
dated June 11, 1998. I understand that effective June 22, 1998, I shall join CSX
as Executive Vice President of Operations. I understand that CSX is committing
to and will be compensating me on an annual basis for 1998, 1999, and 2000 with
a compensation package totaling $1,000,000 which includes base salary, annual
bonus, and annual performance share awards as detailed below.
ANNUAL BASE SALARY $300,000.00 paid yearly at the rate
of $25,000.00 per month
ANNUAL BONUS OPPORTUNITY 80% of annual earnings
($240,000.00); may be increased
by an additional 25% if CSX
exceeds its annual financial
objectives.
If deferred, at my option, in CSX
stock until retirement/termination,
a 25% premium will be paid in the
form of CSX stock on any portion
deferred.
Donald D. Davis
June 19, 1998
Page 2
ANNUAL PERFORMANCE AND 8,000 to 10,000 Shares of CSX
SHARE AWARD stock to be awarded annually (actual
award will depend on stock price at
time of award to produce annual
compensation of $1,000,000.00)
ANNUAL STOCK OPTION GRANT 20,000 Shares of
CSX stock options to be awarded
annually.
I also understand that other perquisites will include:
Executive Automobile Program ($600.00 per month plus insurance) Mayo
Clinic Annual Executive Physical Program Country Club Membership
(initiation fees and annual dues at club of my choice) Executive Tax
Preparation Program through my current provider CSX Hotel Discount
Program (The Greenbrier and Grand Teton Lodge) Estate Planning Services
through my current provider.
In addition to the above, as an employee of CSX, I understand that I will
receive all other employment benefits and be eligible to participate in all
employment benefit plans ordinarily and customarily provided for senior
executives of CSX at a comparable level in the organization.
For purposes of my participation in the CSX Pension Plan, the three years of
pension credit that I am entitled to receive pursuant to my Conrail Change of
Control Agreement shall be credited to me.
If my employment is terminated by CSX at any time prior to January 1, 2001, CSX
shall provide me with severance pay and continuation of employment benefits
until January 1, 2001 at the same level of total annual compensation and
employment benefits as I was receiving immediately prior to the termination of
my employment.
Donald D. Davis
June 19, 1998
Page 3
If I have accurately summarized the employment terms being offered to me by CSX,
please sign a copy of this letter and return it to me.
Very truly yours,
/s/RONALD J. CONWAY
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Ronald J. Conway
Understood and Agreed
by CSX Transportation
/s/DONALD D. DAVIS
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Donald D. Davis
Senior Vice President-
Employee Relations
CSX Transportation