Exhibit 10.1
RETENTION AND RETIREMENT AGREEMENT
THIS AGREEMENT
, is made and entered into as of July 31, 2017 by and between Caterpillar Inc. (the “Company”), and Bradley M. Halverson (the “Executive”).
RECITALS
WHEREAS
, the Company and Executive would like Executive to remain employed as its Chief Financial Officer through March 1, 2018 for, among other reasons, knowledge transfer purposes and to assist the Company with the transition of Executive’s responsibilities to a successor; and
WHEREAS
, in connection with Executive’s retirement from the Company effective March 2, 2018 (the “Retirement Date”), Executive will receive a cash payment and other benefits as described below, subject to the terms and conditions contained herein.
NOW, THEREFORE
, the Company and Executive hereby agree as follows:
I.
PAYMENTS AND BENEFITS
(a)
Payment Upon Retirement
. Subject to the conditions precedent described in Section 2.1, the Company will make a lump sum cash payment to Executive in the amount of TWO MILLION SIX HUNDRED TWELVE THOUSAND TWO HUNDRED FIFTY DOLLARS AND NO CENTS (USD$2,612,250.00) less all applicable federal, state and local tax withholding and deductions, as soon as administratively practicable after the Retirement Date, but not later than 60 calendar days following the Retirement Date.
(b)
Payment Upon Death
.
If Executive dies before the Retirement Date and provided (a) the conditions precedent described in Subsections 2.1(a) and 2.1(b) are satisfied as of Executive’s date of death and (b) the Executive’s estate executes the Release on behalf of Executive as described in Section 2.2, a lump sum cash payment shall be paid to Executive’s estate in the amount set forth in Section 1.1(a) as soon as administratively practicable after Executive’s date of death but in no event later than 75 calendar days following the end of the Executive’s U.S. tax year in which the date of death occurs, and in no event shall Executive’s estate be permitted to determine the year of payment.
1.2
Equity Compensation
. Subject to the conditions precedent described in Section 2.1, the Company will cause the entire outstanding, non-vested performance-based restricted stock unit (“PRSU”) grant made to Executive on March 6, 2017 to remain outstanding following the Retirement Date and such PRSUs will become vested only if, and to the extent that, the performance goals for
the full performance period are achieved. For purposes of this Section 1.2, the terms “performance goals” and “performance period” have the meanings ascribed to them in the award notice evidencing such PRSU grant. The shares associated with any vested stock units (less any applicable tax withholding) will be issued or delivered to Executive in accordance with the terms of the applicable award notice, the Caterpillar Inc. 2014 Long-Term Incentive Plan, and applicable law.
For avoidance of doubt, all other equity compensation granted to Executive by the Company that is outstanding as of the Retirement Date will be administered in accordance with the terms of the award notices evidencing the respective grants, equity plans and applicable law.
II.
CONDITIONS PRECEDENT; EXECUTIVE’S ONGOING OBLIGATIONS
2.1
Conditions Precedent
. The payment and benefits described in Article I of this Agreement are expressly conditioned on:
(a)
Executive not resigning his employment with the Company prior to the Retirement Date;
(b)
Executive not being terminated by the Company for Cause prior to the Retirement Date;
(c)
Executive’s termination of his employment with the Company due to his retirement effective as of the Retirement Date;
(d)
Executive executing, and not revoking, the Release as provided in Section 2.2; and
(e)
Executive complying with all requirements of this Agreement, including without limitation Sections 2.3, 2.4, 2.5, 2.6 and 2.7.
For avoidance of doubt and except as otherwise provided in Section 1.1(b), (i) if Executive’s employment is terminated for by the Company for Cause or by Executive for any reason prior to the Retirement Date; (ii) if Executive does not terminate employment with the Company effective as of the Retirement Date; (iii) if Executive fails to execute the Release; (iv) if Executive revokes the Release; or (v) if Executive violates any other provision of this Agreement, the payment and benefits described in Section 1.1 and 1.2 will not be made.
If the Executive is terminated by the Company without Cause prior to the Retirement Date, the payments and benefits described in Sections 1.1 and 1.2 of this Agreement will be made as described in Article I, provided that Executive executes the Release not later than twenty-one (21) days after the date of his termination, does not revoke the Release, and otherwise complies with all requirements of this Agreement.
