THIS EMPLOYMENT
AGREEMENT (the “Agreement”) is entered into by and
between John F. Remondi, a resident of the Commonwealth of
Massachusetts (“Executive”), and SLM Corporation, a
corporation organized and existing under the laws of the State of
Delaware (the “Company”).
WHEREAS, the Board
of Directors of the Company (“Board”) wishes to retain
Executive as Vice Chairman and Chief Financial Officer of the
Company, and Executive wishes to accept such employment with the
Company, in each case, on the terms set forth herein;
NOW, THEREFORE, in
consideration of the mutual covenants and obligations contained
herein, and intending to be legally bound, the parties, subject to
the terms and conditions set forth herein, agree as
follows:
1. Employment
and Term. Executive hereby agrees to be employed as Vice Chairman
and Chief Financial Officer of the Company, and the Company hereby
agrees to retain Executive as Vice Chairman and Chief Financial
Officer. Executive’s employment under this Agreement may be
maintained through Sallie Mae, Inc. (“Sallie Mae”) or
another wholly owned subsidiary of the Company used to employ the
Company executives, and in such case any reference in this
Agreement to employment or termination of employment with the
Company shall be deemed to include employment or termination of
employment with Sallie Mae or such other subsidiary. The term of
Executive’s employment as Vice Chairman and Chief Financial
Officer under this Agreement shall be the period commencing on
January 8, 2008 (the “Commencement Date”) and
ending on the earlier of January 8, 2011 and the effective
date of any termination pursuant to the provisions of
Section 11 (the “Term”).
2. Duties.
During the Term, Executive will have the title of Vice Chairman and
Chief Financial Officer of the Company. Executive agrees to assume
such duties and responsibilities as may be reasonably assigned to
Executive from time to time by the Board or the Company’s
Chief Executive Officer, which duties shall include, but not be
limited to, primary management responsibility for accounting and
financial reporting, corporate finance, relationships with
regulators and rating agencies, investor relations, and financial
planning. During the Term, Executive shall report directly to the
Company’s Chief Executive Officer. As requested by the Chief
Executive Officer, Executive shall assume such additional positions
with respect to subsidiaries of the Company as necessary or
appropriate in furtherance of his responsibilities.
3. Other
Business Activities. During the Term, Executive agrees to devote
such time, attention, skill and efforts to the business and affairs
of the Company as may be required by the Chief Executive Officer or
the Board and/or necessary to discharge the duties and
responsibilities assigned to Executive hereunder. Executive shall
serve the Company faithfully and to the best of his ability. In
furtherance of the foregoing, and not by way of limitation, for so
long as he remains Vice Chairman and Chief Financial Officer of the
Company, Executive shall not directly or indirectly engage in any
other business activities or pursuits, except for (a) those
arising from positions held as of the Commencement Date as a
director or otherwise with charitable or business organizations,
and (b) with prior notice to the Chief Executive
Officer,
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activities in
connection with (i) service as a volunteer, officer or
director or in a similar capacity of any charitable or civic
organization, and (ii) serving as a director, executor,
trustee or in another similar fiduciary capacity for a
non-commercial entity; provided, however, that any such activities
do not conflict with or materially interfere with Executive’s
performance of his responsibilities and obligations pursuant to
this Agreement.
4. Base
Salary. During the Term, the Company shall pay Executive a salary
at the annual rate of $1,000,000 (the “Base Salary”).
The Base Salary shall be inclusive of all applicable income, Social
Security and other taxes and charges which are required by law or
requested to be withheld by Executive and which shall be withheld
and paid in accordance with the Company’s normal payroll
practice for its similarly situated executives as in effect from
time to time.
5. Annual
Incentive Compensation. Executive shall participate in the
Company’s annual incentive compensation program(s) for
executive officers as provided in the SLM Corporation Incentive
Plan (or any successor plan) as such may be amended from time to
time and (the “Incentive Plan”), subject to the
limitations and conditions set forth therein or in any successor
plan. During the Term, the maximum bonus opportunity available for
Executive under the Incentive Plan shall not be less than three
(3) times his Base Salary.
6. Initial
Stock Option Award. As a material inducement for Executive to
accept employment with the Company, on the Commencement Date,
Executive was granted a stock option award covering two million
(2,000,000) shares of the Company’s common stock (the
“Initial Stock Option”). A portion of the Initial Stock
Option covering one million (1,000,000) shares of the
Company’s common stock was granted under the Incentive Plan
(the “Initial Plan Grant”). The portion of the Initial
Stock Option not represented by the Initial Plan Grant was granted
as an “employment inducement award” (within the meaning
of Section 303A.08 of the New York Stock Exchange Listed
Company Manual).
