The Shaw Group Inc.
4171 Essen Lane
Baton Rouge, LA 70809
225.932.2500
(THE SHAW GROUP INC. LOGO)
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Mr. Dorsey Ron McCall July 29, 2002
710 Kingswood Drive
Sulphur, LA 70664
Dear Ron:
I am pleased to offer you employment with The Shaw Group, Inc. (the
"Company") as President, Maintenance Services. The key provisions of our
employment offer are as follows:
o START DATE - You shall begin on a mutually agreeable date as soon as
possible.
o BASE SALARY - $25,000.00/month ($300,000.00 annually) payable biweekly
in arrears.
o ANNUAL BONUS - Participation in the Company's bonus plan with a minimum
annual bonus of $250,000.00.
o SUPPLEMENTAL BONUS - For each year while you are employed, you shall
receive a supplemental bonus equal to five percent (5%) of any increase
in the net profits of the Company's maintenance operations over the
base year. (The base year is the Company's fiscal year ending August
31, 2002.) Net profits shall be the Company's net profits before taxes
determined in accordance with the Company's normal and customary
accounting policies and procedures. The Company's maintenance
operations shall include both existing maintenance operations and new
maintenance operations regardless of whether the maintenance operations
are conducted through the Company or through any of its affiliates.
Each year, the annual bonus shall be credited against the supplemental
bonus.
o ADVANCE - On commencement of employment, you shall receive an advance
of $750,000.00. Each year, the initial $200,000.00 of your bonus plus
50% of that part of your bonus between $250,000.00 and $350,000.00
shall be credited against the advance until the advance is paid in
full. For example, if your bonus is $325,000.00, $237,500.00
($200,000.00 + 1/2 of $75,000.00 = $237,500.00) shall be credited
against the advance. If you voluntarily terminate your employment with
the Company prior to September 1, 2007, or if your contract is
terminated for cause prior to September 1, 2007, you shall repay to the
Company the part of the advance that has not yet been repaid. If your
contract is terminated for any other reason (including death) prior to
September 1, 2007, you or your wife, as the case may be, shall have no
obligation to reimburse the
Company for the portion of the advance not yet repaid except out of the
bonus that will continue to be paid to you or your wife, as the case
may be.
o STOCK OPTIONS - Pursuant to the terms and conditions of the Company's
stock option plan, on commencement of your employment, at no cost to
you (except for payment of the exercise price when you exercise the
option), you shall be granted an option to purchase 50,000 shares of
the Company's common stock. That option shall vest in four equal annual
installments. More particularly, your right to acquire an option for
12,500 shares of the Company's common stock shall vest each year for
four years on the anniversary of your start date.
o COUNTRY CLUB MEMBERSHIP - The Company shall reimburse you for your
normal and customary country club membership dues, including any
reasonable initiation fees.
o BENEFITS - You shall be eligible to participate in the following
benefit programs. (The following description is a summary of the
benefit plans currently offered by the Company. The Company may adjust,
modify, change, terminate or substitute a new policy, procedure,
benefit or practice, in whole or in part, at its discretion. Any
change, however, shall apply equally to all employees participating in
the benefit program and not just to you.)
-401(k) RETIREMENT PLAN - Employees currently may defer up to
$11,000.00 of covered compensation into the plan subject to
federal limits and non-discrimination testing. The plan offers a
selection of thirteen different investment funds, including a
Company common stock fund. The Company matches employee
contributions at $0.50 per $1.00 up to 6% of covered
compensation. You shall be eligible to enroll in the plan on any
entry date following one year of employment. The plan's entry
dates are January 1 and July 1. Thus, the first entry date after
your first year of employment will be July 1, 2003. However, you
will be eligible to roll over the funds in your existing 401(k)
plan immediately.
-BASIC TERM LIFE AND ACCIDENTAL DEATH AND DISMEMBERMENT
INSURANCE - The Company at its expense shall provide term life
insurance and accidental death and dismemberment coverage in an
amount equal to twice your base salary. In your case, that
coverage will be $600,000.00. Your ability to receive the
insurance coverage is guaranteed.
