Document:

Exhibit 10.3

 

January 21, 1999

 

Personal

 

Mr. W. Hunt

Hexcel Composites Ltd

Duxford

Cambridge

CB2  4QD

 

Dear Bill:

 

Your pension benefits

 

The pension provision made for you by Ciba was set out in a letter
dated 19 August 1992 from Mr. J.S. Fraser.  The purpose of this letter is to confirm that
Hexcel Composites Limited (the “Company”) is pleased to maintain your existing
pension promise as set out in Mr. Fraser’s letter.  This letter also clarifies your pension
promise and your life assurance and ill-health retirement benefits.

 

Retirement at Normal Retirement Date

 

Your Normal Retirement Date is your 65th birthday.  On retirement at this date you will receive
an annual pension of two-thirds of your Pensionable Salary over the year prior
to retirement.  Pensionable Salary is
your basic salary plus any further earnings which are pensionable under the
terms of the Hexcel Composites Limited Pension Scheme (the “HCL Scheme”).  For the avoidance of doubt your Pensionable
Salary will not be restricted by the earnings cap imposed by the Finance Act
1989.

 

Early Retirement from age 60

 

At your option, you may retire from the Company’s service on or after
your 60th birthday.  In such
circumstances you will receive an annual pension of two-thirds of your
Pensionable Salary over the year prior to retirement.

 

Leaving service benefits

 

On leaving service you will be entitled to an annual pension deferred
to your Normal Retirement Date.  The
annual deferred pension will be 1/720th of your Pensionable Salary
over the year prior to leaving service multiplied by the number of months from
the date

 

1

 

you first joined a Ciba-Geigy pension scheme to the date of leaving
service (up to a maximum of 480 months).

 

This deferred pension is to be increased over the period between the
date of leaving and your Normal Retirement Date by the lesser of the increase
in the Retail Prices Index and 5% per year compound over this period.

 

If you choose to receive your deferred pension before your Normal
Retirement Date then a reduction will be applied for early payment on the same
basis as applies to deferred pensions in the HCL Scheme at the time of your
retirement.

 

Death after retirement (or after leaving service but before Normal
Retirement Date)

 

On death after retirement (or after leaving service but before Normal
Retirement Date) your widow will receive an annual pension of 60% of your own
pension.

 

Death in service

 

A lump sum of three times your Pensionable Salary will be paid.

 

An annual pension will be paid to your widow of 40% of the Pensionable
Salary earned over the year prior to your death.

 

Retirement on ill-health grounds

 

If, having obtained medical evidence, the Company decides that you are
unable to carry out your normal duties as a result of ill-health or disability
then you will be granted an annual pension of two-thirds of your Pensionable
Salary earned over the year prior to retirement.  On death after ill-health retirement an
annual pension of 60% of your own annual pension will be payable to your widow.

 

Lump sum option

 

On retirement you may take part of your benefits in lump sum form by
giving up part of your pension entitlement. 
Under current legislation, part of your benefits from the HCL Scheme and
your Standard Life personal pension may be taken as a lump sum free of
tax.  If you decide to take part of your
benefits as a lump sum then your pension promise will be reduced on the same
basis as applies as at the date of your retirement to members of the HCL Scheme
exchanging pension for a lump sum.

 

Any reduction in your pension promise as a result of taking a lump sum
will be ignored in calculating the widow’s pension promise in respect of death
after retirement.

 

2

 

Your contributions

 

You will be required to contribute towards your pension arrangements at
the same percentage of your Pensionable Salary as is applicable to members of
the HCL Scheme from time to time (currently 4% of Pensionable Salary).  Since your benefits are based on Pensionable
Salary without restriction for the earnings cap, your contributions will also
be based on unrestricted Pensionable Salary. 
Your pension contributions will be paid to the HCL Scheme, subject to
Inland Revenue maximum contribution limits.

 

Post retirement increases

 

The pension payable to you (and the pension payable contingently to
your wife) in accordance with your promise will be increased annually in
payment by the lesser of 5% and the increase in the Retail Prices Index.  Further discretionary increases may be
provided if the Company believes this would be consistent with discretionary
increases awarded to pensioners of the HCL Scheme.

 

Provision of your benefits

 

Your pension promise will be provided from the aggregate of the following
sources:

 

1.               Your benefits from your Standard Life
personal pension in respect of contributions paid prior to 1 January 1998
when you joined the HCL Scheme.

 

2.               Your benefits in respect of the transfer
value paid from the Ciba Pension Scheme to the HCL Scheme in January 1998.  These benefits are set out in the appendix to
this letter.

 

3.               Your benefits in respect of pensionable
service in the HCL Scheme from 1 January 1998.  These will be the Inland Revenue maximum
benefits in respect of such service which, under current legislation, will be
the lesser of:

 

•                  1/30th
of the earnings cap for each year of service; and

 

•                  2/3rds
of the earnings cap less your benefits under 1 and 2 above.

 

4.               Direct payment of benefits from Hexcel
Composites Limited to the extent, if any, that 1, 2 and 3 above are
insufficient to provide the promised benefits. 
Any proceeds of life assurance and disability insurance policies
affected by the Company on your behalf will be used to finance such direct
payments – i.e., such proceeds will be used to finance your benefit promise and
not payable in addition to it.

