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EXHIBIT 10.02
December 17,1998
Jacobus (Koos) Groot
Veermanskade #4
1621 AN HOORN
Netherlands
Dear Koos:
I am pleased to confirm the final offer of employment extended to you by our
Senior Vice President Human Resources, Bob Creviston, for the position of
Executive Vice President Kellogg Company and President of Asia Pacific. In this
capacity, you will report directly to me.
The starting salary for this position is U.S. $350.000 per year. Your cash bonus
for 1999, payable in the first quarter of 2000, will be based on a target of 60%
of base pay. Actual payment is based on a formula which includes three factors;
individual, area, and Company performance. The range of payment is from 0 to
150% of target, depending upon achieving goals and objectives. The minimum
payment in the first year, assuming you are actively employed, will be 60% of
base pay.
We have approval from the Compensation Committee of the Board of Directors to
grant to you a sign-on stock option grant in the amount of 45,000 shares and an
additional 35,000 options as part of our 1999 executive option plan. The strike
price of both options will be determined on January 4, 1999 by averaging the
high and low stock price for that day. The options vest 50% after one year and
the remainder after the second year. You will be eligible for all provisions of
the option program to include the accelerated option feature ("AOF"). Detailed
material has been sent under separate cover.
The material that you already received provides detailed information on our
benefit plans however, I thought a quick review might be helpful. The Savings
and Investment Plan and the pension plan are especially outstanding. Should you
decide to voluntarily invest between 1 and 13 percent of your pay, Kellogg
Company will contribute to your Savings and Investment Plan account at a rate of
80% - 80 cents for each dollar you deposit up to 5% of your pay. You will be
eligible to start contributing to the Savings and Investment Plan immediately;
however, Company contributions will not begin until after you have completed 1
year of service. At the time of withdrawal of funds, we will consider payment of
such funds in the most tax effective manner within tax and legal constraints.
The pension plan is funded by the Kellogg Company and does not require employee
contribution. You begin building service credits on a monthly basis the day you
begin employment. The Compensation Committee has approved your enrollment in our
Key
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Mr. Jacobus (Koos) Groot
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December 17,1998
Employee Benefit Plan, which allows us to accrue on a monthly basis over the
first 6 1/2 years of employment up to 13 additional years of credited service
and for you to receive a lump sum payment, should you leave the Company, for all
accrued benefits during the first 5 years of employment. Should you leave the
Company after 5 years of employment a portion of the accrued benefit must be
paid from the Qualified Retirement Plan and the remaining portion will be
available for lump sum distribution. The attachment titled "Kellogg Company
Comparison of Retirement Benefits" provides an estimate of the value of the
plan.
Additional benefits include life insurance, hospital-surgical and major medical
insurance, the dental plan, the Salary Continuation Plan in the event of
personal illness, local holidays, vacations (we will immediately qualify you for
5 weeks of paid vacation). In addition to the life insurance mentioned above,
you will qualify for our Executive Survivor Income Plan which provides an
additional death benefit of 3 times the total of your base and bonus.
Expatriate benefits will be provided as follows:
A Company car, equivalent to a BMW 740, including service, will be
provided.
The Company will pay for housing to include all utilities except
personal telephone. We will assume your current lease, which we
understand expires in June, 2000. Housing costs to be off-set by your
payment of a housing norm, which is currently calculated at U.S.
$41,536 per year. This calculation is tied directly to your
compensation level and the ORC table that predicts the amount normally
spent for housing in the U.S.
Utilizing the ORC table and capping the salary at U.S. $250,000 we will
pay a goods and services differential payment currently estimated at
U.S. $79,283 per year. This amount is to be adjusted if the index
increases or decreases by 5%.
We will reimburse you for education expenses for all children through
secondary level. Payment will include tuition fees, books, supplies,
mandatory fees and Public or school provided transportation, not
included are uniforms and elective fees.
Home Leave: One round-trip, business class ticket for you and your
dependents will be made available to a home location to be designated
by you. Downgrading is available should you want to acquire additional
trips.
Language lessons will be made available as needed by your family.
Home "office" equipment will be provided as appropriate.
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Mr. Jacobus (Koos) Groot
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December 17,1998
Tax preparation will be provided by PricewaterhouseCoopers for the
filing of your Hong Kong taxes. Tax equalization to the U.S. will not
occur until such time that you relocate from Hong Kong. Should you
relocate in mid tax year and be tax equalized, your net after tax
income will reflect consideration for the partial year in Hong Kong.
The Company will pay the costs associated with the storage of your
goods in Hong Kong. The typical process is for the agent storing your
goods to send a bill for the storage charges to Kellogg-Asia Pacific,
and Kellogg-Asia Pacific would then remit the payment to the storage
agent.
If you own a home that should become vacant, and you are making every
effort to lease the home, the Company will provide up to 3 months of
waiving the housing norm deduction per each 12-month period that it
remains vacant.
House Refurbishing Allowance: A house refurbishing allowance of $10,000
will be paid to you for expenses incurred in refurbishing your current
condo; i.e. painting, etc.
You will be eligible for a membership in the Aberdeen Marina Club. The Company
will pay for the Class A Corporate Membership (transferable debenture and
entrance fee), and you will be responsible for payment of the monthly
subscription fee.
In the event your employment is terminated for any reason other than
malfeasance, theft, or immorality, you will be provided an amount of severance
pay equal to 2 years' pay. The pay shall be determined by averaging the prior 2
years' base pay and actual bonus. Any severance pay is conditional upon signing
a release and waiver of all claims against Kellogg Company and its subsidiaries.
In addition, we will provide one-way tickets for you and your dependents to a
location of your choice and move your household goods, both at your domicile and
currently in storage to that location. The tickets and moving provision will
also apply should you resign your position. You will qualify for the severance
portion of this paragraph until you reach age 55, after that date should
severance be necessary, the Company will take into consideration all factors
related to your employment. In the event of a labor dispute, the laws of the
U.S. will apply.
As a matter of policy, employment is contingent upon you successfully passing a
drug test which is administered at the time of a medical evaluation. You can
arrange to have the medical evaluation and drug test done at location of your
choice or both can be accomplished during your next visit to Battle Creek.
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Mr. Jacobus (Koos) Groot
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December 17, 1998
Arny and I are very excited about the potential of having you join the Kellogg
organization. I hope you will give serious consideration to our offer. I look
forward to hearing from you soon.
Sincerely,
/s/ Carlos M. Gutierrez
Carlos M. Gutierrez
/pj
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