1-13-12
Exhibit 10.17
January 6, 2012
Mr. Daniel P. Cartwright
5501 Stone Lake Avenue
Gillette, WY 82718
Dear Dan,
We are pleased that you have accepted the position of President – Canadian Operations of Walter Energy, Inc. (“Walter” or the “Company”) effective as January 6, 2012. The attached schedules outline the remuneration and benefits and terms and conditions of your employment.
As the President – Canadian Operations of Walter, you will have such duties, responsibilities and authorities as the Chief Executive Officer of Walter (the “CEO”) determines are appropriate for your position. You will report to the CEO or to his designee.
It is agreed and understood that this letter agreement (including the schedules and exhibits attached hereto) (collectively, the “Agreement”) and the other agreements referred to in this Agreement shall constitute our entire agreement with respect to the subject matter hereof and shall supersede all prior agreements, discussions, understandings and proposals (written or oral) relating to your employment with the Company and its affiliates. This Agreement may only be amended or modified by a written agreement executed by you and Walter (or any of its respective successors) and will be interpreted under and in accordance with the laws of the State of Delaware without regard to conflicts of laws.
This Agreement may be executed by fax or pdf and in any number of counterparts, all of which, when taken together, will constitute one and the same instrument.
Dan, we are delighted that you are remaining with Walter and we look forward to continuing to work with you. If the terms contained within this Agreement are acceptable, please sign one of the enclosed copies and return it to me in the envelope provided.
| Sincerely, |
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| /s/ Walter J. Scheller, III |
| 1-13-12 |
| Walter J. Scheller, III |
| Date |
| Chief Executive Officer |
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| Walter Energy, Inc. |
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ACCEPTANCE
I have read the Agreement, have been advised to consult with counsel of my choice concerning the same, and I fully understand the same. I approve and accept the terms set forth in the Agreement as governing my employment relationship with Walter.
| /s/ Daniel P. Cartwright |
| 1/26/12 |
| Daniel P. Cartwright |
| Date |
Enclosures:
Schedule A Remuneration & Benefits
Schedule B Terms and Conditions
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SCHEDULE A
REMUNERATION & BENEFITS
| Name: |
| Daniel P. Cartwright |
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| Role Title: |
| President – Canadian Operations |
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| Role Band: |
| n/a |
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| Business Unit: |
| Canadian Operations |
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| Employer: |
| Walter Energy, Inc. |
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| Date of Appointment: |
| January 6, 2012 |
This schedule should be read in conjunction with the remainder of the Agreement. The policies covering these benefits and their terms and conditions may be varied from time to time.
| Base Salary and Remuneration: |
| The remuneration for this position is a base salary of $330,000 per annum which will be subject to review and adjustment by the Compensation and Human Resources Committee of the Board of Directors (the “Compensation Committee”) and paid in accordance with Walter’s payroll practices, as they may change from time to time. Your annual base salary, as in effect from time to time, is hereinafter referred to as the “Base Salary.”
The remuneration structure is designed to provide competitive levels of total remuneration for strong individual and corporate performance and achieve a close alignment between personal and business performance and remuneration. |
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| Annual Bonus (EIP): |
| You will continue to participate in Walter’s Executive Incentive Plan, as it may be amended from time to time (the “EIP”) and, in this position, will be eligible to earn an annual target bonus of 65% of your Base Salary (the “Target Bonus”), with an upside potential of 2 times your Target Bonus for top performance. The actual amount of your bonus, if any, will fluctuate |
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| based upon actual performance under the performance metrics associated with the EIP. Participation in the bonus pool is dependent upon the achievement of Walter’s annual performance goals, as well as the accomplishment of (x) individual objectives and/or (y) departmental goals, in each case, as determined and recommended by the management of Walter and subsequently approved by the Compensation Committee. In order to receive a bonus under the EIP, you must be employed at the time the bonus is paid. Notwithstanding anything in this Agreement to the contrary, with respect to any bonus to be paid hereunder, such bonus will be paid in accordance with the EIP and, to the extent possible, will be structured to comply with Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) as performance based compensation thereunder; provided however, to the extent not deductible by Walter, such payment will be deferred until it can be paid by Walter on a tax deductible basis. As you are aware, participation in Walter’s Employee Stock Purchase Plan is a condition to participation in the bonus pool under the EIP. |
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| Long Term Incentive: |
| Subject to your continued employment with Walter, you will remain a participant in Walter’s Amended and Restated 2002 Long-Term Incentive Award Plan, as it may be amended and restated from time to time (and any successor long term incentive award plan) (collectively, the “LTIP”), and will remain eligible to receive annual equity grants from Walter.