 

5.               This letter is executed as a deed poll
with the intention of allowing your wife to benefit from the promises made in
this letter.

 

3

 

Yours sincerely

 

	
   /s/ Stephen C. Forsyth

  	
   

  	
   /s/ Ira J. Krakower

  
	
  S C Forsyth, Director

  	
  I J Krakower, Director

  

 

executed as a deed poll for and on behalf of Hexcel Composites Limited

 

This is to confirm that Hexcel Corporation (which shall include its
successors and assigns) irrevocably guarantees all payments due William Hunt or
his wife pursuant to paragraph 4 above to the extent that Hexcel Composites
Limited fails for whatever reason to do so, in whatever form, including lump
sum, as required to be paid by Hexcel Composites Limited.

 

 

	
  /s/ John J. Lee

  	
   

  	
   

  
	
  John J. Lee

  	
   

  
	
  Chairman & CEO

  	
   

  

 

executed as a deed poll by Hexcel Corporation

 

 

Countersigned by W. Hunt to confirm his acceptance that this letter
replaces the letter of 19 August 1992 from Mr. J.S. Fraser of Ciba.

 

	
  /s/ William Hunt

  	
   

  	
   

  
	
  W. Hunt

  	
   

  

 

4

 

Appendix to letter dated 21 January 1999

 

Mr. W. Hunt

 

Benefits from the HCL Pension Scheme in respect of the transfer value
received from the Ciba Pension Scheme in January 1998.

 

•                  A pension of
£39,900 per annum as at 1 January 1998, payable from your Normal
Retirement Date (i.e. your 65th birthday).

 

•                  A reduced
pension of £29,900 per annum as at 1 January 1998 on early retirement at
age 60.

 

•                  On retirement
between ages 60 and 65 the pension would be calculated pro rata.

 

•                  The pension as
at 1 January 1998 will be increased in line with the Retail Prices Index
over the period from 1 January 1998 to retirement.

 

•                  The pension will
increase in payment in line with normal HCL Scheme increases (i.e. in line with
the Retail Prices Index subject to an annual maximum increase of 5% and subject
to possible further discretionary increases if inflation exceeds 5% in a
particular year).

 

•                  On death, either
before or after retirement, a widow’s pension of 60% of the pension (including
increases up to the date of death) is payable.

 

5Exhibit
10.3

 

Director Compensation Summary 

 

Non-management directors
receive an annual retainer of $150,000 per year, $60,000 of which will be paid in cash and $90,000 of which is paid in stock units or
restricted stock (as described below), though a director may elect to receive up to 100
percent his annual retainer in stock units or restricted stock. Non-management directors
also received a one-time cash award of $25,000
upon their election, concurrent with the closing of the Company’s initial
public offering. The Chairman of the Board receives an additional $25,000 annual retainer, the Chairman
of the Audit Committee receives an additional $20,000 annual retainer and the
Chairman of each of the
Compensation Committee, the Nominating and Governance Committee, the Finance
Committee and the Risk Oversight
Committee receives an additional $10,000 annual retainer. Members of the Audit
Committee receive an additional $10,000 annual retainer and members of each of
the Compensation Committee, the Nominating
and Governance Committee, the Finance Committee and the Risk Oversight Committee receive an
additional $5,000 annual retainer. The Company will generally not pay a fee for
attendance at board or committee meetings, though the Chief Executive Officer
has the discretion to pay
attendance fees of $2,000 for extraordinary or special meetings. 

 

An initial (one-time)
grant of restricted shares with
a value of $100,000 was awarded to each non-management director upon his
initial election upon closing of the IPO. These restricted shares will vest on
the day immediately prior to the third annual shareholders meeting at which
directors are elected following the grant of the shares.

 

Retainer equity awards were granted upon completion of the IPO and
will be granted annually
thereafter (usually on the date of the Company’s
annual shareholders’ meeting) in the form of stock units until the share ownership guidelines set
forth in the next paragraph have
been met. The first 10,000
stock units awarded to each director will become non-forfeitable on the day
immediately prior to the first annual shareholders meeting at which directors
are elected following the grant of the units. The issuance of Common Shares for
these units will be mandatorily deferred until six months after termination of the director’s service on the Board
of Directors. After the share ownership guidelines discussed below are met,
directors may elect to receive their annual retainer equity award in the form
of either restricted shares that vest on the day immediately prior to the first
annual shareholders meeting at which
directors are elected following the grant of the shares, or stock units that
become non-forfeitable on the day immediately prior to the first annual
shareholders meeting at which directors are elected following the grant of the
units, with the issuance of Common Shares deferred to a later date chosen by
the director. Stock units cannot be sold or transferred until the Common Shares
are issued. Dividend equivalents will be credited to stock units and reinvested
as additional stock units. 

 

The Board of Directors
has recommended that each director own at least 10,000 Common Shares within
three years after joining the board. Common Shares represented by stock units
will count toward that guideline, though restricted shares awarded upon a
director’s initial election will not.

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