Exhibit 10.31
(ITT INDUSTRIES LOGO)
SCOTT A. CRUM ITT INDUSTRIES, INC.
Senior Vice President
Director, Human Resources 4 West Red Oak Lane
White Plains, NY 10604
tel 914 641.2010
fax 914 696.2964
scott.crum@itt.com
May 31,2005
Mr. George E. Minnich
6 Whitehall Place
Farmington, CT 06032
Dear George:
I am pleased to confirm our offer for the position of Senior Vice President and
Chief Financial Officer at ITT Industries Headquarters in White Plains, New
York. It is anticipated that you will join ITT Industries effective July 1,
2005. In this position you will report directly to Steven R. Loranger, Chairman,
President and Chief Executive Officer.
- - Annual Base Salary: Your starting base salary will be $460,000 annually,
payable in bi-weekly installments.
- - Annual Incentive: You will be eligible to receive an award for performance
year 2005 under the ITT Industries Annual Incentive Plan for Executive
Officers as calculated in accordance with the plan's terms. If the bonus
calculated pursuant to the plan is less than $345,000 or 75% of your
annual base salary, then a separate payment will be made outside the plan,
such that the total of the payments will be no less than $345,000 or 75%
of your annual base salary. The payment(s) will be made in March 2006.
- - Long-Term Incentives: You will participate in the ITT Industries Long-Term
Incentive Award Program as follows:
- You will receive 25,000 nonqualified stock options under the terms
of the ITT Industries 2003 Equity Incentive Plan, plan text
attached. The aggregate value of this stock option award is $565,000
based on a Black Scholes option value of $22.60 per share. The
option exercise price will be the closing price of ITT Industries
common stock on your start date and will become exercisable upon the
earlier of (1) a 25% closing share price appreciation for ten
consecutive days as reported by the New York Stock Exchange or (2)
six years from the date of the grant. Nevertheless, your options may
not be exercised prior to three years from grant date and have a
term of seven years. In addition, should you be permitted to
exercise the 16,000 UTC options that were granted to you in 2005, we
will adjust the ITT award to 22,100 options.
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- In addition, you will be granted target awards as follows under the
ITT Industries 1997 Long-Term Incentive Plan:
- A 2004 target award of $250,000. The measurement period
for this award will be January 1, 2004 through December
31, 2006. Payment, if any, will be made in January 2007.
- A 2005 target award of $500,000. The measurement period
for this award will be January 1, 2005 through December
31, 2007. Payment, if any, will be made in January 2008.
The ultimate value of your awards will be determined based on ITT
Industries' Total Shareholder Return (TSR) relative performance as
measured against the S&P Industrials, in accordance with the terms
of the Plan and the administrative rules, copies attached.
- - Restricted Stock Award: You will receive a restricted stock award of
10,000 shares under the ITT Industries 2003 Equity Incentive Plan. These
shares will vest in installments of 5,000 shares after three years from
the date of grant and 5,000 shares after five years from date of grant.
Should you be terminated by ITT, other than for cause, before the
restrictions with respect to these shares lapse, the remaining restriction
period(s) will be waived and you will receive these shares unrestricted,
upon satisfactory payment to ITT of your tax obligation. This award of
restricted stock will carry both dividends and voting rights. George,
based on a stock price of $93/share, the current value of this award is
approximately $930,000.
- - Automobile Allowance: You will be eligible for a monthly automobile
allowance of $1,300 under the ITT Industries Corporate Policy 30-18,
Company Vehicles and Allowances (U.S. Operations), attached.
- - Financial Counseling and Tax Planning: You will be eligible to receive
financial counseling and tax planning services which will be reimbursed by
ITT Industries on a tax protected basis.
- - Annual Physical and Fitness Subsidy: You will be eligible for a
company-paid annual executive physical exam and an annual fitness subsidy
of $500 for membership in a health club.
- - Relocation: Your relocation costs will be reimbursed in accordance with
section 30-11 of the attached ITT Industries Corporate Policy. ITT
Industries will pay all appropriate closing costs associated with the
purchase of a residence in the White Plains area. In conjunction with your
relocation, we have agreed to provide you with a one month "settling in"
allowance on a tax protected basis.