For purposes of this Section 2.1, “Cause” means a willful engaging in gross misconduct materially and demonstrably injurious to the Company, and for this purpose, “willful” means an act or an
omission in bad faith and without a reasonable belief that such act or omission was in or not opposed to the best interests of the Company.
2.2
Release
. Not earlier than the Retirement Date, and not later than 21 days after the Retirement Date, Executive (or Executive’s estate, as applicable) shall execute and deliver to the Company the general release (the “Release”) in the form attached hereto as Exhibit A. Executive (or Executive’s estate, as applicable) shall have a period of seven days after executing the Release to revoke the Release by written notice of revocation given to the Company. Anything else contained herein to the contrary notwithstanding, if Executive (or Executive’s estate, as applicable), either fails to execute and deliver the Release, or revokes in writing the Release, within the time periods described above, the payment shall be immediately forfeited and Executive (or Executive’s estate, as applicable) shall have no rights under this Agreement.
2.3
Restrictive Covenants
. For twelve months following the Retirement Date, Executive will not, directly or indirectly, without the Company’s prior written consent, do any of the following:
(a) Solicit any business competitive with any Company business from any person or entity who: (i) was a Company provider or customer within the 18 months before the Retirement Date and (ii) with whom Executive had contact to further the Company’s business or for whom Executive performed services, or supervised the provision of services for, during Executive’s employment;
(b) Hire, employ, recruit or solicit any Company employee or consultant who possesses confidential information of the Company;
(c) Induce or influence any Company employee, consultant, customer or provider to terminate his, her or its employment or other relationship with the Company;
(d) Engage or participate in, or in any way render services or assistance to, any business that competes, directly or indirectly, with any Company product or service that Executive participated in, engaged in, or had Confidential Information regarding, in any geographic territory over which Executive had responsibilities, during the 18 months before the Retirement Date;
(e) Assist anyone in any of the activities listed above.
Executive may serve as a director or otherwise seek and accept employment with any business that is not a direct competitor to the Company as described in this Section 2.3, with the understanding that should Executive gain employment at other employers in the future, that the Company has conflict of interest guidelines in effect that may impact its purchasing relationships and practices with such possible employers, as stated in Caterpillar's Purchasing Practices No. 49. If Executive violates the promises in this Section 2.3 or in Section 2.4, 2.5, 2.6 or 2.7, in addition to all other remedies, Executive shall not be entitled to receive any further payments or benefits under this Agreement, and Executive agrees to repay to the Company amounts previously paid to him under this Agreement.
2.4
Non-Disparagement
. Executive agrees not to make any negative comment about or otherwise disparage the Company or those associated with it orally or in writing, directly or by implication, to any person, including the Company’s customers or agents. The Company agrees to
instruct its Executive Officers not to make any negative comment about or otherwise disparage Executive, either orally or in writing, directly or by implication to any person. Executive further agrees not to provide testimony as an expert or paid witness on behalf of a party adverse to the Company. This Section 2.4 does not prohibit Executive from testifying pursuant to a subpoena or from accepting witness fees accompanying a subpoena, and this Section 2.4 in no way limits Executive’s right to report possible violations of law or regulation to any governmental agency; to file a charge with any governmental administrative agency or participate in any such agency investigation; nor from making any disclosures that are protected under whistleblower provisions of state or federal law or regulations. This provision also does not prohibit or restrict Executive (or his attorney) from responding to any inquiry about this Agreement or its underlying facts and circumstances by the Securities and Exchange Commission (SEC) or any other governmental entity or agency such as the Equal Employment Opportunity Commission (EEOC). Nor does this Section 2.4 require Executive to notify Caterpillar regarding any such reporting, disclosure or cooperation with SEC or any other entity or agency of the government.