-SUPPLEMENTAL LIFE INSURANCE - You may purchase supplemental
term life insurance in increments of up to five times your base
salary with
payment of the exercise price when you exercise the option), you shall
be granted an option to purchase 50,000 shares of the Company's common
stock. That option shall vest in four equal annual installments. More
particularly, your right to acquire an option for 12,500 shares of the
Company's common stock shall vest each year for four years on the
anniversary of your start date.
o COUNTRY CLUB MEMBERSHIP - The Company shall reimburse you for your
normal and customary country club membership dues, including any
reasonable initiation fees.
o BENEFITS - You shall be eligible to participate in the following
benefit programs. (The following description is a summary of the
benefit plans currently offered by the Company. The Company may adjust,
modify, change, terminate or substitute a new policy, procedure,
benefit or practice, in whole or in part, at its discretion. Any
change, however, shall apply equally to all employees participating in
the benefit program and not just to you.)
-401(k) RETIREMENT PLAN - Employees currently may defer up to
$11,000.00 of covered compensation into the plan subject to
federal limits and non-discrimination testing. The plan offers a
selection of thirteen different investment funds, including a
Company common stock fund. The Company matches employee
contributions at $0.50 per $1.00 up to 6% of covered
compensation. You shall be eligible to enroll in the plan on any
entry date following one year of employment. The plan's entry
dates are January 1 and July 1. Thus, the first entry date after
your first year of employment will be July 1, 2003. However, you
will be eligible to roll over the funds in your existing 401(k)
plan immediately.
-BASIC TERM LIFE AND ACCIDENTAL DEATH AND DISMEMBERMENT
INSURANCE - The Company at its expense shall provide term life
insurance and accidental death and dismemberment coverage in an
amount equal to twice your base salary. In your case, that
coverage will be $600,000.00. Your ability to receive the
insurance coverage is guaranteed.
-SUPPLEMENTAL LIFE INSURANCE - You may purchase supplemental
term life insurance in increments of up to five times your base
salary with a current cap of $750,000.00. Your ability to
purchase the insurance is guaranteed. You will pay life insurance
premiums on a pre-tax basis through the Company's Section 125
Cafeteria Plan. You may purchase additional supplemental life
insurance conditional on your passing a satisfactory physical
examination.
-DEPENDENT LIFE INSURANCE - You may purchase supplemental life
insurance on your spouse ($10,000.00) and on your dependent
children ($5,000.00 per child). You will pay life insurance
premiums on a pre-tax basis through the Company's Section 125
Cafeteria Plan.
-GROUP MEDICAL AND DENTAL INSURANCE - You, your wife and your
dependent children shall be eligible to participate in the Company's
group medical and dental insurance programs. Group medical insurance
is provided through a Preferred Provider Organization (PPO) Plan or a
traditional indemnity plan based on the location of your residence.
Group dental insurance is provided through a traditional indemnity
plan. Both the group medical insurance and the group dental insurance
contain a waiver for pre-existing conditions.
You will not be eligible to participate in the Company's group
medical insurance plan and group dental insurance plan until the
first day of the month after you have completed three months of
employment. During that interim period; you will maintain COBRA
medical coverage through your current employer. The Company shall
reimburse you for the difference between COBRA coverage and the same
category of coverage (for example, employee only coverage or employee
plus family coverage) for the Company's group medical insurance plan
and the Company's group dental insurance plan.
-EXEC-U-CARE PROGRAM - The Company's Exec-U-Care Program
reimburses you for medical and dental expenses not covered by the
Company's group medical insurance plan and group dental insurance
plan. The Exec-U-Care Program currently provides coverage of up to
$5,000.00 per occurrence with a maximum of $50,000.00 per year and
with a life time maximum of $2 million.
SICK LEAVE - You are immediately eligible for five sick days per
calendar year. Your sick leave this year shall be pro-rated based on
the time you are employed by the Company.
