Item
5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On
January 31, 2007, Foster Wheeler Ltd. (the “Company”) elected Mr. Franco
Baseotto to serve as the Company’s Executive Vice President and Chief Financial
Officer, effective August 13, 2007. Mr. Baseotto is hereinafter referred to
as
the “Elected Officer.”
Supplemental
Employment Agreement
On
November 12, 2007, the Company and the Elected Officer’s Italian employer,
Foster Wheeler Continental Europe S.r.L. (“FWCE”), a subsidiary of the Company,
entered into a Supplemental Employment Agreement (the “Supplemental Agreement”)
with the Elected Officer. The Supplemental Agreement supplements the Elected
Officer’s Italian employment arrangements with FWCE with an additional
employment arrangement comparable to that provided to the other executive
officers of the Company. The Supplemental Agreement is in the Italian language
and is governed by Italian law. An English language translation of the
Supplemental Agreement is attached hereto as Exhibits 10.1 and is hereby
incorporated into this Item 5.02 by reference. The following summary is
qualified in its entirety by reference to the Supplemental
Agreement.
Under
the
Supplemental Agreement, in the event of termination of employment of the Elected
Officer by FWCE for cause or by the Elected Officer other than for good reason,
in each case as defined under Italian law, FWCE will pay any severance indemnity
required to be paid under Italian law and under the Elected Officer’s existing
Italian employment arrangements with FWCE.
In
the
event of termination of employment of the Elected Officer by FWCE without cause
or by the Elected Officer for good reason, the Company will, in addition to
paying the severance indemnity required to be paid under Italian law, provide
the Elected Officer the option of choosing between (1) the payments due to
him
under any employment agreement with FWCE or (2) all of the following benefits:
(a) the balance of any bonus (and/or other incentive awards) awarded by the
Company’s compensation committee but yet unpaid; (b) benefit continuation and
conversion rights under FWCE’s employee benefit plans; (c) monthly payments, for
twenty-four months after the date of termination occurs, of an amount equal
to
1/12 of the Elected Officer’s base salary plus the relevant severance indemnity
accrual required under Italian law on such base salary (the “Base Amount”); (d)
for (i) the calendar year that includes the date of termination, an amount
equal
to the Elected Officer’s short-term incentive target percentage opportunity for
such calendar year, multiplied by the Elected Officer’s Base Amount in effect on
the date of termination multiplied by a multiplier reflecting the Company’s
performance as approved by the Company’s compensation committee for such
calendar year and (ii) for the calendar year immediately following the calendar
year that includes the Elected Officer’s date of termination, an amount equal to
the Elected Officer’s short-term incentive target percentage opportunity for the
calendar year that included the Elected Officer’s date of termination multiplied
by the Elected Officer’s Base Amount in effect on his date of termination, plus,
in the case of both (i) and (ii), an additional amount equal to the severance
indemnity accrual that would have been made under Italian law on such amounts
if
the Elected Officer had not been terminated; (e) the amount corresponding to
two
years of social security contributions under Italian law based on the Elected
Officer’s base salary as of the date of termination; (f) removal of transfer and
any other restrictions on all shares of capital stock of the Company registered
in the Elected Officer’s name and/or granted to the Elected Officer but not yet
vested; (g) full vesting of all vested and unvested stock options to purchase
shares of capital stock of the Company; and (h) executive level career
transition assistance services.
The
Elected Officer’s Supplemental Agreement will be effective as long as he is
employed by FWCE. During the term of his employment, and for one year
thereafter, the Elected Officer is prohibited from providing services to, or
being a shareholder of, a competitor of the Company and, for two years
thereafter, from calling upon any person who is, as of his date of termination
of employment, engaged in any activity on behalf of the Company or is a customer
of the Company for the purpose or with the intent of enticing that person to
cease such activity on behalf of the Company or to cease doing business with
the
Company. In consideration for the foregoing, and as necessary to satisfy Italian
law, the Elected Officer will be paid 30% of the Base Amount following the
Elected Officer’s date of termination of employment and 10% of the Base Amount
on the first anniversary date of such payment.
In
addition, at all times during and after the term of the Supplemental Agreement,
the Company has agreed to indemnify the Elected Officer and pay any expenses
in
connection with any threatened or actual suit to which he is or may be a party
as a result of being an officer, director or employee of the Company or any
of
its subsidiaries.
Change
of Control Agreement
On
November 12, 2007, the Company and FWCE also entered into a Change of Control
Agreement with the Elected Officer (the “Change of Control Agreement”). The
Change of Control Agreement is in the Italian language and is governed by
Italian law. An English language translation of the Change of Control Agreement
is attached hereto as Exhibits 10.2 and is hereby incorporated into this Item
5.02 by reference. The following summary is qualified in its entirety by
reference to the Change of Control Agreement.
Under
the
Change of Control Agreement, for a period of up to three years following a
“change of control,” the Elected Officer shall continue in the employment of the
Company with a materially commensurate position and responsibilities and will
be
entitled to continue receiving generally the same compensation and benefits
he
was entitled to before the change of control occurred. Further, if, within
three
years of a change of control, the Company terminates the Elected Officer’s
employment other than for cause or disability, or if the Elected Officer
terminates his employment for good reason, in each case as defined in the Change
of Control Agreement, the Company will, in addition to paying the severance
indemnity required to be paid under Italian law, provide the Elected Officer
the
option of choosing between (1) the payments due to him under any employment
agreement with FWCE or (2) a lump sum cash payment of the following amounts:
(a)
the Elected Officer’s accrued but unpaid Base Amount through the date of
termination; (b) a proportionate annual bonus amount for such termination year;
(c) unpaid deferred compensation and vacation pay, if any; (d) an amount equal
to three times the sum of the Elected Officer’s Base Amount and his highest
annual bonus; (e) an amount equal to the corresponding Italian social security
contributions which would have been paid had the Elected Officer continued
his
employment for three years from the date of termination; and (f) payment for
any
shares of restricted stock to the extent such shares are tendered by the Elected
Officer to the Company. In addition, the Elected Officer will also be entitled
to: (a) five-year continuation of certain employee welfare benefits unless
terminated earlier due to the Elected Officer’s reemployment with another
employer; (b) outplacement services; and (c) full vesting of all vested and
unvested stock options to purchase shares of capital stock of the Company.
In
the
event that the Elected Officer is terminated because of his death or for cause,
or if the Elected Officer terminates his employment without good reason, the
Company will pay the Elected Officer (or his estate, as applicable) any
severance indemnity or other payments required under Italian law or under the
Supplemental Agreement and accrued but unpaid compensation and benefits,
including a proportionate annual bonus amount for such termination year in
the
case of death or termination by the Elected Officer without good reason.
Indemnification
Agreement
In
accordance with the Company’s usual practice, the Elected Officer and the
Company have also entered into an Indemnification Agreement, dated November
12,
2007. The Indemnification Agreement was entered into in order to provide the
Elected Officer with specific contractual assurance that he would be indemnified
to the fullest extent permitted by law, as currently required under the
indemnity provisions of the Company's Bye-laws. The Company's form of
Indemnification Agreement for directors and officers was filed with the
Securities and Exchange Commission as Exhibit 99.1 to the Company's Current
Report on Form 8-K filed on November 8, 2004, and the Indemnification Agreement
between the Company and the Elected Officer is substantially on the terms and
conditions set forth in such form agreement.