Employment Agreement between American Standard and Lawrence B. Costello (Senior Vice President, Human Resources)

Summary

This agreement outlines the terms of employment for Lawrence B. Costello as Senior Vice President, Human Resources at American Standard. Mr. Costello will receive a base salary of $350,000 per year, annual and long-term incentive plans with guaranteed minimums for 2000 and 2001, stock options, a sign-on stipend, and various executive benefits. The agreement specifies that employment is at-will and contingent on standard pre-employment requirements. Benefits include participation in retirement and insurance plans, vacation, and other executive perks. Either party may terminate employment at any time.

EX-10.VI 4 file003.txt EMPLOYMENT AGREEMENT OF LAWRENCE B. COSTELLO EXHIBIT (10)(vi) [LOGO] Corporate Headquarters One Centennial Avenue P.O. Box 6820 Piscataway, NJ 08855 Phone ###-###-#### May 1, 2000 Mr. Lawrence B. Costello 27 Palmer Drive Moorestown, NJ 06057 Dear Larry, We are delighted that you have accepted this offer of employment to join American Standard in the capacity of Senior Vice President, Human Resources reporting to me. As we discussed, your annual base salary rate will be $350,000.00 or a semi-monthly basis of $14,583.33. You will also participate in our Annual Incentive Plan with a target of 55%. You will be guaranteed a payment of not less than $200,000.00 for performance years 2000 and 2001. The incentives are generally paid in the first quarter of the year following the year in which they are earned. In addition, you will receive stock options of 50,000 shares of American Standard common stock, with a grant price equal to the fair market value of a share of such stock (determined in accordance with the terms of the American Standard Stock Incentive Plan) on the day you commence employment. This does not constitute a commitment for a Stock Option award or the amount of such award for any period other than the one addressed. As an officer of the Corporation, you will be eligible for the following benefits: Financial & Tax Planning, Severance Plan, Medical, Life and Disability Insurance and free plumbing and air conditioning equipment, exclusive of installation. You will also participate in the Corporation's Long Term Incentive Plan with a target of 1.3 times your eligible earnings, with a guaranteed payment of $200,000.00, to be paid in 2000 and 2001. Under the Supplemental Executive Retirement Plan (SERP), you are eligible to receive a targeted benefit according to a formula which is based on years of service and average compensation for the three highest calendar years of your final ten calendar years of employment. Because SERP is an "umbrella pension benefit", your targeted SERP benefit is reduced by any amounts payable to you in the form of Social Security benefits and two times the value of your cumulative basic ESOP Company contributions. Your benefits are vested upon completion of five years of service or continuation of employment through age 65. SERP payments are distributed in a lump sum at the time of retirement. You will also be provided with a $200,000.00 sign-on stipend. All payments identified in this letter constitute taxable income. You are entitled to participate in the American Standard Benefits Programs as described in the attached summary. In addition you will be provided with four weeks of vacation per annum accrued and paid according to existing and future policy. American Standard maintains an employment-at-will policy, which means that you or the company can terminate your employment with or without cause, at any time and for any reason. There is nothing in this letter that is intended to constitute a contract of employment for a guaranteed period of time. This offer of employment is contingent upon your compliance with the Immigration and Naturalization Reform Act of 1997, satisfactory reference checks, signing of the company's "Agreement Relating to Assignment of Inventions, Non-Disclosure of Confidential Information" and Code of Conduct and a drug screening. Larry, I expect that your decision to join the company will be mutually rewarding. We look forward to having you become part of the Human Resources Department in the belief that you will form many productive and rewarding relationships. Please sign below indicating your acceptance of this offer and confirm your anticipated commencement date. Sincerely yours, /s/ Fred Poses Fred Poses Chairman & CEO /s/ Lawrence B. Costello - ------------------------------------ ------------------------------------ Signature Anticipated Commencement Date