10. (xi) (A)
CONFIDENTIAL
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April 15, 1997
Tom Austin
20600 Milton Court
Brookfield, Wisconsin 53045
Dear Tom:
This letter confirms our offer to you as Executive Vice President and General
Merchandise Manager for Montgomery Ward. You will report to Roger Goddu,
Chairman and Chief Executive Officer. Your reporting relationship may change in
the future, but, you will only report to either Tom Grimes or Roger Goddu. You
will be a member of the Montgomery Ward Executive Committee. Your compensation
plan will include the following:
1.) Base salary of $400,000 annually, paid semi-monthly. You will be
eligible for normal merit increase reviews beginning in 1998.
2.) Target bonus on the Performance Management Plan of $150,000. Based
upon the achievement of superior performance against specific
objectives for the year, you have the opportunity to earn up to 150%
of your target bonus. For fiscal 1997, 1998 and 1999, your target
bonus of $150,000 will be guaranteed. Additionally, we will pre-pay
your guaranteed bonus targets for 1997 and 1998.
3.) You will receive a hiring bonus of $50,000 within 30 days of
employment to handle miscellaneous losses incurred by the move.
4.) The Company will provide you with a special bonus plan to offset
your Kohl's equity loss that will provide for a maximum payment of
$500,000 which will vest as follows:
$200,000 5-1-1998
$150,000 5-1-1999
$150,000 5-1-2000
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Tom Austin
April 15, 1997
Page 2
The payment of monies earned for this bonus award will be made on May
1, 2000. If you leave the company prior to May, 2000, you will receive
only the vested amount as of your separation date.
5.) You will participate in the senior officer perquisites, including;
financial counselling, tax assistance, executive medical, and annual
physical examination.
6.) Montgomery Ward will provide you with a relocation plan, including
movement of household goods, househunting trips, home purchase plan at
100% of the appraised value of your home, and payment of your closing
costs on your home purchase, plus up to two points on your financing
of a new home. Your temporary housing expenses in the Chicago area
for the first six months (or until relocation if sooner) will be paid
by Montgomery Ward. You will receive a gross up for the taxes you
incur as a result of your relocation.
7.) As soon as possible after your start date, you will be recommended
for a stock option for 300,000 shares of Montgomery Ward Holding stock
at the 1997 fair value. These options will vest as follows:
100,000 - May 1, 1998
100,000 - May 1, 1999
100,000 - May 1, 2000
All stock options in point 6 are subject to the Terms and Conditions
of the Stockholders Agreement. (A copy of the current Prospectus is
included). If the Montgomery Ward Holding stock is diluted or a new
plan is implemented, you will receive additional stock options to
retain your ownership opportunity at substantially the same level as
the original 300,000 share option grant.
8.) If Montgomery Ward initiates a separation of your employment for
any reason other than "Cause" as defined below, you will receive:
A) Your base salary through May 1, 2000, however, not less
than twelve months.
B) The continuation of the vesting of your stock and stock
options through May 1, 2000.
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Tom Austin
April 15, 1996
Page 3
"Cause" shall mean (i) your willful failure to substantially perform
your duties hereunder, (ii) your willful failure to follow a written,
lawful order or written directive from the Board of Directors or Chief
Executive Officer of the company, or (iii) your conviction of any kind
of felony or any misdemeanor involving moral turpitude. For purposes
of this paragraph, no act, failure to act, on your part shall be
considered "willful" unless such act, or failure to act by you was not
in good faith and was without reasonable belief that your action or
omission was in the best interest of the Company.
If you voluntarily leave Montgomery Ward, or are separated for
"Cause", you will receive no severance payments, nor will your stock
continue to vest beyond your separation date.
9.) The non-compete provision of the Stockholder's Agreement is
modified for you to provide only a one year non-compete period
following any separation from Montgomery Ward; and, such non-
competition will apply only to Sears, J.C. Penney, Target and Kohl's.
I am happy that you are considering joining Montgomery Ward. If you are in
agreement with this letter, please sign below and return it to me whereupon it
will become our binding agreement. I am certain that your management ability
can help move Montgomery Ward to the premier position in the Industry.
Sincerely,
/s/ Robert A. Kasenter
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Robert A. Kasenter
Executive Vice President
Human Resources
cc: Roger Goddu
/s/ Tom Austin
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Tom Austin
April 16, 1997
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Date
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