Cfo Employment Agreement

EXHIBIT 10.40 ROBERT C. LANNERT EMPLOYMENT AGREEMENT This Employment Agreement (the "Agreement") is entered into between Navistar International Corporation, aDelaware corporation (the "Company"), its principal operating subsidiary, International Truck and Engine Corporation, aDelaware corporation ("International"), and Robert C. Lannert, a resident of the State of Illinois (the "Executive"), asof July 8, 2002. WHEREAS, the Executive has advised the Board of Directors of the Company that he intends to step down as adirector and Chief Financial Officer and retire as an employee of the Company and International prior to March 14, 2005,when he attains the age of sixty-five. WHEREAS, the Board and the Executive have determined that it would be appropriate to initiate a managementtransition process that includes the designation of a new Chief Executive Officer and a new Chief Financial Officer andthe creation of the Office of the Chairman. WHEREAS, the Board desires to retain the Executive as a director and an employee and a member of the Office ofthe Chairman beyond his planned retirement date until March 14, 2005, when he attains the age of 65, and as a consultantfollowing Executive's retirement. NOW, THEREFORE, This Agreement is hereby entered into in consideration of the following covenants and mutualpromises.1. Retirement Transition and Succession Planning . In order to facilitate and assist in the management transition, the Executive will continue as a director and employee of the Company at least until March 14, 2005 (the "Retirement Date"). It is anticipated that prior to the Retirement Date the Board will designate new Chief Executive and Chief Financial Officers. To further facilitate and assist in the management transition, the Executive has been designated Vice Chairman of the Board and became a member of the Office of the Chairman comprised of the Executive, John Horne, currently Chairman of the Board and Chief Executive Officer, and Daniel C. Ustain, recently designated President and Chief Operating Officer.2. Compensation prior to the Retirement Date . The Executive shall continue to receive his base salary and benefits until the Retirement Date. The Executive's base salary shall be reviewed annually by the Committee on Compensation and Governance ("Committee") of the Board of Directors and increased as determined by the Committee and approved by the Board of Directors considering the individual performance of the Executive. In no event shall any such increase be less than 5% per year. Until the Retirement Date, Executive will continue to receive stock option awards in accordance with the Company's current program, policies and practices. Effective upon the Retirement Date, Executive will be eligible for a prorated Annual Incentive Plan award for the fiscal year of his retirement. Any such award will be determined and paid in accordance with the Company's current program, policies and practices.3. Resignation of Officerships, Titles and Directorships . Effective on the Retirement Date, unless extended by mutual agreement of the Company and the Executive, the Executive will resign all then remaining officerships, titles, and directorships with the Company, its subsidiaries and affiliates.4. Managerial Retirement Objective Plan . On the Retirement Date, as long as the Executive continues to comply with the conditions set forth in this Agreement, Executive's accrued benefit under the International Managerial Retirement Objective Plan (the "MRO" Plan) shall be calculated based on the Executive's highest consecutive 60 months of base salary plus the Executive's highest five ...