6.1
Exercise Price; Net Exercise of Option. The Initial Stock Option
has a per share exercise price equal to $17.30, which price was the
per share closing price of the Company’s common stock on the
Commencement Date. The exercise price shall be paid by the Company
withholding from the shares of common stock that otherwise would be
issuable to the optionholder upon the exercise of the Stock Option
(or portion thereof) the whole number of shares (rounded up) having
a fair market value (as determined pursuant to the Plan) on the
date of exercise sufficient to satisfy the exercise price. If the
withheld shares are more than sufficient to satisfy the exercise
price the Company shall make such arrangement as it determines
appropriate to credit such amount for the optionholder’s
benefit.
6.2
Vesting and Exercisability. The extent to which the Initial Stock
Option vests and becomes exercisable shall be determined under this
Section 6.2 and Section 8.2. Subject to Executive’s
continued employment with the Company as an executive officer
through the applicable vesting date, the Initial Stock Option shall
become vested and exercisable in its entirety upon the earlier of
(a) the Company’s stock price closing at a price for
five (5) consecutive trading days that is equal or greater
than $20.76 per share, (b) January 8, 2013, and
(c) the Executive’s death or Disability (as defined
herein); provided, however, that
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in no event
shall the Initial Stock Option become vested and exercisable before
January 8, 2009.
7. Additional
Stock Option Award. On the first anniversary of the Commencement
Date, so long as Executive is then employed as an executive officer
of the Company, Executive shall be granted a stock option award
covering one million (1,000,000) shares of the Company’s
common stock (the “Additional Stock Option”, and
together with the Initial Stock Option, the “Stock
Options”).
7.1
Exercise Price; Net Exercise of Option. The Additional Stock Option
shall have a per share exercise price equal to the per share
closing price of the Company’s common stock on the first
anniversary of the Commencement Date. The exercise price shall be
paid by the Company withholding from the shares of common stock
that otherwise would be issuable to the optionholder upon the
exercise of the Stock Option (or portion thereof) the whole number
of shares (rounded up) having a fair market value (as determined
pursuant to the Plan) on the date of exercise sufficient to satisfy
the exercise price. If the withheld shares are more than sufficient
to satisfy the exercise price the Company shall make such
arrangement as it determines appropriate to credit such amount for
the optionholder’s benefit.
7.2
Vesting and Exercisability. The extent to which the Additional
Stock Option vests and becomes exercisable shall be determined
under this Section 7.2 and Section 8.2. Subject to
Executive’s continued employment with the Company as an
executive officer through the applicable vesting date, the
Additional Stock Option shall become vested and exercisable in its
entirety upon the earlier of (a) the Company’s stock
price closing at a price for five (5) consecutive trading days
that is equal or greater than $24.22 per share,
(b) January 8, 2014, and (c) the Executive’s
death or Disability (as defined herein); provided, however, that in
no event shall the Additional Stock Option become vested and
exercisable before January 8, 2010.
8. Additional
Terms Applicable to the Stock Options.
8.1
Expiration. The Stock Options shall be forfeited and shall
immediately expire and terminate if not vested on or before the
date Executive’s employment with the Company as an executive
officer terminates. In addition, to the extent that the Stock
Options have not been forfeited or exercised, the Stock Options
shall expire on the earlier of (a) the tenth anniversary of
the date of their grant, (b) the first anniversary of
Executive’s termination of employment on account of death or
Disability (as defined herein); (c) the date Executive’s
employment is terminated for Cause (as defined herein) or
(d) three months following the date Executive’s
employment is terminated for any reason other than death,
Disability or Cause.
8.2
Change of Control. Notwithstanding anything to the contrary in
Section 6.2, Section 7.2 and Section 8.1, vesting,
exercise, and expiration of the Stock Options in the context of an
actual or proposed Change of Control shall be governed by the terms
of the Change in Control Severance Plan.
8.3
Anti-Dilution Adjustments. The number of shares subject to the
Stock Options, the exercise price of the Stock Options and the
stock price vesting criteria set forth in
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Sections 6.2 and 7.2 shall be
proportionately adjusted by the Compensation Committee if the class
of securities which are subject to the Stock Options is
(i) exchanged for or converted into cash, property or a
different number or kind of shares or securities as a result of a
reorganization, merger, consolidation, recapitalization,
restructuring or reclassification, or (ii) if the number of
securities of the class of securities then subject to the Stock
Options are increased or decreased or if cash, property or shares
or securities are distributed in respect of such subject securities
as a result of a dividend (other than a regular, quarterly cash
dividend) or other distribution, stock split, reverse stock split,
spin-off or the like.
8.4
Tax Withholding. Upon exercise of all or a portion of the Stock
Options, (i) Executive shall pay in cash or make other
arrangements satisfactory to the Compensation Committee for the
satisfaction of any withholding tax obligations that arise by
reason of exercise of the Stock Options, in whole or in part, and
(ii) the Company shall not be required to issue shares of
common stock until such obligations are satisfied.
