Exhibit 99.3
[SOLUTIA INC. logo]
SOLUTIA, INC.
575 Maryville Centre Drive
St. Louis, MO 63141
P. O. Box 66760
NANCY J. STEMME St. Louis, Missouri 63166-6760
Director, HR Planning Tel 314-674-8435
Fax 314-674-5388
E-mail njstem@Solutia.com
January 4, 2005
Mr. Luc De Temmerman
Dorpstraat 30
B-3040 Neerijse
Belgium
Dear Luc,
Effective July 19, 2004, you entered into an Agreement (the "Agreement")
with Solutia Inc. ("Solutia" or "Company") providing that your services will
be performed at your current location or a location of the Company not more
than 50 miles from such current location. The Company requests your services
now be performed from the Company's headquarters in St. Louis, Missouri or a
location within 50 miles from the Company's headquarters. As a result, you
agree that this assignment to St. Louis shall not constitute "Good Reason"
as that term is defined in section 4(c) of your Agreement. To facilitate
this arrangement, the Company will provide for certain allowances as
described in the Solutia International Assignment Policy (the "Policy").
This letter reflects the parties' mutual understanding of those allowances
that will be provided to you.
Your assignment in St. Louis will begin not later than February 1, 2005 and
is expected to end on the six month anniversary of the Emergence Date from
bankruptcy, as defined in your Agreement. You and your eligible dependents
already have an L-visa and approved I-140 for the green card petition. Upon
your arrival in the U.S., Solutia will make every effort to quickly file for
adjustment of status.
1. COMPENSATION
Your compensation, including base salary, annual bonuses and special
emergence bonus payments are expressly governed by the terms and conditions
of the Agreement. Your base salary will be (euro)289,519 (corresponding to
US $350,000 at the exchange rate of 1.2089) and will be reduced by the
amount of hypothetical Belgian income tax.
For purpose of calculating pension benefits and insurances, your annual base
salary will be retained as a national salary in Belgium.
Any annual bonuses or special emergence bonus which may become payable
pursuant to the terms of the Agreement will be paid in euros and will be
reduced by the amount of the hypothetical Belgian income tax.
2. GOODS AND SERVICES (G&S) ALLOWANCE
Solutia agrees to provide a goods & services allowance to allow you to
maintain your purchasing power at the approximate level you enjoyed in
Belgium. This allowance makes it possible for you to live in St. Louis,
Missouri at approximately the same standard to which you have been
accustomed in Belgium. This allowance, however, is not designed to cover the
full cost of goods and services and transportation costs in the U.S., but
rather the difference between prices in Belgium and prices in the U.S.
taking currency fluctuation and inflation change into consideration.
Based on data provided by Solutia's outside compensation provider, it is
anticipated that you will receive an initial allowance of approximately
(euro)0 ($0) per month. This calculation takes into consideration both your
salary level and family size (spouse and eligible dependents as defined in
the policy) and is intended to offset the difference in the purchase price
of goods and services (i.e. food at home, food away from home, furnishings,
recreation, etc.) between Belgium and the U.S. and to cover the cost to own
and operate an appropriate vehicle at your salary level. Operating costs
include fuel, oil, maintenance and tires. This allowance may vary from time
to time (depending on cost of living). When there are changes in the
allowance amount, the change will be communicated to you via the monthly
compensation worksheet. The goods and services allowance that will be paid
to you may not be negative.
3. U.S. HOUSING AND UTILITIES ARRANGEMENTS
Solutia will provide up to $3,500 per month during your assignment to cover
the lease cost of housing and utilities in St. Louis. It is mandatory that
you work with me to have legal counsel review the lease agreement for St.
Louis housing. The budget for housing and utilities takes into consideration
your family size (spouse and one eligible dependent), in addition to your
current salary level. Should you decide upon housing that exceeds the
maximum provisions, you will be personally liable for any residual
amount(s). Please note that "utilities" refer to electricity, gas, water and
trash removal.
4. HOUSEHOLD GOODS
Solutia will provide a lump sum payment of $50,000 at the commencement of
your assignment to cover your costs associated with the movement of
household effects and pets to and from St. Louis (air shipping costs,
packing and unpacking costs, clearance charges, customs and duty charges,
household effects insurance, transport, kennel and quarantine expenses,
etc.) and costs to purchase supplemental furniture and appliances upon
arrival in St. Louis. The payment includes the costs to repatriate goods and
pets at the end of your assignment.
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5. BELGIUM HOUSING AND UTILITIES
Since you will continue to maintain your Belgian residence, your Home
Country Housing Obligation will be set at (euro)0 ($0) for the total
duration of this assignment.
6. ALLOWANCES
Solutia will provide a lump sum payment of $50,000 at the commencement of
your assignment representing the global business allowance, relocation
allowances and auto loss allowance. The global business allowance recognizes
the various challenges and inconveniences experienced during your
assignment. The relocation allowances (normally paid at commencement and at
repatriation) cover miscellaneous expenses incurred during your relocation.
