KANSAS CITY SOUTHERN (NYSE:KSU) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On June 17, 2019, The Kansas City Southern Railway Company (“KCSR”), a wholly-owned subsidiary of Kansas City Southern, entered into a severance agreement with the Company’s President and Chief Executive Officer Mr. Patrick J. Ottensmeyer (the “CEO Severance Agreement”), as well as new severance agreements (the “Officer Severance Agreement”) with each of Messrs. Michael W. Upchurch, Jeffrey M. Songer, Brian D. Hancock, Michael J. Naatz, and Adam J. Godderz, and Ms. Lora S. Cheatum (the “Officer Severance Agreement”, and together with the CEO Severance Agreement, the “Severance Agreements”). The Severance Agreements replace and supersede the existing employment agreements between the Company and the respective individuals. The forms of the Severance Agreements are attached as Exhibits 10.1 and 10.2 hereto and incorporated by reference herein. Each of the Severance Agreements entered is identical to the respective form in all material respects.
The Severance Agreements provide for the payment of amounts earned by the executive through the date the executive’s employment was terminated, and severance benefits if the executive’s employment is terminated by the Company without “Cause” or, in the case of the CEO, for “Good Reason” (a “General Severance”), or if within 24 months immediately following a “Change of Control,” the executive’s employment is terminated by the Company without “Cause” or by the executive for “Good Reason” (a “CIC Severance”). “Cause,” “Good Reason,” and “Change of Control” are defined in the Severance Agreement.
In the event of a General Severance, the executive will receive, subject to certain conditions, a cash severance payment equal to one (two in the case of the CEO) times the sum of (a) the executive’s base salary and (b) such executive’s “Severance Bonus” (the amount eligible to be paid to the executive, to the Company’s Annual Incentive Plan, for the calendar year in which the executive was terminated).
In the event of a CIC Severance, the cash severance payment will be equal to two (three in the case of the CEO) times the sum of (a) the executive’s base salary and (b) such executive’s “Severance Bonus” (the amount eligible to be paid to the executive, to the Company’s Annual Incentive Plan, for the calendar year in which the executive was terminated, or in the case of an executive other than the CEO, 60% of the executive’s base salary at termination, if greater).
These severance payments will be paid in substantially equal installments over twelve months. In addition, the Company will reimburse the executive, subject to certain conditions, an amount equal to the difference between the monthly COBRA premium paid by the executive for health plan continuation coverage and the monthly premium amount paid by similarly situated active executives, with the term of such payments ranging from up to twelve months in the event of a General Severance and up to eighteen months in the event of a CIC Severance, subject to other early termination provisions.
In order to receive the severance benefits described above, the executive must sign an “Arbitration Agreement” and a “Release.” The severance benefits are also contingent on the executive complying with certain confidentiality, non-disclosure, and non-competition provisions. Under the non-competition provisions, the executive agrees not to compete with the business of the company in any geographic area then served by the Company for a period of one year following the termination of his or her employment. The executive also agrees, subject to certain limitations, to not divert business from the Company, solicit business from customers or prospective customers of the Company, or solicit any employee to leave the employ of the Company.
The foregoing summary of the Severance Agreements is not complete and is qualified in its entirety by reference to the full text of the Severance Agreements>attached as Exhibits 10.1 and 10.2 hereto and incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits.
KANSAS CITY SOUTHERN Exhibit
EX-10.1 2 kcsexhibit1012019sevagreem.htm EXHIBIT 10.1 Exhibit Exhibit 10.1CEO VERSIONSEVERANCE AGREEMENTThis Agreement (\”Agreement\”) dated as of [DATE] is by and between The Kansas City Southern Railway Company,…
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About KANSAS CITY SOUTHERN (NYSE:KSU)
Kansas City Southern (KCS) is a transportation holding company with domestic and international rail operations in North America that are focused on the north/south freight corridor connecting commercial and industrial markets in the central United States with industrial cities in Mexico. The Company controls and owns The Kansas City Southern Railway Company (KCSR), a United States Class I railroad that serves a 10-state region in the midwest and southeast regions of the United States and has the shortest north/south rail route between Kansas City, Missouri and several key ports along the Gulf of Mexico in Alabama, Louisiana, Mississippi and Texas. The Company controls and owns Kansas City Southern de Mexico, S.A. de C.V. (KCSM), which serves Mexico’s principal industrial cities and three of its seaports. KCSM has the right to control and operate the southern half of the rail bridge at Laredo, Texas, which spans the Rio Grande River between the United States and Mexico.
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