CIT Group Executive’s Letter Proves to be Valuable…

At the beginning of February, CIT Group, Inc. (CIT) announced that its president and Chief Operating Officer, Alexander Mason, would leave the company on February 26th. Mason joined the company June 16, 2008, putting his tenure there at just over 19 months.

When the announcement was made on February 1st, the company issued a press release which quoted interim CEO Peter Tobin as saying, —Alex came to CIT at a time of enormous challenge. We would like to thank him for his contributions during our restructuring, and we wish him continued success in the future. Simultaneously, it also filed an 8-K with the SEC that stated: —Mr. Mason has agreed to forego severance and any other compensation other than the earned cash compensation he is entitled to receive for 2009 and until termination under his employment agreement dated June 16, 2008.

Given the wording of the 8-K, it’s understandable if readers might not know that the company was referring to the —minimum cash bonus that CIT Group promised to give Mason for both 2008 and 2009. But we found that information in the late annual report that CIT Group filed on March 16th. (Its annual report was really due March 1, 2010, but the company filed a notice with the SEC to explain that it would not be able to meet the deadline —without unreasonable effort and expense.)

Exhibit 10.20 of the annual report is a confidential letter dated January 29, 2010 from Executive Vice President of Human Resources James Duffy to Mason regarding —Transition Arrangements. It states in part:

—This letter will confirm that your last day with CIT will be February 26, 2010 (the ‘Separation Date’). At that time, each of your positions as an officer and employee of CIT and its subsidiaries will cease.

From now until your Separation Date, you agree that your compensation will consist only of your base salary and continued participation for you and your applicable dependents in the benefit plans in which you or such dependents currently participate. In addition, you will continue to be entitled to the 2009 guaranteed cash bonus of $1,350,000 provided for in your Letter Agreement, dated June 16, 2008 (your ‘Employment Agreement’). For the avoidance of doubt, this amount will be payable at the time, and will be subject to all of the conditions, currently set forth in your Employment Agreement. For the avoidance of doubt, your termination of employment under this letter will be treated as an Eligible Termination for purposes of 2009 guaranteed cash bonus.

In exchange for signing the “Transition” agreement – which also promised to reimburse Mason for up to $75,000 in legal fees – CIT Group asked for consideration: he had to sign a General Release that gave up any legal claims he might have asserted against the company.