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U.S.
Executive Offices
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P.O.
Box 0445
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155
Chestnut Ridge Road
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Montvale,
NJ 07645
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April
7,
2008
Mr.
David
Pannier
Trane
Inc.
1
Centennial Avenue
Piscataway,
NJ 08855
Dear
David,
I
am
pleased to present you with an offer of employment to join Ingersoll Rand (IR)
as Senior Vice President and Sector President, Trane Residential reporting
to
me. Your official date of employment (i.e. your hire date) will be effective
on
the consummation of Ingersoll Rand’s acquisition of Trane (the “Closing”) and
this offer is contingent upon such Closing. At the first meeting of the
Ingersoll Rand Board of Directors (the “Board”) following your hire date, you
will be presented for election as a Senior Vice President and Officer of
Ingersoll-Rand Company Limited (the “Company”). We look forward to your
accepting this offer as described below and becoming a part of our
team.
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1.
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This
position will be located in Tyler,
Texas.
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2.
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Your
starting base salary will be at an annual rate of U.S. $325,000 paid
monthly. Your base salary will be reviewed on an annual basis
approximately one year from your hire date. Any base salary increases
will
be based on your performance, prevailing market data and are subject
to
approval by the Compensation Committee of the
Board.
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3.
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This
position is an “incentive eligible” position, which means you will be
eligible to participate in the IR annual cash incentive program.
Your
annual cash incentive opportunity is targeted at 65% of base salary.
The
actual award that an individual may receive can be higher or lower
than
the targeted amount depending upon individual performance and the
performance of the Company. With respect to performance year 2008
(“Performance Year 2008”), your IR annual incentive cash award will be
prorated for the period from the date of the Closing and ending on
December 31, 2008, and will be based on your individual performance,
the
performance of the TRS sector and IR performance in
general.
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4.
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As
soon as administratively practical following the Closing, you will
receive
an award of Ingersoll Rand stock options, under the IR Incentive
Stock
Plan, as determined by the Compensation Committee of the Board. This
award
of IR stock options will be of equivalent Black Scholes value (as
determined by IR) to recent annual stock option awards you have received
from Trane. Consistent with the acquisition agreement, this award
is
intended to replace the stock option award that you would have received
from Trane in February 2008, but did not due to the pending
acquisition.
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David
Pannier
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2
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April
7, 2008
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Starting
with Performance Year 2008, you will be eligible to receive stock option awards
in February 2009 and forward under the Incentive Stock Plan as administered
by
the Compensation Committee of the Board. Your annual opportunity is currently
targeted at a Compensation Committee-determined value of the stock option equal
to approximately $580,500 based on Black Scholes value. Actual stock option
awards are contingent on and variable with your performance, the Company’s
financial performance and the estimated value of IR stock options at the end
of
the applicable performance period. The Company reserves the right to amend
annual targets, in line with evolving market and business conditions and
prevailing practices.
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5.
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As
you know, the Trane Long Term Incentive Plan (LTIP) will be paid
out as of
the closing date, which we expect to be in the second quarter. For
the
remaining months of 2008, you will continue in the LTIP (or a mirror
image
of it) at the same target level of annual compensation opportunity,
i.e.,
120% of base salary, but based on new Ingersoll Rand performance
metrics
currently being developed. Integration teams have been formed to
work on
the development of compensation programs for the combined entity,
which
are expected to be in place by January 1,
2009.
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6.
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You
will be eligible to participate in a deferred compensation plan,
which
will give you the opportunity to defer almost all of your annual
cash
incentive award and LTIP award and up to 50% of your base salary
on a
pretax basis, to the extent permitted under the terms of the EDCP
and
applicable law. Information regarding the deferred compensation plan
will
be sent to you and a representative from our vendor, MullinTBG, will
contact you to explain this program after you begin your employment.
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7.