-SHORT TERM DISABILITY - You may purchase short term disability
insurance for 2/3rds of your base salary up to a maximum of $1,200.00
per week for ninety days. You will pay premiums on a pre-tax basis
through the Company's Section 125 Cafeteria Plan.
-LONG TERM DISABILITY - You shall participate in the Company's
Executive LTD Plan at no cost to you. The disability benefit under
that plan is 60% of your Base Salary up to $10,000.00 per month.
-FLEXIBLE SPENDING ACCOUNTS - You may set aside pre-tax dollars
from your pay for eligible health care and/or dependent/custodial
care expenses.
-OTHER - If you choose, you may participate in your discretion
in the Company's Vision, Pre-paid Legal, Long-term Care, and Property
and
Casualty Insurance Plans. You will pay premiums on a pre-tax
basis though the Company's Section 125 Cafeteria Plan.
VACATION - You are eligible immediately for 20 days
per year of vacation to be taken in accordance with the
Company's vacation policies. Any unused vacation days may be
rolled forward into future calendar years pursuant to the
Company's policies and procedures. Your vacation time this
year shall be pro-rated based on the time you are employed by
the Company.
-STARTING DATES FOR PARTICIPATION IN COMPANY BENEFIT
PLANS - You shall be eligible to enroll in the Basic Term Life
and Accidental Death and Dismemberment Insurance Plan, the
Supplemental Life Insurance Plan, Dependent Life Insurance
Plan, Executrix-U-Care Program, Short Term Disability Plan,
Long Term Disability Plan, Flexible Spending Accounts Plan,
Vision Plan, Pre-paid Legal Plan, Long-term Care Plan, and
Property and Casualty Insurance Plan on your first day of
employment. You will be eligible to enroll in the Group
Medical and Dental Insurance Plans on the first day of the
month after you have completed three months of employment.
$ INTERIM LIVING EXPENSES - The Company shall provide you with an
allowance of $2,000.00 per month for six months to reimburse you for
your expenses in relocating to the Baton Rouge area. That allowance
shall begin immediately on your employment.
$ LEASE OF WATERCRAFT - The Company shall lease your watercraft for
Company business at an annual lease rate of $120,000.00 per year. That
lease shall contain terms and conditions that are normal and customary
for the lease of watercraft and shall be on terms and conditions
mutually agreeable to you and the Company. That lease shall not
prohibit you from using your watercraft for personal use or for leasing
your watercraft to others.
$ TERMINATION FOR CAUSE - The Company may terminate your contract for
cause which shall be defined:
"Cause" for purposes of this offer shall mean the occurrence
of any of the following: (l) any action by you which
constitutes any willful breach of duty or habitual neglect of
duty materially and
adversely affecting the Company; (ii) the appropriation or
attempted appropriation of a material business opportunity of
the Company, including attempting to secure any personal
profit in connection with entering into any transaction on
behalf of the Company, except as provide by the Company
as direct or indirect compensation or benefit for your performance in
connection with such transactions; or (iii) the intentional
misappropriation or attempted misappropriation of any of the Company's
funds or property.
If the Company believes you have breached the above standard, it shall notify
you in writing of why it believes you have breached that standard and shall
give you ten days to respond to the Company's initial determination.
o DEATH AND DISABILITY BENEFIT - If you die prior to September 1, 2007,
the Company shall pay your wife the compensation and benefits to which
you would have been entitled under your contract if you had lived until
August 31, 2007. If you become permanently disabled prior to September
1, 2007, the Company shall pay you the compensation and benefits to
which you would have been entitled under your contract if you had not
become permanently disabled prior to August 31, 2007, less any benefits
you receive under the Company's Executive LTD Plan reduced by any taxes
owed by you on those benefits. If you become permanently disabled and
you die prior to September 1, 2007, the Company shall pay your wife the
compensation and benefits to which you would have been entitled under
your contract until August 31, 2007, or until her death, whichever is
first. For these purposes, your compensation shall include the
consulting fees you would have received if you had not died or become
permanently disabled prior to the end of your consulting contract.
