November 19, 1992
Mr. Gary C. Dunton
5 Belgravia Terrace
Farmington, CT 06032
Dear Gary:
It was really a pleasure to have spent time with you over the
past few weeks. It provides me great pleasure to offer you an
opportunity to be a critical part of the new USF&G executive
team. Your job, managing our Commercial Lines operations, is
absolutely critical to our short and long term success. I know
you are the right person to meet this challenge in providing the
leadership we need to develop and implement our long term
business strategy.
The specific terms of your employment are outlined below:
Position: Executive Vice President - Commercial Lines
Salary: $26,250.00 per month, $315,000 on an annualized
basis.
Annual Bonus: Participation in our Management Incentive Plan
at a targeted bonus rate of forty (40%) percent
of earned salary. Guaranteed bonus of $75,000
for 1993 provided you are still on board as of
12/31/93.
Long Term Bonus: Participation in our three (3) year rolling
long term incentive plan, targeted at fifty
(50%) percent of your salary.
Options: 50,000 shares (representing sign-on and 1993
annual options). Options to be approved by
the Compensation Committee of the Board of
Directors and prices as of that date.
Sign On Bonus: We will pay you a special bonus of $125,000 upon
your employment with USF&G. You will also receive
a $75,000 bonus payable upon your employment with
USF&G to offset the forfeitures in your 1992
Aetna bonus.
Annuity: Purchase annuity paying $20,000 annually at age
65 to be cancelled when person vests.
Benefits: Full benefits package, covering medical, dental,
life and disability. Participation in the USF&G
401K "matching" plan.
Relocation: Comprehensive relocation benefits including home
purchase and an eight (8%) percent of salary
relocation bonus.
Also eligible to receive a one-time bonus to
cover any tax liability you may incur from the
sale of your current home and the purchase of
a new home.
Perquisites: Company car allowance, split dollar life
insurance policy, four weeks vacation, free
parking, financial counseling, First Class air
travel, membership at the Caves Valley Country
Club and annual physical.
Severance: If you are terminated during the first two (2)
years of employment other than for performance
reasons, as determined by me, you will receive
a minimum of one (1) years salary as severance.
I am very excited about having you on the USF&G executive team and
working closely with you. I am sure it will be challenging and rewarding.
If you have any questions on these specific items, please call me or Ed Gold
as soon as possible.
Sincerely,
NORMAN P. BLAKE, JR.
Accepted: _____________________ Date: 12/3/92
Gary C. Dunton