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Following
the Closing, and possibly into calendar year 2009, integration teams
from
both IR and Trane will be working on merging and/or aligning the
IR and
Trane benefit programs. Because we want you as an employee of the
IR group
of companies, we will, to the extent possible and feasible, take
all
actions necessary to transition you to the IR benefit plans as soon
as
reasonably possibly; provided that, for a period of one year following
the
closing your employee benefits, base salary and long and short-term
bonus
compensation opportunity (excluding equity compensation) in the aggregate,
will be no less favorable than the employee benefits, base salary
and long
and short term bonus compensation opportunity (excluding equity
compensation) provided to you by Trane immediately prior to the Closing.
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8.
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After
Closing, you will participate in IR benefits arrangements, for which
you
are eligible and to the extent you do not continue to participate
in a
similar Trane plan; provided, however, in no event will you participate
in
benefit plans and arrangements maintained by Trane and IR of the
same
type, or providing the same or similar benefits, at the same time
(including, without limitation, with respect to
vacation benefits).
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9.
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As
an elected officer of the Company, you will be eligible to participate
in
the Elected Officer Supplemental Program (EOSP). The EOSP is a
non-qualified defined benefit pension plan that substantially augments
IR’s qualified pension plan. A brief summary is
enclosed.
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10.
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You
will be provided a company automobile in accordance with our Company
car
policy, which in your case provides an executive automobile with
a
purchase value of up to $60,000. A
portion
of the cost for these services is imputed to your annual income and
will
be included in your statement of gross income for tax purposes each
year.
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David
Pannier
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3
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April
7, 2008
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11.
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You
will be eligible for the Company’s Executive Health Program, a copy of
which is enclosed.
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12.
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As
an elected officer of the Company, you are eligible for financial
and
retirement counseling services through AYCO, a division of Goldman-Sachs.
This service includes investment strategy and tax filing assistance.
A
portion
of the cost for these services is imputed to your annual income and
will
be included in your statement of gross income for tax purposes each
year.
A representative from AYCO will contact you after your employment
date to
explain the services.
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13.
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You
will continue to be eligible for change in control benefits under
your
Trane Change in Control Agreement currently in effect, but, if a
Change in
Control of IR occurs you will be entitled to the greater of the benefits
under your current agreement or those under the standard IR Change
in
Control Agreement for similarly situated employees; provided, however,
in
no event will you receive benefits under both agreements for the
same
termination.
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David,
we
all believe that you will make a significant contribution in this continued
role
as Sector President and look forward to your future contributions to Ingersoll
Rand. This offer of employment is contingent upon the satisfaction of several
items, which are identified on the attached “Conditions of Offer” form. To
accept this offer, please sign the “Conditions of Offer” form and return it to
Marcia Avedon.
If
you
have any questions regarding your compensation and benefits, please contact
Marcia Avedon (201-573-3563), Rob Butler (201-573-3137) or myself.
Sincerely,
Herbert
L. Henkel
Chairman,
President and
Chief
Executive Officer
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cc:
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Marcia
Avedon
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Rob
Butler
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Attachments
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David
Pannier
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4
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April
7, 2008
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Conditions
of Offer
This
offer is contingent upon the following:
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1.
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The
finalization of Ingersoll Rand’s acquisition of Trane (i.e., the closing
of the sale).
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2.
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Understanding
and agreement that your employment is to be “at will”. This means that you
or the Company, for any reason or no reason, may terminate employment
and
that nothing in this offer is intended to create a contract of employment
for any period of time.
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3.
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Understanding,
agreeing and signing and returning the Code of Conduct and Proprietary
Information forms.
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4.
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Your
acceptance and execution of this offer in the space provided below,
and
its receipt by Ingersoll Rand no later than one week following the
date of
the offer.
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CANDIDATE
ACCEPTANCE
I
accept
your offer of employment with Ingersoll Rand, as Senior Vice President and
Sector President, Trane Residential and agree to the conditions hereon and
in
the offer letter.
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David
Pannier
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Date
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