2.5
Cooperation and Assistance
. Except as provided for in Section 2.4 with regard to governmental reporting, Executive agrees that he will cooperate (a) with the Company in the investigation, prosecution or defense of any potential claims or concerns regarding the business of the Company about which he has relevant knowledge, including by providing truthful information and testimony as reasonably requested by the Company, and (b) with all government authorities on matters pertaining to any investigation, litigation or administrative proceeding concerning the Company. The Company will in turn cooperate and assist Executive with addressing any such matters and will reimburse Executive for any reasonable travel and out-of-pocket expenses that he incurs in providing such cooperation. Except as provided for in Section 3.9 with regard to governmental reporting, Executive further agrees to inform Employer of all subpoenas, correspondence, telephone calls, and requests for information, inquiries or other contacts he may receive from third parties, concerning any fact or circumstances known to him during his employment. Executive agrees to inform Caterpillar within three (3) business days of each such contact. All notices and other communications Executive may provide Employer as required to accomplish this obligation shall be in writing and shall be given by Executive in hand or by electronic mail delivery shall be deemed effective as of the date delivered, and shall be addressed as follows: Chief Legal Officer, Law & Public Policy Division, Caterpillar Inc., 100 N.E. Adams Street, Peoria, IL 61629-7310.
2.6
Acknowledgment of Obligations
. Executive acknowledges that during his employment, Executive developed and has been exposed to trade secrets or confidential information regarding the Company, including business strategies, operations, and actual and potential customers and suppliers (“Confidential Information”). The Company considers such Confidential Information to be valuable and proprietary. Executive agrees that after any termination or retirement date that he remains bound by the Intellectual Property Agreement that Executive signed during his employment with the Company. Executive acknowledges that Except as provided for in Section 2.4 with regard to governmental reporting, he is under a continuing obligation to keep confidential, not disclose and not use any confidential information except as specifically authorized by the Company. Executive understands that he may be required to sign an exit statement upon any separation from employment that reaffirms these obligations regarding trade secret and confidential information.
Should Executive gain employment at other employers in the future, he understands that the Company has conflict of interest guidelines in effect that may impact its purchasing relationships and practices with such possible employers, as stated in Caterpillar’s Purchasing Practices No. 49.
2.7
Disclosure
. Executive acknowledges that he has reviewed Caterpillar’s Worldwide Code of Business Conduct (the “Worldwide Code”) and understands his obligations to the Company under the Worldwide Code. Executive agrees that he has been given an adequate opportunity to advise the Company, and that he has fully and truthfully advised the Company, of any facts that he is aware of that constitutes or might constitute a violation of the Worldwide Code, any other Company policies, or any ethical, legal or contractual standards or obligations of the Company. If Executive learns of such facts in the future, Executive agrees to report them to the Company by contacting the Company’s Office of Business Practices.
III.
MISCELLANEOUS PROVISIONS
3.1
References to “Company”
. For purposes of Sections 2.1, 2.3, 2.4, 2.5, 2.6, 2.7, 3.2, 3.3, 3.4 and 3.5, the term “Company” as used therein shall also include the corporate parents of the Company as well as any and all subsidiaries and affiliates of the Company.
3.2
Successors
. All obligations of the Company under this Agreement shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect merger, consolidation, purchase of all or substantially all of the business and/or assets of the Company or otherwise.
3.3
Section 409A of the Code
. Executive understands and agrees that the payment made pursuant to this Agreement does not constitute deferred compensation for purposes of Section 409A of the Internal Revenue Code of 1986 and its accompanying regulations (“Section 409A”). Specifically, the payment will be made in a manner that will cause it to be a short-term deferral as described in Treas. Reg. § 1.409A-1(b)(4) and the Company will treat and report such payment in a manner consistent with the preceding. This Agreement shall be implemented and construed in a manner to give effect to the foregoing. In no event whatsoever shall the Company be liable for any tax, interest or penalties that may be imposed on Executive pursuant to Section 409A for any reason. The Company shall not have any obligation to indemnify or otherwise hold Executive harmless from any such taxes, interest or penalties, or liability for any damages related thereto.
3.4
Other Compensation and Benefits
. Executive understands and acknowledges that, except as provided for by the terms of this Agreement, all Company compensation and benefit plans, policies and programs that provide for compensation or benefits post-employment shall be administered pursuant to their terms, provisions, conditions and administrative practices and policies, as interpreted and applied by the Company or the plan administrator(s) as applicable, based on Executive’s termination of employment (including Executive’s death). For avoidance of doubt, Executive’s execution of this Agreement does not make Executive eligible for any post-employment or retirement-type benefits such as pension and retiree healthcare benefits from the Company. Executive’s eligibility for such benefits, if at all, shall be determined pursuant to the terms,
provisions, conditions and administrative practices of the Company’s existing plans, policies and programs.
