Outline of terms for Mr. Garneau
We have come to terms with Mr. Garneau on the principal terms of his compensation arrangements, which will be reflected in an employment agreement
and which are summarized below.
Annual compensation. Mr. Garneau’s annual base salary will be $765,000 and he will be eligible to participate in the Company’s 2011 Short-Term
Incentive Plan, if and when adopted by the board of directors, pursuant to which he would be eligible to receive a discretionary incentive award ranging
between 50% and 150% of his annual base salary, based on performance targets to be established by the board of directors. In 2011, it is expected that the
target level for Mr. Garneau will be 100% of his annual base salary.
Pension. Mr. Garneau will be eligible to participate in the Company’s defined contribution pension program pursuant to which the Company will contribute
22.5% of his aggregate compensation (defined as the sum of his annual base salary and incentive awards paid under an annual incentive plan) for his 5%
contribution. He will also be eligible to participate in the 2010 AbitibiBowater Inc. Equity Incentive Plan, or the “2010 LTIP”, as determined in the board of
directors’ discretion from time to time. In 2011, it is expected that Mr. Garneau will be awarded an initial grant equivalent to 225% of his annual base
salary.
Severance. In the event of involuntary termination other than for “cause” (to be defined in the employment agreement), Mr. Garneau will be eligible to
receive a lump sum payment equal to six weeks of eligible pay (defined as the sum of annual base salary and the average of the two last incentive awards
paid under an annual incentive plan, with a maximum of 125% of target) for each year of continuous service with the Company, with a minimum of 52
weeks and a maximum of 104 weeks.
Change in control. The Company and Mr. Garneau will also enter into a change in control agreement. The change in control agreement is expected to
provide that in the event of involuntary termination (other than for “cause”) or departure for “good reason” within two years of a “change in control”,
Mr. Garneau will be entitled to receive three times his eligible pay (defined as the sum of his annual base salary and the average of the two last incentive
awards paid under an annual incentive plan, up to 125% of target), as well as other benefits to be provided for in the agreement. “Cause,” “good reason” and
“change in control” are to be defined in the agreement.
Miscellaneous. Mr. Garneau will receive a perquisite allowance of $16,000 per year, will be entitled to a club membership, will be reimbursed for expenses
under the Company’s expense reimbursement policy and will be entitled to five weeks vacation per year. Mr. Garneau will continue to be indemnified
pursuant to an indemnification agreement between the Company and Mr. Garneau entered into on December 9, 2010, the Company’s charter, by-laws and
director and officer liability insurance policies maintained by the Company.
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