The auto loss allowance covers an inordinate loss in the sale or lease
termination of up to one automobile.
7. BENEFIT PLANS
You will continue to be covered under the benefit plans (i.e. pension,
vacation) under which you participated while you worked in Belgium whenever
legally possible and practical.
HEALTH INSURANCE
You will participate in the highest option medical, dental and vision plans
offered to salaried employees in the U.S.
SOCIAL SECURITY
According to the regulation between Belgium and the United States, you will
remain on the international social security scheme during your assignment
(DOSZ).
RETIREMENT PLAN
You will continue to be covered by the Solutia Belgium Pension Plan. For
purpose of calculating pension benefits and insurances, your annual base
salary will be retained as a national salary in Belgium.
OTHER COMPANY BENEFITS
During your assignment you will continue to be covered by the Belgian
insurance policy, travel accident insurance policy and sick leave policy.
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8. INCOME TAX EQUALIZATION
Your taxes will be equalized within the terms specified in the Policy. It is
the intent of the Policy that your Belgian income tax burden should remain
the same as if you had remained in Belgium and that no advantage or
disadvantage shall accrue to you due to differences in income tax rates
between Belgium and the U.S. Solutia will bear the cost of the actual income
taxes (U.S. and Belgium) incurred during your assignment. However, Solutia
will not bear the additional cost of the Belgium actual taxes in the event
that you remain tax resident due to personal reasons.
Your Belgian income tax burden ("hypothetical tax") will be based on Solutia
income only (exclusive of premiums and allowances). The hypothetical tax
burden will be calculated by a professional tax consultant to be selected by
the Company and withheld monthly from your compensation.
An estimate will be made at the beginning of assignment (and each subsequent
year during the fourth quarter) which will become the amount to be deducted
from each paycheck for hypothetical tax. A final reconciliation of actual
hypothetical tax will be completed by the professional tax consultant at tax
preparation time. At that point you will receive reimbursement from Solutia
if money is due to you, or you will be responsible for payment of any
balance due to Solutia at that time.
TAX RETURN PREPARATION
You are responsible for filing tax returns and meeting tax obligations in
both Belgium and the U.S. You are responsible for providing all information
necessary to complete your tax return to your tax consultant within ninety
(90) days of the end of the taxable year to which the tax return relates. If
you fail to provide this information in the designated time period, and as a
result, cause a late filing of your returns, you will be liable for any
penalties, fines, and interest incurred.
As a condition of your assignment, you agree that Solutia has the right to
inspect prior year tax returns as necessary, returns for years subject to
income tax equalisation and future years until credits are exhausted. In
addition, you agree to provide to the tax consultant copies of all returns
as may be necessary to determine and reconcile the appropriate excess tax
reimbursement and will sign a release authorising the excess tax
reimbursement calculations to be provided to Solutia.
In the event of termination of employment while on assignment, you agree to
take all necessary steps to facilitate tax returns in accordance with U.S.
and Belgian tax laws on a timely basis.
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9. HOME LEAVE/TRAVEL GRANTS
REGULAR
Consistent with your current arrangement, Solutia will continue to pay the
cost for your spouse to travel four times per year. She may travel to
Belgium or your relatives can come and visit you, without however exceeding
the cost which your spouse would have incurred. In all cases of travel,
invoices for actual travel should be submitted. Payments of cash in lieu of
travel will not be granted.
EMERGENCY
Special circumstances may arise which will require emergency travel by you
and/or your eligible dependents between the U.S. and Belgium. In such cases,
upon approval, the Company will pay travel costs (not to exceed round trip
economy class air fare between St. Louis and Belgium).
10. VACATION
Vacation during your assignment will be governed by the Belgian vacation
policy. Based on your credited service, you are entitled to 20 working days
vacation per year plus any extra vacation days which are granted for length
of service with the Company. Service with the Company is to be interpreted
as total service with Solutia from your original date of joining.
11. CAR ALLOWANCE
Solutia will provide a lump sum payment of $30,000 at the commencement of
your assignment to cover the cost of automobile lease, insurance and
operating/maintenance expenses for the term of your assignment.
12. REPATRIATION
Upon the end of your assignment or your termination of employment for any
reason, you will be responsible for the costs associated with your
repatriation back to Belgium, including the costs associated with shipment
of goods and pets.
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Please do not hesitate to contact me if you have any questions regarding the
Policy or this letter. If you are in agreement with the provisions outlined
above, will you please date, sign and return the original copy of this
letter, retaining a copy for your files.
Best wishes to you in your new assignment.
Sincerely,
/s/ Nancy Stemme
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Nancy Stemme
Director, HR Planning
Accepted by:
/s/ Luc De Temmerman January 11, 2005
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Luc De Temmerman Date
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