3.5
Indemnification
.
The Company shall defend and indemnify Executive with respect to Executive’s actions in the performance of Executive’s duties arising from his employment and performance as an officer and employee through the Separation Date to the fullest extent permitted by the Company’s Bylaws and supporting policies, or any applicable indemnification agreement that is in effect from time to time.
3.6
Governing Law
. This Agreement shall be interpreted and enforced in accordance with the laws of the State of Illinois except insofar as an interpretation or enforcement issue is governed by federal law.
3.7
Judicial Modification and Severability
. If any of this Agreement’s provisions is determined to be unenforceable, Executive and Company both agree that such provision should be modified so that it is enforceable or, if modification is not possible, that it should be severed, and the enforceability of the remaining provisions will not be affected by such modification or severance.
3.8
Amendment
. This Agreement may be amended only by written agreement of Executive and the Company.
3.9
Consulting an Attorney
. Executive understands that the Company has advised him to consult with an attorney prior to signing this Agreement, but that any legal consultation is at Executive’s own expense. Executive agrees that he has had an adequate opportunity to consult with an attorney, Executive has read and understands this Agreement, and Executive is voluntarily signing this Agreement.
3.10
Non-Admissions
.
The fact and terms of this Agreement are not an admission by the Company or by the Executive of liability or other wrongdoing under any law.
3.11
Execution of Agreement by Parties
. Upon execution of this Agreement, Executive and the Company signify their agreement with the terms and conditions of this Agreement.
|
|
|
|
|
|
EXECUTIVE
/s/ Bradley M. Halverson
Print Name: Bradley M. Halverson
Date: July 31, 2017
|
COMPANY
/s/ Cheryl H. Johnson
Print Name: Cheryl H. Johnson
Title: Chief Human Resources Officer
Date: July 31, 2017
|
|
|
|
EXHIBIT A
GENERAL RELEASE AGREEMENT
|
|
|
|
1.
|
In consideration of the cash payments made to Bradley M. Halverson (“Executive”) pursuant to a Retention and Retirement Agreement (the “Agreement”) dated as of July 31, 2017 Executive hereby waives and releases the following parties (the “Released Parties”) from all claims that Executive may have, known or unknown, against them:
|
(a)
Caterpillar Inc. (the “Company”);
|
|
|
|
(b)
|
The Company’s subsidiary and affiliated companies;
|
|
|
|
|
(c)
|
The Company’s predecessors; and
|
|
|
|
|
(d)
|
All of the above companies’ agents, directors, officers, employees, representatives, fiduciaries, shareholders, successors and assigns.
|
Executive acknowledges that prior to execution of the Agreement he had no right to receive the cash payment and benefits provided for by the Agreement, and that under the terms of the Agreement his receipt of, and right to receive the payment and benefits is expressly conditioned upon his executing, and not revoking, this Release.
|
|
|
|
2.
|
Executive’s release of claims includes all claims related to his employment with the Company (and all subsidiaries and affiliates of the Company) or the termination of his employment. For example, Executive’s release includes claims based on:
|
|
|
|
|
•
|
Any federal statute, including: the False Claims Act (including any right to share in any recovery by the United States government); Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1866; the Civil Rights Act of 1874; the Age Discrimination in Employment Act (ADEA); the Equal Pay Act; the Americans with Disabilities Act; the Employee Retirement Income Security Act of 1974; and the National Labor Relations Act;
|
|
|
|
|
•
|
Any state statute, including discrimination and whistleblower statutes;
|
|
|
|
|
•
|
Any express or implied contract between the Company (and/or any subsidiary or affiliate of the Company) and him;
|
|
|
|
|
•
|
Any tort, such as defamation, misrepresentation, infliction of emotional distress, or fraud;
|
|
|
|
|
•
|
Any other legal theory.
|
|
|
|
|
3.
