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Employment Agreements. The Retained Executives’ entitlement to
the Termination Awards and SRP Cashouts under the 1990 Employment
Agreements gave them additional leverage in their negotiations
with Schneider over the terms of their future employment.
From July 23 to July 25, 1991, Schneider’s chairman met with
the Retained Executives and attempted to convince them to remain
in the employment of, and enter into new agreements with,
petitioner. The Retained Executives were presented with a
compensation proposal containing an “integration long-term
incentive plan” (Integration LTIP), which required revocation of
the 1990 Employment Agreements and granted a performance award of
up to 600 percent of each executive’s salary.
The Retained Executives reacted negatively to this proposal,
concluding in a July 29 meeting that the proposal attached too
much risk to future compensation payments, given the Termination
Award and SRP Cashout payments guaranteed to each executive under
the 1990 Employment Agreements. As one of the Retained
Executives remarked at this meeting: “a bird in the hand is worth
two in the bush”.
That same day, petitioner’s chairman wrote Schneider’s
chairman explaining that the Retained Executives were
disappointed with Schneider’s compensation proposal and
suggesting that the “golden parachutes” contained in the 1990
Employment Agreements be cashed out as a prerequisite to entering
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