Offer of Employment Letter, between Kraft Foods and W. Anthony Vernon



 EXHIBIT 10.2 
 

 
 PERSONAL AND CONFIDENTIAL 
 June 17, 2009 
 Mr. Tony Vernon 
 Dear Tony,

 I am very pleased to provide you with this letter confirming the verbal offer that has been extended to you for the position of President Kraft Foods
North America located in Northfield, Illinois, USA. As discussed, we are interested in you joining Kraft Foods on August 17, 2009. This letter sets forth all of the terms and conditions of the offer. 
 Listed below are details of your compensation and benefits that will apply to this offer. 
 Annualized Compensation 
  

				
	 Annual Base Salary
	  	$	725,000
	 Target Management Incentive Plan – (90%*)
	  	$	652,500
	 Target Long-Term Incentive Plan – (150%*)
	  	$	1,087,500
	 Target Annual Equity Award
	  	$	1,475,000
	 Total Annual Target Compensation
	  	$	3,940,000

  

	*	Target as a percent of base salary. 

 Annual Incentive Plan 

 You will be eligible to participate in the Kraft Management Incentive Plan (MIP), which is the Company’s annual incentive program. Your target award
opportunity under the MIP is equal to 90% of your base salary. The actual amount you will receive may be lower or higher depending on your individual performance and the performance of Kraft Foods Inc. Your 2009 award will be payable in March 2010.
Your MIP eligibility will begin on your date of employment. 








 June 17, 2009 
 Page 2 of 4

  

 Long-Term Incentive Plan 
 You will also be eligible to participate in the Long-Term Incentive Plan (LTIP), which is the Company’s executive long-term performance share program. The current LTIP performance cycle began on January 1,
2009 and is scheduled to end on December 31, 2011. Your LTIP eligibility will begin with this performance cycle as if you were employed by Kraft Foods on January 1, 2009. Your target opportunity under the LTIP is equal to 150% of your base
salary at the beginning of the performance cycle. The actual amount you will receive may be lower or higher depending upon the performance of Kraft Foods Inc. during the performance cycle. 
 A new three-year performance cycle starts at the beginning of each year. This structure creates overlapping performance cycles. For example, your first payout under this
program will be made in the first quarter of 2012 for the 2009-2011 performance cycle. Your second award payout will be in the following year (2013) for the performance period of 2010-2012. Similarly, you will continue to be eligible to earn an
award payout each year thereafter based on the three-year trailing performance period. 
 Stock Program 
 Also, you will be eligible to participate in the Company’s stock award program. Stock awards are typically made on an annual basis, with the next award anticipated
to be granted in the first quarter of 2010. Awards are delivered as follows: 50% of equity value in restricted stock and 50% in stock options. Actual award size is based on individual potential and performance. 
 Sign-On Incentives 
 In recognition of the loss of short-term
and long-term incentives from your previous employer, upon hire, you will receive one-time sign-on incentives in the form of restricted stock as follows: 
  

			
	Equity Sign-On Incentive	    	$1,000,000 restricted stock award to vest one-third each year over a three-year period

 If prior to full vesting of the sign-on restricted shares granted per this offer letter, your employment with the
Company ends due to involuntary termination for reasons other than cause, the value of the total number of unvested shares shall vest on the scheduled vesting dates. The number of shares that you will receive will be determined based upon the fair
market value of Kraft Foods Inc. Common Stock on your date of hire. You will receive dividends on the shares during the vesting period consistent in amount and timing with that of Common Stock shareholders. The other terms and conditions set forth
in Kraft Foods’ standard Stock Award Agreements will apply. 








 June 17, 2009 
 Page 3 of 4

  

 For purposes of this offer letter, “cause” means: 1) continued failure to substantially perform the job’s
duties (other than resulting from incapacity due to disability); 2) gross negligence, dishonesty, or violation of any reasonable rule or regulation of the Company where the violation results in significant damage to the Company; or 3) engaging in
other conduct which materially adversely reflects on the Company. 
 Perquisites 
 You will be eligible for a company car allowance equal to $15,000 per year under the executive perquisite policy. You will also be eligible for an annual financial counseling allowance of $7,500. You may use any firm
of your choosing. 
 Stock Ownership Guidelines 
 You will be required to attain and hold Company stock equal in value to $4,000,000. You will have five years from your date of employment to achieve this level of ownership. Stock held for ownership determination includes common stock held
directly or indirectly, unvested restricted stock or share equivalents held in the Company’s 401(k) plan. It does not include unexercised stock option shares or unearned performance shares. 
 Other Benefits 
 Your offer includes Kraft Foods’
comprehensive benefits package available to full-time salaried employees. This benefits package is described in the enclosed Kraft Foods Benefits Summary brochure. You will be eligible for 6 weeks (30 days) of paid time off. In addition, you are
eligible for ten designated holidays. 
 You will be a U.S. employee of Kraft Foods and your employment status will be governed by and shall be construed in
accordance with the laws of the United States. As such, your status will be that of an “at will” employee. This means that either you or Kraft Foods is free to terminate the employment relationship at any time, for any reason. 

If your employment with the Company ends due to involuntary termination other than for cause, you will receive severance arrangements no less favorable than those
accorded recently terminated senior executives of the Company. 
 To assist in your relocation from Pennsylvania to Illinois, we offer relocation assistance
as outlined in Kraft Foods’ Relocation Guide. 








 June 17, 2009 
 Page 4 of 4

  

 This offer is contingent upon successful completion of our pre-employment checks, which may include a background screen,
reference check, and post-offer drug test pursuant to testing procedures determined by Kraft Foods. 
 If you have any questions, I can be reached at the
office at (xxx) xxx-xxxx or on my cell phone at (xxx) xxx-xxxx. 
 Sincerely, 
  

	
	 /s/ Karen J. May

	Karen J. May
	Executive Vice President Human Resources

 I accept the offer as expressed above. 
  

									
	 /s/ W. Anthony Vernon
	 		 	6/18/09	 		 	
	Signature	 		 	Date	 		 	

  

			
	Enclosure:	 	Kraft Foods Benefits Summary
		 	Restricted Stock Agreement
		 	Relocation Assistance Summary