|
This Agreement’s general release provisions exclude: claims arising after Executive signs this Agreement; claims for breach of this Agreement and any claims that cannot be waived under law, including the right to receive payment for accrued and unused vacation pay. In addition, this Agreement’s general release provisions exclude claims for defense and indemnification as provided for in this Agreement and claims for coverage under Employer’s Directors and Officers insurance policies applicable to Executive’s duties arising from employment with the Company. Neither shall the release provisions above nor anything else in this Agreement limit Executive’s rights to: (i) obtain any vested and nonforfeitable benefits under any retirement plan; (ii) preclude him from exercising any conversion or continuation coverage rights he may have under any welfare benefit plan; or to (iii) file a charge with any administrative agency (such as the U.S. Equal Employment Opportunity Commission or a state fair employment practices agency), provide information to an agency, or otherwise participate in an agency investigation or other administrative proceeding. However, Executive is relinquishing all rights to receive any money or other individual relief based on any agency or judicial decision, including class or collective action rulings, except that Executive may receive money properly awarded by the U.S. Securities and Exchange Commission as a securities whistleblower incentive.
|
|
|
|
|
4.
|
Execution and Revocation of Release
. Executive must execute this Release, and deliver it to the Company, not earlier than the date on which his employment is terminated and not later than twenty-one (21) days after such date. Executive may revoke this Release by a written notice of revocation at any time within seven (7) days after executing and delivering it. The executed Release, and any written notice of revocation, shall be delivered either by personal delivery, or by certified first class mail, with proper postage prepaid (which shall be effective as of the date of mailing), and in either case shall be addressed to the following person:
Chief Legal Officer; Caterpillar Inc., 100 NE Adams Street, Peoria, IL 61629
.
|
Executive acknowledges that if he either fails to execute and deliver this Release as described above, or revokes this Release, the payments and benefits provided under the Agreement will be forfeited in their entirety. Executive acknowledges that he has been given a period of at least twenty-one (21) days to consider whether to execute this Release, has been advised by the Company to consult with legal counsel at his own expense regarding this Release and the Agreement, and is entering into this Release and the Agreement knowingly, voluntarily, and with full knowledge of their significance and has not been coerced, threatened, or intimidated into signing this Release or the Agreement.
Exhibit 99.1
August 1, 2017
Caterpillar contact:
Bridget M. Young
Global Government & Corporate Affairs
309-675-8463
young_bridget_m@cat.com
FOR IMMEDIATE RELEASE
Caterpillar Group President and Chief Financial Officer Brad Halverson to Retire in 2018; Company to Launch External Search for New CFO
PEORIA, Ill. — Concluding a career spanning more than three decades with the company, Caterpillar Inc. (NYSE: CAT) today announced that Group President and Chief Financial Officer (CFO) Brad Halverson has elected to retire in early 2018.
“As a second generation Caterpillar employee, Brad’s roots began well before he joined the company, and on behalf of the extended Caterpillar family, I want to thank him for his many years of service,” said Caterpillar CEO Jim Umpleby. “Brad assumed the CFO role just as we faced an unprecedented downturn in our business. The company undertook significant restructuring in response to the downturn, and Brad played a critical role in that process, helping the company maintain a strong balance sheet and good cash flow. Brad also provided strong leadership for Caterpillar Financial Services Corporation, which maintained strong financial metrics, including past dues, writes offs and credit losses during the downturn,” Umpleby added.
The company will launch a global, external search to fill the CFO position, and Halverson’s decision to continue working into early 2018 will help ensure a smooth transition for the CFO position.
“I've had a great career with Caterpillar, and I'm blessed and fortunate to be in a position to retire and spend more time with my family – my wife Mindy, my children and grandchildren,”
Halverson said. “I will remain active in community events and will continue to support the various Peoria area charities and organizations that are important to me and my family.”
Prior to becoming CFO, Halverson served two years as vice president of the Finance Services Division, and before that position, he was the corporate controller.
Halverson joined Caterpillar in 1988 as an accountant. In 1993, he moved to Geneva, Switzerland, to become a strategy and planning consultant. He went on to become controller in Europe, responsible for Caterpillar's financial reporting in Europe, Africa and the Middle East. Halverson returned to the United States in 1996 to manage general accounting and financial systems. From 1998 until 2002, Halverson was the CFO of Caterpillar's Engine Division and was the director of Mergers & Acquisitions.