Your annual equity grant in respect of the 2012 fiscal year will be valued at 60% of your Base Salary, based on the Black-Scholes value at the date of grant, fifty percent (50%) of which will be in the form of non-qualified stock options and fifty percent (50%) of which will be in the form of restricted stock units. Such equity grants will be awarded under and subject to the terms and conditions of the LTIP and the terms and conditions applicable to other awards granted by Walter under the LTIP to employees of Walter. |
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| Company Car: |
| You will be provided with an automobile in Vancouver, B.C. |
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| Expenses: |
| Continued reimbursement for all reasonable and customary out-of-pocket business expenses incurred by you in the performance of your duties hereunder, in accordance with the policies, practices and procedures of Walter relating to reimbursement of business expenses incurred by Walter employees in effect at any time during the 12 month period preceding the date you incur the expenses; provided, however, that any such expense reimbursement will be made no later than the last day of the calendar year following the calendar year in which you incur the expense, will not affect the expenses eligible for reimbursement in any other calendar year, and cannot be liquidated or exchanged for any other benefit. |
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| Health & Welfare Plan(s): |
| Continued participation in Walter’s life and health insurance benefit programs in accordance with their terms, as they may change from time to time. |
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| Retirement Plan(s): |
| Continued participation in Walter’s retirement plan(s) according to its terms as they may change from time to time. |
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| Leave: |
| Continued eligibility for 20 business days of vacation and 10 company paid holidays to be used each year in accordance with Walter’s policy, as it may change from time to time. |
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| International Assignment: |
| Additional details will be provided under the Company’s International Assignment Policy and Tax Equalization Policy. |
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SCHEDULE B
TERMS AND CONDITIONS
1. It is agreed and understood that your employment with Walter continues to be at will, and either you or Walter may terminate the employment relationship at any time for any reason, with or without cause, and with or without notice to the other; nothing in this Agreement or elsewhere constitutes or shall be construed as a commitment to continue to employ you or pay you severance, other than as stated in Schedule A or in the CIC Agreement, for any period of time.
2. Outside Interest. While employed by Walter, you agree to devote your full business time and best efforts to the performance of your duties hereunder and will not engage in any other business, profession or occupation for compensation or otherwise which would conflict or interfere with the rendition of such services either directly or indirectly without the prior written consent of the CEO or his designee.
3. You agree that all inventions, improvements, trade secrets, reports, manuals, computer programs, systems, tapes and other ideas and materials developed or invented by you during the period of your employment with Walter, either solely or in collaboration with others, which relate to the actual or anticipated business or research of Walter or any of its subsidiaries or affiliates, which result from or are suggested by any work you may do for Walter or any of its subsidiaries or affiliates, or which result from use of Walter’s or any of its subsidiaries’ or affiliates’ premises or Walter’s, its subsidiaries’, its affiliates’, or its customers’ property (collectively, the “Developments”) shall be the sole and exclusive property of Walter. You hereby assign to Walter your entire right and interest in any such Developments, and will hereafter execute any documents in connection therewith that Walter may reasonably request. This section does not apply to any inventions that you made prior to your employment by Walter, or to any inventions that you develop entirely on your own time without using any of Walter’s equipment, supplies or facilities, or Walter’s or its subsidiaries’, affiliates’, or customers’ confidential information which do not relate to Walter’s or its subsidiaries’ or its affiliates’ business, anticipated research and development, or the work you have performed for Walter and its subsidiaries and affiliates.
4. As an inducement of Walter to make this offer to you, you represent and warrant that there exists no impediment or restraint, contractual or otherwise on your power, right or ability to accept this offer and to perform the duties and obligations specified in this Agreement.
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5. Non-Compete/Non-Solicit. It is understood and agreed that you have and will continue to have substantial relationships with specific businesses and personnel, prospective and existing, vendors, contractors, customers, and employees of Walter and its subsidiaries that result in the creation of customer goodwill. Therefore, while you are employed by Walter and following the termination of your employment for any reason and continuing for a period of 12 months from the date of your termination, so long as Walter or any affiliate, successor or assigns thereof is in the coal mining business or like business within the Restricted Area (defined as mining industries in the geographical areas in which Walter or any of its subsidiaries competes at the time of your termination), unless the Board of Directors approves an exception, you shall not, directly or indirectly, for yourself or on behalf of, or in conjunction with, any other person, persons, company, partnership, corporation, business entity or otherwise:
(a) Call upon, solicit, write, direct, divert, influence, or accept business (either directly or indirectly) with respect to any account or customer or prospective customer of the Company or any corporation controlling, controlled by, under common control with, or otherwise related to Walter, including but not limited to Western or any other affiliated companies; or
(b) Hire away any independent contractors or personnel of Walter and/or entice any such persons to leave the employ of Walter or its affiliated entities without the prior written consent of Walter.
