January 1, 2005
EXHIBIT 10-29
USG CORPORATION
SENIOR EXECUTIVE SEVERANCE PLAN
You are a key member of the senior executive team of USG Corporation
(hereinafter, together with its participating subsidiaries, including in
particular the business entity which pays your salary and benefits and which
will be primarily responsible for the performance of the Corporation's
obligations under this Plan, collectively referred to as the "Corporation"). The
Corporation, accordingly has an interest in creating and preserving an
environment that will permit you to give undivided attention to your duties and
responsibilities. That interest would be especially strong during the
potentially distracting circumstances created by the current business
environment and asbestos litigation.
The USG Corporation Senior Executive Severance Plan (the "Plan") addresses the
above needs. It is intended to provide you with ongoing compensation and
benefits or a lump sum payment in the event you are involuntarily terminated
between January 1, 2005 through and including the effective date of a Plan of
Reorganization. The Plan, of course, asks something of you as well, since in any
agreement each party has to promise to do or to give up something.
Please read the provisions of the Plan that follow. If you find them acceptable
and agree to be bound by them, please so indicate by signing the enclosed
Statement of Acceptance and returning it to the office indicated. You will not
be covered by the Plan until you have taken these steps.
You are under no obligation to participate in the Plan and should feel no
pressure to do so. The Corporation believes the Plan is in both its and your
best interests. Whether you participate, however, is ultimately your decision.
If you do elect to receive severance benefits under this Plan, you will not be
eligible to also receive severance benefits under any other USG severance plan,
employment agreement or termination compensation agreement.
1. IMPORTANT DEFINITIONS
Under this Plan, "employment loss" means:
A. any actual termination by the Corporation of the Senior Executive's
employment between January 1, 2005 through and including the effective date
of a Plan of Reorganization, which is not due to voluntary resignation
(except as in subsection B below), voluntary retirement, death or
disability and does not constitute termination for "cause" (as defined
below); or
B. a resignation of employment by you due to 1) any reduction in Base Salary
as in effect on January 1, 2005 or as increased thereafter; or 2) any
material reduction in title, responsibilities, or authority as in effect on
January 1, 2005.
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January 1, 2005
"Employment loss" shall not include 1) termination based on "cause," which for
this Plan shall mean continued failure by the Senior Executive to substantially
perform his or her duties after a demand for substantial performance has been
delivered by the Senior Executive's manager specifically identifying the manner
in which it is believed the Senior Executive has not substantially performed his
or her duties; or 2) willful misconduct by the Senior Executive which is
materially injurious to the Corporation or any related or affiliated company.
"Base Salary - Option A" means the sum of the Senior Executive's annual salary
and the par award opportunity for the applicable fiscal year under the annual
incentive portion of the Corporation's Management Incentive Compensation Program
(or any similar annual program in which the Senior Executive then participates)
at the value in effect at the time of termination or January 1, 2005, whichever
is higher. Such sum shall be divided by fifty-two if a weekly figure is desired
and by twelve if a monthly figure is desired.
"Base Salary - Option B" means the Senior Executive's annual salary in effect at
the time of termination. It does not include the par award opportunity for the
applicable fiscal year under the annual incentive portion of the Corporation's
Management Incentive Compensation Program (or any similar annual program in
which the Senior Executive then participates). Such sum shall be divided by
fifty-two if a weekly figure is desired and by twelve if a monthly figure is
desired.
2. INITIAL ELIGIBILITY AND COMMITMENTS
All Senior Executives (as defined herein) are eligible to participate in this
Plan. A "Senior Executive" is an employee who between January 1, 2005 through
and including the effective date of a Plan of Reorganization would be eligible
for a two year Employment Agreement with the Corporation or one of its domestic
subsidiaries.
Under this Plan, the Senior Executive agrees to remain in the employ of the
Corporation through and including the effective date of a Plan of
Reorganization, except as may be permitted by other provisions of this Plan or
any employment agreement. It is understood that nothing in this document shall
be construed as limiting the Corporation's right to terminate employment at any
time, subject only to providing the compensation and benefits to which the
Senior Executive would be entitled under this Plan or under any employment
agreement in effect at the time of termination. Payment of compensation and
benefits to which the Senior Executive is entitled under this Plan or under any
employment agreement shall constitute the Senior Executive's sole remedy in the
event of employment loss regardless of whether compensation and benefits are
payable under this Plan or under the provisions of any employment agreement.
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January 1, 2005
3. COMMITMENTS OF THE CORPORATION
Compensation and benefits shall become due and payable under this Plan if the
Senior Executive suffers an employment loss as defined under this Plan between
January 1, 2005 through and including the effective date of a Plan of
Reorganization, in which case the Senior Executive may elect to receive either
Option A or Option B, but not both.
OPTION A
The Corporation shall be obligated to pay and provide the Senior Executive for
twenty-four full months of the following:
- Base Salary - Option A as defined above in this Plan, plus
- Participation in all benefits to which the Senior Executive would
normally be entitled including, but not limited to, all retirement and
investment plans, all life, health and disability insurance, and all
salary continuation plans, together with bonuses and such other grants
of additional compensation or supplemental benefits as may be granted
from time to time (subject to periodic changes in such benefits as are
applicable generally to all Senior Executives in the Plans). This
participation would not include continued participation in the Key
Employee Retention Plan, the retention of a company vehicle, computer
and office equipment, or company paid club memberships.