- - Severance: You will be covered under the terms of the ITT Industries
Senior Executive Severance Pay Plan, copy attached; but subject to a
severance benefit equal to two years of base salary should you be
terminated by ITT Industries other
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than for cause. Should you be terminated by the company other than for
cause during the first three years of your employment, you will receive an
additional payment in the amount of $515,000 to be paid in a lump sum upon
your termination. Should you be terminated by the company at any time
after the third anniversary of your employment, ITT will not invoke its
right to pay the two-year severance in a lump sum in a manner which would
curtail your ability to achieve five-year vesting under the ITT Industries
Salaried Retirement Plan. All other terms of the severance plan will be in
force.
You will also be covered by the ITT Industries, Inc. Special Senior
Executive Severance Pay Plan which provides, among other things, severance
pay equivalent to the sum of three times the highest annual base salary
rate paid and three times the highest bonus paid in respect of the three
years preceding a change of control, defined as an Acceleration Event in
the plan, copy attached. For purposes of this plan, should you be
terminated during the first year of employment, the bonus for performance
year 2005 will be the target of 75% of base salary.
- - Benefits Plans: You will be eligible for coverage under the various plans
comprising the ITT Industries Salaried Benefits Program when you satisfy
the participation conditions. Information describing the following plans
is enclosed:
- Salaried Medical Plan through Empire Bluecross Blueshield and
Medco
- Salaried Dental Plan through Met Life
- Salaried Life Insurance Plan
- Salaried Retirement Plan
- Salaried Long-Term Disability Insurance Plan
- Salaried Short-Term Disability Plan
- Salaried Investment & Savings Plan
- Life Plus program
- Long-Term Care Plan
Medical and dental coverage requires employee contributions and commences on
your first day of work for you and your eligible dependents. Please refer to the
attached Exhibit `A' for estimated health plan contributions.
Basic Life and Accidental Death and Dismemberment Insurance are provided for you
under the ITT Industries Salaried Life Insurance Plan. Also, you are eligible to
elect optional life insurance coverage through Life Plus, an individual program
sponsored by Marsh at Work Solutions and Long-Term Care coverage offered through
John Hancock. You may also elect to participate in the contributory Long-Term
Disability Plan as of your first day of work. These plans offer you attractive
rates through convenient payroll deductions.
Please note that membership in the ITT Industries Salaried Retirement Plan
begins for all eligible employees on the first day of the month after completing
one year of eligibility service. Upon completion of the membership requirements
for plan participation, Benefit Service will be recognized from your first day
of employment.
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- - Group Accident Insurance: You will also be eligible to be covered by the
Group Accident Insurance Program for Officers and Directors which provides
significant automatic and optional accidental death and dismemberment
benefits. Details and conditions are provided in the enclosed brochure.
- - Vacation: You will be entitled to paid vacation under the ITT Industries
Executive Vacation Policy. During 2005 you will be eligible for two weeks
of vacation. In addition, ITT Industries headquarters will be closed for
the December holiday from Monday December 26th through Friday, December
30th. You will be eligible for four weeks of vacation beginning in January
2006 plus the December holiday shutdown. Further explanation of our
vacation policy and other personnel policies will be provided on your
first day of work.
The terms and conditions of your employment will be governed by standard ITT
Industries policy. You will be required to present documents to verify your
identity and employment eligibility as a condition of employment. As a matter of
policy, any offer will be contingent upon successful completion of the placement
process which includes a pre-placement medical examination and a drug-screening
test.
George, we pleased that you have accepted our offer. We are convinced that you
have much to contribute to ITT Industries and that your association with ITT
Industries will prove to be a happy and beneficial one. Please do not hesitate
to contact me with any questions you may have regarding this offer.
I would appreciate it if you would sign this letter and return it to me. A copy
is enclosed for your records.
Very truly yours,
/s/ Scott Crum
/s/ Vincent A. Maffeo
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Vincent A. Maffeo
Senior Vice President and General Counsel
ITT Industries, Inc.
Terms Agreed to and Accepted:
/s/ George E. Minnich 6/1/05
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George E. Minnich Date
Cc: Steven R. Loranger
Attachments
05GEMLetter5-31-05