EXHIBIT 10.1
Published on October 26, 2006
Exhibit 10.1
October 17, 2006
PERSONAL & CONFIDENTIAL
Thomas Walpole
Dear Tom:
Further to our recent discussions, this is to confirm to you the terms of the
expatriate offer for the position of President, Novelis Asia. You will be
located in Seoul, Republic of Korea, and you will report to me.
The terms and conditions of this expatriate assignment are as follows:
1. Starting Date And Duration
--------------------------
The effective date of your appointment is February 01, 2007. The
anticipated duration of this assignment is three years. Actual
duration will be reviewed annually.
2. Status of Employment
--------------------------
You will be an employee of and paid by Novelis, Inc. Your status is
that of an employee of Novelis, Inc. seconded to Novelis Korea
Limited. U.S. laws provide that a U.S. employee may remain outside of
the United States for an extended term and yet retain participation in
a number of the Novelis Corporation Benefit Plans and the U.S. Social
Security system.
However, in order to maintain your participation in these plans, it is
essential that Novelis retain certain customary employee management
rights as your employer during your secondment. There is no reason why
in practice this retention of rights in Novelis should in any way
interfere with your ability to work loyally and effectively for
Novelis Korea Limited.
Within the context of the Novelis Policy on International Assignments,
your status is defined as being that of a U.S. based expatriate on
assignment in the Republic of Korea.
3. Compensation Package
--------------------------
Your base compensation and benefits package is designed to provide you
with a level of income and benefits which are similar to those you
would have received in the U.S.A. in a similar position.
Page 2 of 7
(a) Position Grade
--------------
The Position Grade is Grade 47.
(b) Home Base Salary
----------------
Your home base salary will be US$ 270,000.00 per annum.
Your home base salary will be subject to review periodically
in accordance with Novelis salary administration practices in
the U.S.A.
(c) Expatriate Premium
------------------
You will receive an Expatriate Premium, which is 10% of your
Home Base Salary, net after tax per annum. This premium will
be adjusted as and when your Home Base Salary is adjusted.
(d) Location Allowance
------------------
You will receive a Location Allowance, which is 10% of your
Home Base Salary, net after tax per annum. This premium will
be adjusted as and when your Home Base Salary is adjusted.
(e) Short Term Incentive Plan (STIP)
--------------------------------
In addition to base salary, this position also includes
participation in Novelis' STI program. The target payout for
your position will be 55% of your base salary annually,
$148,500. Your 2007 STIP participation will be determined on
the basis of 12 months in this new role. The performance
measures for this plan will be built around Novelis
performance objectives for the corporation and your business
unit. Depending on the level of the results, the actual bonus
could be as high as two-times the prorated target or 110% of
your base salary or as low as zero.
(f) Novelis Corporation Long Term Incentive
---------------------------------------
You will be eligible for participation in Novelis' LTI
program, the LTIP target for your grade is $300,000 and
actual grant may be adjusted from that amount. Novelis is in
the process of developing a new plan for approval by
shareholders in October. We anticipate making a grant shortly
thereafter for a three-year performance period. It is
expected that the performance measure will be the total
shareholder return of Novelis compared to the return of the
companies in the S&P Industrials Index. Depending on the
level of the results, the actual LTI earned for a period
could be as high as two and one-half times target (would be
higher if Novelis share price increases from date of grant)
or as low as zero. Targets for each position have not yet
been established. It is anticipated that the plan design will
require the payout to be made in Novelis shares.
(g) Flexible Perquisites Program
----------------------------
As an employee on the expatriate program you will not
participate in the Novelis Flexible Perquisites Program.
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(h) Method of Salary Payment
------------------------
Your salary will be paid to you in U.S. dollars by Novelis
Corporation.
(i) Savings Plan
------------
You will be eligible to continue your active participation in
the 401(k) on the compensation paid by Novelis.
(j) Goods and Services Adjustment
-----------------------------
You will receive an allowance or have a deduction made, as
the case may be, to compensate for the differences in
relative costs of goods and services between Seoul, Republic
of Korea and the U.S.A. This allowance, or deduction, will
vary from time to time. Currently, this allowance is
approximately $37,000 while you are on single status, and
would be adjusted to approximately $74,000 when your family
moves to Korea.
4. Retirement Base
---------------
The U.S.A. is designated as your Retirement Base.
5. Pension
-------
As an employee of Novelis Corporation, you will continue to
participate in the Novelis Pension Plan during the term of your
assignment. You will not be eligible to join the pension and related
benefit plans of Korea.
6. Life and Business Travel Accident Insurance
-------------------------------------------
During your assignment, you will continue to be covered by the Novelis
Life Insurance and Business Travel Accident Plans. You may continue to
purchase optional and dependent life insurance.
Annual adjustments to your coverage and resulting contribution changes
will take into consideration any salary adjustment you might receive
during your assignment.
7. Long-Term Disability
--------------------
You will also maintain coverage under the Novelis Long Term Disability
Plan. The provisions of that plan are explained in the Novelis
benefits materials, a copy of which you already have from your annual
enrollment. The cost of this program is borne by the company.
Page 4 of 7
8. Social Security
---------------
You will continue to participate in the United States Social Security
System. If required to make contributions to Korean Social Security,
these funds will be reimbursed to you.
9. Medical and Dental Insurance
----------------------------
You (and your family, when relocated) will be covered for medical and
dental insurance under Novelis' plans for expatriates. In addition,
services of S.O.S., an independent contract firm which provides
emergency medical advice, referral and if necessary medical evacuation
will continue.