Halverson graduated with a Bachelor of Science degree in Accounting in 1982, and earned an Executive MBA in 1996, both from the University of Illinois. He is a certified public accountant (CPA) and member of the American Institute of CPAs.
Halverson serves on the Sysco Corporation Board of Directors and is a member of the U.S. Chamber of Commerce Board. He also serves on the Dean’s Business Council for the University of Illinois at Urbana-Champaign College of Business and the OSF St. Francis Medical Center Community Advisory Board. Halverson is the Immediate Past Chairman of the Easter Seals of Central Illinois Board of Trustees, and he is the current Treasurer of the Easter Seals Foundation Board of Trustees. In addition, Halverson is the Chairman of the Illinois High School Association State Basketball Tournament Steering Committee.
About Caterpillar
For more than 90 years, Caterpillar Inc. has been making sustainable progress possible and driving positive change on every continent. Customers turn to Caterpillar to help them develop infrastructure, energy and natural resource assets. With 2016 sales and revenues of $38.537 billion, Caterpillar is the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The company principally operates through its three product segments - Construction Industries, Resource Industries and Energy & Transportation - and also provides financing and related services through its Financial Products segment. For more information, visit caterpillar.com. To connect with us on social media, visit caterpillar.com/social-media.
Forward-looking Statements
Certain statements in this press release relate to future events and expectations and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “believe,” “estimate,” “will be,” “will,” “would,” “expect,” “anticipate,” “plan,” “project,” “intend,” “could,” “should” or other similar words or expressions often identify forward-looking statements. All statements other than statements of historical fact are forward-looking statements, including, without limitation, statements regarding our outlook, projections, forecasts or trend descriptions. These statements do not guarantee future performance and speak only as of the date they are made, and we do not undertake to update our forward-looking statements.
Caterpillar’s actual results may differ materially from those described or implied in our forward-looking statements based on a number of factors, including, but not limited to: (i) global and regional economic conditions and economic conditions in the industries we serve; (ii) commodity price changes, material price increases, fluctuations in demand for our products or significant shortages of material; (iii) government monetary or fiscal policies; (iv) political and economic risks, commercial instability and events beyond our control in the countries in which we operate; (v) our ability to develop, produce and market quality products that meet our customers’ needs; (vi) the impact of the highly competitive environment in which we operate on our sales and pricing; (vii) information technology security threats and computer crime; (viii) additional restructuring costs or a failure to realize anticipated savings or benefits from past or future cost reduction actions; (ix) failure to realize all of the anticipated benefits from initiatives to increase our productivity, efficiency and cash flow and to reduce costs; (x) inventory management decisions and sourcing practices of our dealers and our OEM customers; (xi) a failure to realize, or a delay in realizing, all of the anticipated benefits of our acquisitions, joint ventures or divestitures; (xii) union disputes or other employee relations issues; (xiii) adverse effects of unexpected events including natural disasters; (xiv) disruptions or volatility in global financial markets limiting our sources of liquidity or the liquidity of our customers, dealers and suppliers; (xv) failure to maintain our credit ratings and potential resulting increases to our cost of borrowing and adverse effects on our cost of funds, liquidity, competitive position and access to capital markets; (xvi) our Financial Products segment’s risks associated with the financial services industry; (xvii) changes in interest rates or market liquidity conditions; (xviii) an increase in delinquencies, repossessions or net losses of Cat Financial’s customers; (xix) currency fluctuations; (xx) our or Cat Financial’s compliance with financial and other restrictive covenants in debt agreements; (xxi) increased pension plan funding obligations; (xxii) alleged or actual violations of trade or anti-corruption laws and regulations; (xxiii) international trade policies and their impact on demand for our products and our competitive position; (xxiv) additional tax expense or exposure; (xxv) significant legal proceedings, claims, lawsuits or government investigations; (xxvi) new regulations or changes in financial services regulations; (xxvii) compliance with environmental laws and regulations; and (xxviii) other factors described in more detail in Caterpillar’s Forms 10-Q, 10-K and other filings with the Securities and Exchange Commission.
