EXHIBIT 10.12
XTRA Corporation
60 State Street
Boston, Massachusetts 02109
June 30, 1995
Frederick M. Gutterson
128 Tracy Lane
Alamo, California 94507
Dear Fred:
I am pleased to offer you the position of President of XTRA International
Ltd. ("XTRA International"), an indirect wholly-owned subsidiary of XTRA
Corporation ("XTRA"), and Vice President of XTRA. If you accept our offer,
your starting date will be June 30, 1995.
You will be expected to devote your full business time and your best
professional efforts to the performance of your duties and responsibilities
for XTRA International and XTRA and to abide by all of their policies and
procedures, as in effect from time to time. As President of XTRA International
and Vice President of XTRA, your responsibilities will include such duties
and responsibilities as may be assigned to you from time to time by the Board
of Directors of XTRA. In connection with your employment, you will be entitled
to the compensation and benefits described below.
Base Salary. Your base salary will be at the rate of $250,000 per annum,
less applicable legal deductions, payable in accordance with the regular payroll
practices of XTRA for its executives.
Cash Incentive Bonus Plan. Commencing October 1, 1995, you will be
entitled to participate in XTRA's Annual Incentive Plan, from time to time in
effect, with a target award level of 40% of base salary. In accordance with
the terms of the Annual Incentive Plan, your actual award may be up to 60% of
base salary.
Long-Term Cash Incentive Plan. XTRA will make available to you the Long-
Term Incentive Plan (the "Long-Term Plan"), as described on Exhibit A hereto.
For purposes of the Long-Term Plan, the terms set forth on Exhibit B attached
hereto shall have the meanings set forth on Exhibit B. You recognize that
certain payments to you under the Long-Term Plan could be ineligible for
deduction by XTRA under Section 162(m) of the Internal Revenue
Code. Accordingly, XTRA reserves the right to cause any payout which you have
earned under the plan to be deferred, together with a market rate of interest,
to the extent necessary so that the payments thereunder continue to qualify for
deduction by XTRA. XTRA acknowledges that any such deferral will not affect
your fully vested rights in such amounts.
Fiscal 1995 Performance Bonus. You will be entitled to a performance bonus
of $90,000 if XTRA International achieves its forecast for the fiscal quarter
ended September 30, 1995 as set forth on Exhibit C attached hereto (the
"Forecast"). If XTRA International achieves less than 100% of the Forecast but
at least 80% of the Forecast, you will instead be entitled to a performance
bonus of $75,000. If you earn a performance bonus, it will be paid during the
first quarter of fiscal 1996 in accordance with the timing of payments under
XTRA's other cash bonus plans.
Other Benefits. During your employment, you will be eligible to
participate in all benefit plans made available by the XTRA from time to time
to its senior executives and the senior executives of its subsidiaries, subject
to plan terms and generally applicable policies, including any contributions
generally required of such executives.
Business Expenses. XTRA shall pay or reimburse you for all customary
business expenses incurred or paid by you in the performance of your duties and
responsibilities, subject to such policies and limitations of XTRA as may be in
effect from time to time. Without limiting the foregoing, XTRA shall pay or
reimburse you for a parking space at XTRA International's head office in San
Francisco, California and one membership in a luncheon club in San Francisco.
Options. As soon as practical after the date hereof, the Compensation
Committee of XTRA's Board of Directors will grant you an option under the 1987
XTRA Corporation Incentive Stock Plan (subject to all the terms and conditions
of such plan), to purchase 40,000 shares of common stock, which option shall be
granted with a fair market value exercise price, as required by the plan, on the
date of grant, and will vest in equal installments on the first, second and
third anniversary of the date hereof.
Your participation in the plans described above shall not be deemed to
create any rights to continued employment, and your employment will be continued
to be considered "at-will".
In accepting this offer, you give us assurance that you have not relied on
any agreements or representations, express or implied, with respect to your
employment that are not set forth expressly in this letter, other than the your
Employment Agreement dated December, 1994, which has been assumed by XTRA.