6. Non-Disparagement. Following the termination of your employment for any reason and continuing for so long as Walter or any affiliate, successor or assigns thereof carries on the name or like business within the Restricted Area, you shall not, directly or indirectly, for yourself or on behalf of, or in conjunction with, any other person, persons, company, partnership, corporation, business entity or otherwise:
(a) Make any statements or announcements or permit anyone to make any public statements or announcements concerning the termination of your employment with Walter, or
(b) Make any statements that are inflammatory, detrimental, slanderous, or negative in any way to the interests of Walter or its affiliated entities.
7. You acknowledge and agree that you will respect and safeguard Walter’s and its subsidiaries’ property, trade secrets and confidential information. You acknowledge that Walter’s electronic communication systems (such as email and voicemail) are maintained to assist in the conduct of Walter’s and its subsidiaries’ business and that such systems and data exchanged or stored thereon are Walter property. In the event you leave the employ of Walter, you
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will not disclose any trade secrets or confidential information you acquired while an employee of Walter to any other person or entity, including without limitation, a subsequent employer, or use such information in any manner.
8. Compensation Recovery Policy. You understand and agree that if any of Walter’s financial statements are required to be restated due to errors, omissions, fraud or misconduct, the Compensation Committee may, in its sole discretion but acting in good faith, direct that Walter recover all or a portion of any cash incentive, equity compensation or severance disbursements paid to you with respect to any fiscal year of Walter for which the financial results are negatively affected by such restatement. For purposes of this provision, errors, omissions, fraud or misconduct may include and are not limited to circumstances where Walter has been required to prepare an accounting restatement due to material non-compliance with any financial reporting requirement, as enforced by the Securities and Exchange Commission, and the Compensation Committee has determined in its sole discretion that you had knowledge of the material noncompliance or the circumstances that gave rise to such noncompliance and failed to take reasonable steps to bring it to the attention of the appropriate individuals within Walter, or you personally and knowingly engaged in practices which materially contributed to the circumstances that enabled a material noncompliance to occur.
9. This Agreement is intended to comply with Section 409A of the Code and will be interpreted accordingly. References under this Agreement to the termination of your employment shall be deemed to refer to the date upon which you have experienced a “separation from service” within the meaning of Section 409A of the Code. Notwithstanding anything in this Agreement to the contrary, (i) if at the time of your separation from service with Walter you are a “specified employee” as defined in Section 409A of the Code (and any related regulations or other pronouncements thereunder) and the deferral of the commencement of any payments or benefits otherwise payable hereunder or payable under any other compensatory arrangement between you and Walter as a result of such separation from service is necessary in order to prevent any accelerated or additional tax under Section 409A of the Code, then Walter will defer the commencement of the payment of any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to you) until the first business day after the date that is six months following your separation from service (or the earliest date as is permitted under Section 409A of the Code), at which point all payments deferred pursuant to this paragraph shall be paid to you in a lump sum and (ii) if any other payments of money or other benefits due to you hereunder could cause the application of an accelerated or additional tax under Section 409A of the Code, such payments or other benefits shall be deferred if deferral will make such payment or other benefits compliant under Section 409A of the Code, or otherwise such payment or other benefits shall be restructured, to the extent possible, in a manner that
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does not cause such an accelerated or additional tax. To the extent any reimbursements or in-kind benefits due to you under this Agreement constitute “deferred compensation” under Section 409A of the Code, any such reimbursements or in-kind benefits shall be paid to you in a manner consistent with Treasury Regulation Section 1.409A-3(i)(1)(iv). For purposes of Section 409A of the Code, each payment made under this Agreement shall be designated as a “separate payment” within the meaning of Section 409A of the Code.
10. Walter shall withhold from any amounts payable hereunder all Federal, state, city or other taxes as legally shall be required.
11. You acknowledge and agree that you have read this Agreement carefully, have been advised by the Company to consult with an attorney regarding its contents, and that you fully understand the same.
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