8.5
Stockholder Rights; Securities Laws Compliance. Executive shall not
be deemed a stockholder of the Company with respect to any of the
shares subject to the Stock Options, except to the extent that such
shares shall have been transferred to Executive upon exercise of
the award. The Company shall not be required to issue or transfer
any certificates for shares of common stock upon exercise of the
Stock Options until all applicable requirements of law have been
complied with and such shares shall have been duly listed on any
securities exchange on which the common stock may then be listed.
The Company may impose such restrictions, conditions or limitations
as it determines appropriate as to the timing and manner of any
exercise of the Stock Options and/or any resales by Executive or
other subsequent transfers by Executive of any shares of the
Company’s common stock issued as a result of the exercise of
the Stock Options, including without limitation
(a) restrictions under an insider trading policy,
(b) restrictions that may be necessary in the absence of an
effective registration statement under the Securities Act of 1933,
as amended, covering the Stock Options and/or the common stock
underlying the Stock Options and (c) restrictions as to the
use of a specified brokerage firm or other agent for exercising the
Stock Options and/or for such resales or other transfers. The sale
of the shares underlying the Stock Options must also comply with
other applicable laws and regulations governing the sale of such
shares.
8.6
Other Terms and Conditions. The Stock Options shall be subject to
the terms and conditions set forth in this Agreement. To the extent
not addressed or provided otherwise in this Agreement, the Initial
Plan Grant shall also be subject to the terms and conditions of the
Incentive Plan (including the administrative terms) and the portion
of the Stock Options not represented by the Initial Plan Grant
shall likewise for purposes of administration and interpretation be
treated as if granted under and subject to the terms and conditions
of the Incentive Plan.
(a) Retirement
Plans. During the Term, to the extent permissible under the terms
of the applicable plans, Executive shall be entitled to participate
in all tax-qualified and non-tax-qualified pension plans maintained
or contributed to by the Company or for the benefit of its
executives, including without limitation, the Sallie Mae 401(k)
Savings Plan and the Sallie
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Mae
Supplemental 401(k) Savings Plan (collectively, the “the
Company 401(k) Plans”), in accordance with the terms of such
the Company 401(k) Plans as they may be amended from time to time
in the discretion of the Company.
(b) Medical
Insurance. During the Term, Executive shall be entitled to
participate in any medical and dental insurance plans generally
available to the senior management of the Company, in accordance
with the terms of such plans as they may be amended from time to
time in the discretion of the Company.
(c) Other
Benefit Plans. Executive shall be entitled to receive or
participate in such further retirement, savings, deferred
compensation, matching gift program, life insurance, health or
welfare benefit plans offered to the Company’s senior
management generally, in accordance with the terms of such plans as
they may be amended from time to time in the discretion of the
Company.
(d) Expenses.
The Company agrees to reimburse Executive for all reasonable,
ordinary and necessary business expenses incurred by Executive in
performing his duties pursuant to this Agreement, in accordance
with the Company’s reimbursement policies generally
applicable to management personnel. In no event shall any such
reimbursement be paid later than the end of the calendar year
following the year in which the expense was incurred.
(e) Temporary
Housing, Travel Allowance. For up to a two-year period following
the Commencement Date, Executive will be provided with housing in
Reston, Virginia and an allowance of up to $200,000, on an
after-tax basis, for two years for use of corporate aircraft in
commuting between headquarters location and the Executive’s
principal residence.
10. No Other
Compensation. Except as set forth in Sections 4-9 above,
Executive shall have no right to any other remuneration from the
Company in respect of his services as Vice Chairman and Chief
Financial Officer of the Company during the Term.
11. Nondisclosure
of Confidential Information.
(a) Executive
and the Company acknowledge that Executive will, in the course of
his employment, come into possession of confidential, proprietary
business and technical information, and trade secrets of the
Company and its Affiliates, as defined in Section 11(b) (the
“Proprietary Information”). Proprietary Information
includes, but is not limited to, the following:
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Business procedures. All information
concerning or relating to the way the Company and its Affiliates
conduct their business, which is not generally known to the public
or within the industry or trade in which the Company or its
Affiliates compete (such as the Company contracts, internal
business procedures, controls, plans, licensing techniques and
practices, supplier, subcontractor and prime contractor names and
contacts and other vendor information, computer system passwords
and other computer security controls, financial information,
distributor information, and employee data) and the physical
embodiments of such information (such as check lists, samples,
service and operational manuals,
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contracts,
proposals, printouts, correspondence, forms, listings, ledgers,
financial statements, financial reports, financial and operational
analyses, financial and operational studies, management reports of
every kind, databases, employment or personnel records, and any
other written or machine-readable expression of such information as
are filed in any tangible media).
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Marketing Plans and Customer Lists.
All information not generally known to the public or within the
industry or trade in which the Company or its Affiliates compete
pertaining to the Company’s and its Affiliates’
marketing plans and strategies; foreca
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