10. Automobile
----------
United States
-------------
Novelis will establish a guaranteed sale price for one personal
vehicle based on published market resale values. Upon submission of
appropriate documents, you will be reimbursed for any shortfall
between published market resale price and actual sale price. The
maximum reimbursement is limited to 15% of the published resale price.
You will be responsible for arranging and executing the sale before
leaving the United States, or before your family leaves the United
States.
Seoul
-----
Novelis Korea Limited will provide you with a company car for your
business and personal use. In line with practice in the Republic of
Korea, you will also be provided with the services of a company driver
for your business and personal use, with priority given to business
requirements.
11. Leave
-----
(a) Vacation
--------
Your entitlement will continue according to the Novelis
schedule.
(b) Home Leave
----------
The United States is designated as your Home Leave base.
(c) Travel Costs
------------
Home leaves will be granted for the duration of this
assignment. When your family arrives in Korea, you and each
member of your family will be entitled to one (1) round trip
airfare ticket between Seoul and the U.S.A. Prior to your
family's move to Korea, the company will pay for appropriate
trips as needed for family contact. The cost of the airfares
will be for the Company's account. All other incidental
expenses incurred during any home leave trip will be for your
account.
Page 5 of 7
12. Relocation
----------
It is understood that your family may not move to Seoul during the
first year of the assignment. When you move, Novelis will reimburse
you, in the most tax-effective manner, for the following expenses:
a. Upon relocation you will be entitled to business class
airfare via the most direct route between Cleveland and
Seoul, as well as reasonable travel expenses.
b. Novelis will be responsible for the cost of shipping a small
shipment of your household goods and personal effects from
Cleveland to Seoul.
When your family joins you in Seoul, Novelis will reimburse you, in
the most tax-effective manner, for the following expenses:
a. Upon relocation, business class airfares via the most direct
route between Cleveland and Seoul, as well as reasonable
expenses arising from travel for your family.
b. Novelis will provide you with a miscellaneous relocation
allowance of one (1) month's salary net of taxes. This
allowance is meant to cover incidental expenses incurred as a
result of expenses incurred as a result of your move such as,
but not limited to, carpets, drapes, curtains, fresh paint,
licensing of second car, purchase of replacement household
equipment when the electrical current is not compatible with
current equipment, etc.
c. Novelis will be responsible for the cost of storing and/or
shipping your household goods and personal effects from
Cleveland to Seoul.
13. Housing
-------
United States
-------------
Novelis will provide standard assistance to sell your home. If you
utilize the Company provided assistance with the sale of your house,
you will receive Home Country Housing Cost charge applied to your pay
for the term of this assignment. This housing charge reflects
comparable U.S. housing costs. The current housing charge is
approximately $35,000 per year. If you do not sell your house with
company assistance, this housing charge does not apply.
Seoul
-----
The full cost of appropriate fully furnished accommodations, including
utilities (gas, electric and water service), in Korea will be born by
Novelis Korea Limited for the use of you and your family during the
term of the assignment. Since the company is paying for your full
housing costs while on assignment, there is no housing allowance.
Page 6 of 7
14. Sports/Social Club
------------------
The cost of joining and maintaining a family membership in one
sports/social club in Seoul will be for Novelis Korea Limited account.
Expenses incurred at the club, other than those that are for business
entertainment will be for your account. This provision is a taxable
benefit to you and the hypothetical tax cost will also be for Novelis
Korea Limited account.
15. Professional assistance for the preparation of income tax returns
-----------------------------------------------------------------
You will be provided with the services of professional consultants for
the preparation of your personal income tax requirements in Korea and
the United States. The fees for this service will be for Novelis Korea
Limited account. Any tax liabilities you incur in Korea, over and
above what you would be required to pay from your regular employment
status with Novelis in the United States will be for the Company's
account.
16. Children's Education
--------------------
The Company recognizes the need for English-speaking schooling. When
your family moves to Korea, Novelis will pay for your children to
attend an international school, including tuition and books.
17. Compassionate Leave
-------------------
In addition to the trips outlined above, should a member of your
immediate family not residing with you in Seoul suffer
life-threatening illness, injury or death, assistance will be provided
to allow you/and your wife to be with the relative or attend to
necessary arrangements.
18. Change in Status
----------------
Should the duration of this assignment or the position itself change
significantly, then certain parts of this letter will have to be
re-discussed with you. Should the scope of the assignment change
significantly, you will be entitled to repatriation as described in
section 19.
19. Repatriation to the United States
---------------------------------
Upon completion or termination of this assignment, every effort will
be made to provide a position of equal or greater responsibility.
Should there be no suitable position available at that time within
Novelis, you and your wife will be repatriated by the company to the
United States. Your employment will be terminated in accordance with
the severance policy then in effect in the United States.
Page 7 of 7
20. Change of Control
-----------------
Novelis management is in the process of developing a change of control
policy that will take effect January 7, 2007, the content of which and
participant list is subject to approval by the Board of Directors.
Management will be recommending to the Board that the President
Novelis Asia position be covered by an individual change of control
agreement.
21. Contacts
--------
Mr. Ken Grillo will be your contact in the United States. Your contact
in the Republic of Korea will be Bernie Sanders.
Kindly indicate your acceptance of this offer by signing where indicated below
and returning the letter to me. Please make a copy for your file.
Yours Sincerely,
/s/ Martha Brooks
-----------------------
Martha Brooks
Chief Operating Officer
Novelis Corporation
Accepted: /s/ Thomas Walpole
------------------
Thomas Walpole
Dated: 10-20-2006
Copies to:
Kenneth C. Dunn
Ken Grillo
Dennis Harrish
Bernie Sanders