The Corporation also shall be obligated to pay to the Senior Executive an amount
equal to all legal fees and expenses incurred by the Senior Executive to enforce
any right or benefit under this Plan. The Corporation shall not have an
obligation to pay such amount, however, if a court has decided that there has
been no "employment loss" as defined under this Plan.
Any stock option granted to the Senior Executive under any long-term equity plan
of the Corporation ("Equity Plan") but not yet exercisable, any restricted stock
granted to the Senior Executive under any Equity Plan and not yet freed of
restrictions, and any other equity awards or incentives shall be dealt with, for
time and performance vesting and all other purposes as if the Senior Executive
continued as an employee of the Corporation during the period of payments under
this Option A.
The compensation and benefits paid under this Option A shall be subject to
deductions required by law or authorized by the Senior Executive.
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January 1, 2005
During the twenty four full months of payments under Option A of this Plan the
Senior Executive will not engage or participate, directly or indirectly, as a
partner, officer, director, employee, advisor, or otherwise, in any corporation,
business, or activity which competes with the Corporation or any of its
subsidiary companies in the manufacture or sale of any line of products in any
state of the United States, any province of Canada and any state of Mexico where
the Corporation manufactures or sells its products. Further the Senior Executive
will not directly or indirectly through another entity; induce or attempt to
induce any employee of the Corporation to leave the employ of the Corporation,
or in any way interfere with the relationship between the Corporation and any
employee thereof; hire any person who was an employee of the Corporation at any
time during the Senior Executive's period of employment with the Corporation, or
induce or attempt to induce any customer, supplier, licensee, licensor,
franchisee or other business relation of the Corporation to cease doing business
with the Corporation or in any way interfere with the relationship between any
such customer, supplier, licensee, licensor, franchisee or business relation and
the Corporation, including, without limitation, by making any negative
statements or communications about the Corporation or its products, services or
business opportunities. The Senior Executive acknowledges that the Corporation's
agreement to pay the compensation and benefits set forth in this Plan is
conditioned upon the Senior Executive's faithful performance of obligations
under this paragraph. If the Senior Executive fails to do so, the Senior
Executive agrees that the Corporation will be relieved of any obligation to make
any further payments under the Plan.
OPTION B
The Corporation shall, within thirty days of receipt of a signed and unaltered
Agreement and General Release, be obligated to pay the Senior Executive a lump
sum equal to:
- one and one half (1.5) weeks of Base Salary - Option B as defined
above in this Plan for each full year of continuous service with the
Corporation or any of its subsidiaries at the rate in effect
immediately prior to such termination subject to a minimum of two
months Base Salary - Option B, plus
- two weeks of Base Salary - Option B at the rate in effect immediately
prior to such termination date, for each full $15,000 of annualized
Base Salary - Option B at the same rate, plus
- a lump sum cash payment equal to the cost of continuation of the
Senior Executive's current level of medical, vision and dental
benefits for a period equal to the total number of whole weeks
provided under the preceding service and compensation components, plus
- career counseling and job search assistance selected by and fully paid
for by the Corporation.
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January 1, 2005
The benefit under Option B shall not exceed twenty-four months of Base Salary -
Option B at the rate in effect at the date of termination and of course shall be
subject to deductions required by law or authorized by the Senior Executive. The
benefit under Option B shall not include the benefits under the Key Employee
Retention Plan. No such payment under Option B of this Plan shall be considered
as pay for purposes of the USG Corporation Retirement Plan or the USG
Corporation Investment Plan.
4. NO MITIGATION
The Senior Executive will not be required to mitigate the amount of the above
pay-out by seeking other employment or otherwise, nor shall such amount be
reduced by any compensation received from other employment. The Corporation, of
course, shall also be obligated to pay full salary through the date of
termination plus accrued unused vacation.
5. BINDING ON SUCCESSORS
The Corporation shall be obligated to require any successor (whether direct or
indirect, by purchase, merger, consolidation, or otherwise) to all or
substantially all of the business and/or assets of the Corporation or the
appropriate subsidiary, by a written agreement which is part of such
transaction, to assume and perform in their entirety all provisions of this
Plan.
6. CERTAIN TERMINATION PROCEDURES
Any claims of employment loss under this Plan must be communicated in writing to
the Vice President, Human Resources, USG Corporation within one hundred-eighty
(180) days of the employment loss and shall indicate the specific provisions of
this Plan relied on and shall set forth in reasonable detail all relevant facts
and circumstances to support a claim of employment loss under this Plan.
The Senior Executive's failure to assert a claim of employment loss under this
Plan within one hundred eighty (180) days of the employment loss shall be deemed
a waiver of such claim.
7. EFFECTIVE PERIOD OF THE PLAN
This Plan will be in effect from January 1, 2005 through and including the
effective date of a Plan of Reorganization, at which time it shall terminate.
This Plan shall not be terminated earlier or otherwise amended without the prior
written consent of both the Senior Executive and the Corporation.
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January 1, 2005
8. ADMINISTRATIVE RULES AND DETERMINATIONS
Administrative guidelines for the Senior Executive Severance Plan are developed
and administered by the Vice President, Human Resources, USG Corporation, who
shall have full power to interpret the rules and regulations and to determine
and distribute awards.
Nothing herein contained shall limit or affect in any manner or degree the
normal and usual powers of management, exercised by the officers and the Boards
of Directors or committees thereof, to change the duties or the character of
employment of any employee of the Corporation or to remove the individual from
the employment of the Corporation at any time, all of which rights and powers
are expressly reserved.
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