June 19, 1998 PERSONAL AND CONFIDENTIAL Mr. Donald D. Davis Senior Vice President-Employee Relations CSX Transportation 500 Water Street Jacksonville, FL 32202 Dear Don: Thank you for the many courtesies during my recent visit to CSX and your letter of June 11, 1998. I am most anxious to begin my employment with CSX and look forward to seeing you on Monday, June 22, 1998, to begin what I am confident will be a very challenging and rewarding experience with CSX. This letter will confirm my understanding of your oral offer and your letter dated June 11, 1998. I understand that effective June 22, 1998, I shall join CSX as Executive Vice President of Operations. I understand that CSX is committing to and will be compensating me on an annual basis for 1998, 1999, and 2000 with a compensation package totaling $1,000,000 which includes base salary, annual bonus, and annual performance share awards as detailed below. ANNUAL BASE SALARY $300,000.00 paid yearly at the rate of $25,000.00 per month ANNUAL BONUS OPPORTUNITY 80% of annual earnings ($240,000.00); may be increased by an additional 25% if CSX exceeds its annual financial objectives. If deferred, at my option, in CSX stock until retirement/termination, a 25% premium will be paid in the form of CSX stock on any portion deferred. Donald D. Davis June 19, 1998 Page 2 ANNUAL PERFORMANCE AND 8,000 to 10,000 Shares of CSX SHARE AWARD stock to be awarded annually (actual award will depend on stock price at time of award to produce annual compensation of $1,000,000.00) ANNUAL STOCK OPTION GRANT 20,000 Shares of CSX stock options to be awarded annually. I also understand that other perquisites will include: Executive Automobile Program ($600.00 per month plus insurance) Mayo Clinic Annual Executive Physical Program Country Club Membership (initiation fees and annual dues at club of my choice) Executive Tax Preparation Program through my current provider CSX Hotel Discount Program (The Greenbrier and Grand Teton Lodge) Estate Planning Services through my current provider. In addition to the above, as an employee of CSX, I understand that I will receive all other employment benefits and be eligible to participate in all employment benefit plans ordinarily and customarily provided for senior executives of CSX at a comparable level in the organization. For purposes of my participation in the CSX Pension Plan, the three years of pension credit that I am entitled to receive pursuant to my Conrail Change of Control Agreement shall be credited to me. If my employment is terminated by CSX at any time prior to January 1, 2001, CSX shall provide me with severance pay and continuation of employment benefits until January 1, 2001 at the same level of total annual compensation and employment benefits as I was receiving immediately prior to the termination of my employment. Donald D. Davis June 19, 1998 Page 3 If I have accurately summarized the employment terms being offered to me by CSX, please sign a copy of this letter and return it to me. Very truly yours, /s/RONALD J. CONWAY ------------------- Ronald J. Conway Understood and Agreed by CSX Transportation /s/DONALD D. DAVIS ------------------ Donald D. Davis Senior Vice President- Employee Relations CSX Transportation
Employment Agreement - CSX Corp. and Ronald J. Conway
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