Exhibit 10
August 17, 1998
Xx. Xxxxxxx X. Lake
00 Xxxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Dear Xxxx,
In accordance with our recent discussions, I would like to outline for you
some terms for a position with Western Resources. Obviously, any agreement is
subject to approval of the Western Resources Board of Directors.
I am pleased to offer you the position of Executive Vice President, Chief
Strategic Officer for Western Resources. In addition, you would serve as a
member of the Company's Executive Council and participate with other senior
officers in the formation and implementation of corporate policy regarding all
aspects of the Company's operations.
In your position, you would be primarily responsible for leading our
efforts to grow our business as well as the businesses of our subsidiaries.
Where appropriate, you would be expected to serve on subsidiary boards. In
addition, we would expect you to open and manage an office in New York City to
be staffed with a sufficient number of financial analysts in order to provide
much of the analytical work for which we currently rely on bankers.
While we would expect you to spend at least half of your time in Topeka and
to establish your primary residence here, you would be expected to travel
extensively.
Your annual base compensation would be set at $325,000. You would receive
a $350,000 signing bonus if you begin your employment prior to September 1,
1998. In addition to this base compensation, you would participate in the
Company's short- and long-term incentive plans for officers. The short-term
plan, while subject to change, would provide you an opportunity for additional
cash compensation of up to 60% of base pay. You would also receive 30,000 stock
options and 13,500 restricted shares in 1998, under the long-term plan. In
addition, you would be enrolled in Western Resources' executive salary
continuation plan.
If you are still an employee of Western Resources (or its successor or one
of its affiliates) as of September 1, 2000, you would receive a $500,000 payout.
Likewise, if you are an employee on September 1, 2002, you would receive
$1,000,000. In the event your employment is terminated prior to these respective
dates by the Company without "Cause" or by you for "Good Reason," as those terms
are defined in the Company's Change of Control Agreements, you would receive
$500,000 if such termination is prior to September 1, 2000 or $1,000,000 if
after September 1, 2000 but before September 1, 2002.
In addition to the above, you will receive all benefits which are
customarily offered to officers who serve on the Company's Executive Council.
These include a deferred compensation plan, a 401K savings plan, a qualified
retirement plan, medical/dental insurance, life insurance, accidental death and
dismemberment insurance, short- and long-term disability protection, sick leave,
vacation and holiday leave, up to $10,000 annually to cover financial planning
and tax preparation as well as $10,000 for legal assistance in
that regard, a car allowance, personal use of a cellular phone, a club
membership, a change of control agreement, matching gift, and relocation
benefits. I have enclosed a schedule that sets forth this information in greater
detail.
Xxxx, I look forward too hearing from you on this matter. Please call if
you would like to discuss any of these matters in more detail.
Sincerely,
Xxxxx X. Xxxxxx
NAME: Xxxxxxx X. Lake
POSITION: Executive Vice President, Chief Strategic Officer
PAY GRADE: 5
COMPENSATION COMMENTS
------------ ------------
Base Salary $325,000 Paid on the 15th and last day
of the month
Short Term Incentive Yes Performance related cash award
(target of 60% of Base Salary)
Payable in first quarter
following close of performance
period
Long Term Incentive Yes Non-qualified stock options and
dividend equivalents 30,000
stock options and 13,5000
restricted shares in 1998
BENEFITS
--------
Medical/Dental Yes Noncontributory medical;
dental premium split 50/50
Life Insurance Yes 1X salary basic and AD&D -
noncontributory; Up to 4X
salary supplemental - employee
paid; premium fixed at age of
entry; supplemental fully
portable upon termination/
retirement
Qualified Retirement
Plan Elig. After
1 yr. Provides approx. 37% of xxxxx 0
year's average base pay with 20
years of service.
Savings Plan Elig. After
1 mo. 401(k) Plan allows 14% up to
$10,000 pre-tax and 4% after
tax Company matches first 6% of
base pay contributed at 50%
after 1 year of service.
Executive Salary
Continuation Plan Yes Full vesting with 15 years
service or age 65. Provides
61.7% of final 3 year's pay at
age 65. Lesser benefit payable
below age 65. Earliest
commencement is age 50,
actuarially reduced for age
below 60 and service less than
15 years. Benefit reduced by
Qualified Retirement Plan
benefit.
Deferred Compensation Yes Maximum deferral 100% of Base
Salary; 100% of cash incentive
compensation. (Long term
Incentive comp. shares not
eligible for deferral).
Vacation Yes 4 weeks
Holidays Yes 10 days total; 9 fixed, 1
floating
Sick Leave Yes 7 days per year until 12
accumulated, then accrue 14
days per year; 180 days maximum
Short Term Disability Yes Performance related cash award
(target of 60% of Base
Salary) Payable in first quarter
following close of performance
period
Long Term Disability Yes Provides 60% Base Salary up to
$5,000 per month less Social
Security; payable to age 65.
Car Allowance Yes Monthly car allowance $571,
grossed up for anticipated
taxes ($935 includes taxes).
Financial Planning Yes Up to $10,000 annually for
financial planning and tax
related expenses, and up to
$10,000 for associated legal
fees and tax preparation
expenses.
Change of Control
Agreement Yes The Western Resources Change of
Control Agreement provides
specified benefits to a select
group of management and
executive employees of the
company in order that they may
advise the Board whether a
proposed change in control
would be in the best interests
of the company and its
shareowners without being
influenced by the uncertainties
of their own situation. In
your case, the applicable
severance multiple will be
2.99.
Club Membership Yes Company paid membership to
Topeka Country Club. Company
will reimburse for monthly
dues/capital expenses.
Relocation Yes Company will pay for cost of
moving household goods and one
auto. Company will pay up to
90 days storage. You will
receive a cash payment in the
amount of 15% of the appraised
value of your Bronxville
residence (even if you choose
to keep such residence).
Matching Gift Yes The Company's matching gift
program provides matching
contributions to qualified
entities on a 2 for 1 basis of
up to $5,000 per year (maximum
match of $10,000 per year).