Fred, formalities aside, I am personally delighted that you are joining us
and look forward to your contribution.
Sincerely,
/s/ LEWIS RUBIN
Lewis Rubin, President
XTRA Corporation
Accepted and agreed:
/s/ FREDERICK M. GUTTERSON
Frederick M. Gutterson
Date: June 30, 1995
EXHIBIT A
XTRA Marine
Long-Term Incentive Plan Outline
1. PURPOSE: The Purpose of the Long-Term Incentive Plan (the "Plan") of
XTRA INTERNATIONAL LTD. ("XTRA Marine") is to motivate the head of XTRA
Marine to achieve planned operating income levels by providing him with
a stake in the long-term success of the business and also to help retain
him.
2. PARTICIPATION: Participation will include only the head of XTRA Marine.
3. TIME FRAME: The plan would cover a single, 4 year performance period,
commencing October 1, 1995.
4. PERFORMANCE MEASURE: Cumulative Operating Income over Threshold will be
the performance measure for the plan.
Cumulative Operating Income is the sum of the Operating Incomes (as
defined on attached Schedule I) for each year of the performance period
(except as provided in Section 6(A)(1)).
Threshold Operating Income is set using a rate of $* million per year
which results in a threshold of $* million for the 4 year performance
period.
Cumulative Operating Income over Threshold is Cumulative Operating
Income minus Threshold Operating Income.
5. AWARD SIZE: Award size will be equal to *% percent of Cumulative
Operating Income over Threshold. Note: The award is not capped. See
the attached spreadsheet for a sensitivity analysis of award size and
Operating Income level.
* CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION
ILLUSTRATION:
1996 - 1999 Projected
---------------------
Cumulative Operating Income $*
Threshold Operating Income $*
Cumulative Operating Income over Threshold $*
1 Award Size: *%
Award Size: *
6. TERMINATION OF EMPLOYMENT:
A. In the event the Participant's employment with the Company is
terminated without Cause or terminates as a result of the
Participant's death or disability and the Participant has been
an active employee for at least 2 years of the 4-year
performance period, the Participant will be entitled to a
partial payment. The partial payment will be calculated (if
necessary) using:
(1) Cumulative Operating Income through the fiscal quarter
ended preceding termination and
(2) Threshold Operating Income multiplied by the following
fraction: the number of full fiscal quarters of the
performance period elapsed at the date of terminated
divided by 16.
If the Participant is entitled to an award under this Section
6(A), it will be paid during the first quarter of the fiscal
year commencing upon or immediately following the Participant's
termination of employment.
B. In the event that the Participant's employment with the Company
is terminated without Cause or terminates as a result of the
Participant's death or disability and the Participant has been
an active employee for less than 2 years of the 4-year
performance period, the Participant forfeits all rights to any
award under the Plan.
6. In the event of the Participant's employment with the Company terminates
for Cause or
* CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION
as a result of the resignation or retirement of the Participant before
the end of the 4-year performance period, the Participant forfeits all
rights to any award under the Plan.
7. PAYMENT. Except as provided in Section 6(A), if the Participant is
entitled to an award, it will be paid during the first quarter of fiscal
2000 in accordance with the timing of payments under XTRA's other cash
bonus plans
XTRA Marine
Long-Term Incentive Plan
Figures in Thousands (000s)
Projected Financials
*
Worldwide Marine Operating Income
*
Worldwide Marine
Equipment and Utilization Data
*
* CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION
EXHIBIT B
"Cause" shall mean: (i) your material failure to perform (other than by
reason of disability), or material negligence in the performance of your duties
and responsibilities to XTRA and XTRA International, or (ii) other conduct that
is materially harmful to the business, interests or reputation of XTRA or XTRA
International.
"disability" shall mean that you become disabled during your employment
hereunder, and, as a result, are unable to perform substantially all of your
duties and responsibilities to XTRA and XTRA International for 120 days during
any twelve month period.
"Operating Income" shall mean income of XTRA International before interest,
taxes and extraordinary items, all as determined in accordance with generally
accepted accounting principles.