Attached files
EXHIBIT 10.17
[LETTERHEAD OF ABITIBIBOWATER INC.]
October 26, 2010
Mr. David J. Paterson
2350 Mt. Paran Road NW
Atlanta, GA 30327
2350 Mt. Paran Road NW
Atlanta, GA 30327
Re: Terms of Employment Post Emergence
Dear Dave,
This letter is intended to document for you important information concerning changes in your
compensation, benefits and other conditions of service upon the company’s anticipated emergence
from bankruptcy in the coming weeks. As you are aware from the emergence plan, these changes become
effective on the date of emergence or as otherwise described in the details that follow. Please
note that this is a summary of conditions, the whole intended to be in accordance with and pursuant
to the filed restructuring plans.
As of emergence, you will continue to occupy your position of President and Chief Executive
Officer, in the new AbitibiBowater Inc.
The terms and conditions of your employment post emergence are detailed below.
Location:
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Montreal, Quebec, Canada | |
Effective Date:
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These terms and conditions are contingent on approval of the restructuring plans and will be effective on the date of emergence. | |
Compensation:
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Your annual base salary will be US$765,000. |
You will be eligible to participate in a short-term incentive plan effective for quarters 3 and 4
of 2010, with target award payout of 50% of your base salary. For the 2011 short-term incentive
plan, you will be eligible for a target level of 100% of base salary.
The independent directors of the current Board of Directors recommend to the Human Resources
Compensation/Nominating and Governance Committee of the new Board of Directors (the “Committee”) to
award you a restructuring recognition award in the amount of US$765,000, to be paid as soon as
practical following emergence.
Additionally, we have put in place an equity award program, to be effective on the date of
emergence. The independent directors of the current Board of Directors recommend to the Committee
to award you an initial grant under this program equivalent to 225% of your base salary as soon as
practical following emergence.
You will also continue to be eligible for a perquisite allowance of US$12,000 per year as well as a
complete annual medical examination and parking.
Other benefits:
You will maintain participation in various benefit plans such as pension, group insurance, and
vacation.
Upon emergence, you will continue your participation in your defined contributions (DC) pension
plan and you will participate in a new DC SERP to be put in place by the Company, at the following
levels of contribution:
| Employee | Company | |||
| Contributions | Contributions | Contributions | ||
Basic
|
5% of eligible earnings* | 10.5% of eligible earnings | ||
Additional
|
None | 12% of eligible earnings |
| * | Up to the Compensation Limit (U.S.A.) |
Provided you waive all your SERP claims in the creditor protection proceedings, your SERP benefits
accrued up to the date of emergence will be reinstated and fully recognized in new SERPs to be put
in place by the Company, provided that all defined benefits (DB) available under such new SERPs
will be frozen as of the date of emergence. Lump sums will continue to be paid as per pre-filing
practice, provided that if you have accrued benefits pursuant to a Canadian DB SERP, the Company
intends to pay you such benefits as a lump sum once you retire, unless these benefits have been
secured in part or in total, in which case they would be paid in the form of monthly payments.
***
You will receive shortly a separate letter providing you more details with respect to the enrolment
in the DC pension plan.
Severance
You will be covered by the Company’s severance policy for the Chief Executive Officer and his
direct reports. Pursuant to this policy, you will be entitled to six weeks of eligible pay per year
of continuous service, with a minimum of 52 weeks and up to a maximum of 104 weeks. For a period of
12 months following a “change in control”, the severance pay is available in the event of
involuntary termination for a “good reason”. The emergence of
the Company from creditor protection and all related transactions will not constitute a change in
control for the purpose of this policy.
Prior Agreements
Pursuant to the restructuring plans, all your prior management agreements with the Company (e.g.
employment., severance pay and change in control agreements) are being rejected as of the date of
emergence.
***
Enclosed for your reference are the corresponding Fact Sheets for the various compensation and
benefits programs listed above. The complete 2010 Equity Plan is also available upon request, while
the complete plan text of other programs will be available at a later date.
We are excited about the outlook of the newly emerged company and look forward to your continued
leadership.
/s/ Richard B. Evans
Richard B. Evans
Chairman
Richard B. Evans
Chairman
I have read the present letter and hereby accepted these terms and conditions.
/s/ David J. Paterson
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10/27/10
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Enclosures