o TERMINATION WITHOUT CAUSE - If the Company terminates your contract
without cause prior to September 1, 2007, the Company shall continue to
pay you the compensation and benefits you would have received under
your contract if your contract had not been terminated prior to August
31, 2007. If, during the period that the Company must continue to pay
you compensation and benefits, you were to die, the death benefit
described above will apply as though you were still employed by the
Company on the date of your death. For these purposes, your
compensation shall include the consulting fees you would have received
if your contract had not been terminated prior to August 31, 2007, and
you had lived until the end of your consulting contract.
o CHANGE OF CONTROL - If there is a change of control prior to September
1, 2007, the Company shall ensure that the Company's obligations under
your contract are assumed by the person acquiring control. Change of
control shall mean (i) any merger where the Company is not the
surviving entity, (ii) any sale of all or substantially all of the
Company's assets or (iii) the acquisition of control by a person other
than someone who is a current beneficial owner (as that term is defined
under current securities law) of greater than 50% of the voting power
of the Company's voting stock.
o CONSULTING CONTRACT - Following the termination of your employment, the
Company shall hire you as a consultant for each year that you are
employed by
the Company. For example, if you were employed by the Company for three
years, the Company shall hire you as a consultant for three years. For
each year that you are a consultant, the Company shall pay you a fee
equal to 60% of the bonus that you received during the last year you
were employed by the Company. If requested by the Company, you shall
make yourself available for consulting up to 200 hours per year.
If, while you are employed by the Company, you were to die, the Company
shall pay your wife, the amount you would have earned as a consultant
if you had not died. In the case of death, your compensation as a
consultant shall be based on the year of employment prior to your death
or permanent disability.
If, while you are employed by the Company, you were to become
permanently disabled, the Company shall pay you the amount you would
have earned as a consultant if you had not become permanently disabled.
In the case of permanent disability, your compensation as a consultant
shall be based on the year of employment prior to your permanent
disability.
If your contract is terminated for any reason other than death or
disability, including termination for cause, the Company shall pay you
the amount that you would have earned as a consultant if your contract
had not been terminated. If your contract is terminated prematurely,
your compensation as a consultant shall be based on the year of
employment prior to the termination of your contract.
If you die while serving as a consultant, the Company shall pay your
wife the amount that you would have earned as a consultant if you had
not died.
If you become permanently disabled while serving as a consultant, the
Company shall pay you the amount that you would have earned as a
consultant if you had not become permanently disabled.
o DEFENSE AND INDEMNITY - The Company acknowledges that you are subject
to an employment agreement with your current employer and that your
current employment agreement contains a non-competition provision. The
Company shall defend you against any claims by your current employer
that you breached the non-competition provision in your contract with
your current employer and, if your current employer is successful in
asserting its claims, shall indemnify you against any and all monetary
or other damages awarded to your current employer. If your current
employer is successful in obtaining an injunction prohibiting you from
working for the Company, during the period in which you are enjoined
from working for the Company, the Company shall pay you the
compensation and benefits that you otherwise would have received under
your contract.
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This letter, once signed by you, shall be an agreement binding on you and the
Company.
This offer is contingent upon satisfactory results from a pre-employment drug
screen.
Please indicate your agreement to the terms and conditions outlined above by
signing and dating this letter in the space provided below, and return it to Bob
Gettys, our Director of Human Resources.
Should you have any questions regarding this matter, please feel free to call me
at 225-932-2532 or Bob Gettys at 225-932-2610.
We look forward to having you as part of The Shaw Group family.
Sincerely,
Jim Bernhard
Chief Executive Officer
/s/ RICHARD F. GILL
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Richard Gill
Executive Vice President & CCO
Agreed: /s/ DORSEY RON MCCALL Date: 7/29/02
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Dorsey Ron McCall