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would be "fair" with petitioner if WMC were sold. Petitioner was
not satisfied with this general assurance; he wanted a long-term
employment contract in writing, with a substantial severance pay
provision in the event of WMC's sale.
From 1983 to 1989, the value of RFSL's assets increased from
$600 million to $2 billion. Petitioner believed he was primarily
responsible for building and increasing the value of RFSL and of
WMC; therefore he wanted to be adequately compensated in the event
of WMC's sale. Mr. Creighton informed petitioner that a long-term
written employment contract would be forthcoming.
In early 1989, Mr. Weyerhaeuser announced to WC's senior
management that the company had decided to liquidate its noncore
businesses. WMC and RFSL were part of WC's noncore enterprises.
Mr. Creighton and petitioner continued their discussions
regarding a long-term employment contract for petitioner. On
January 4, 1989, petitioner wrote a letter to Mr. Creighton,
memorializing petitioner's understanding of the proposed employment
contract they had discussed. Petitioner understood that the terms
of the forthcoming contract would include: (1) A provision
entitling petitioner to a $280,000 annual base salary and a
guaranteed incentive bonus of $70,000 annually over a period of 5
years; and (2) a severance package equal to 3 years of salary, or
$1 million, in the event of WMC's sale. Petitioner did not receive
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