THIS
EMPLOYMENT AGREEMENT (this “ Agreement ”) is
made and entered into as of December 30, 2008, by and between
David M. Carroll (the “ Executive ”) and Wells
Fargo & Company, a Delaware corporation (the “
Company ”).
The
Company has determined that it is in the best interests of the
Company and its shareholders to assure that the Company will have
the dedication of the Executive following the transaction (the
“ Merger ”) contemplated by the Agreement and
Plan of Merger, dated as of October 3, 2008, between the
Company and Wachovia Corporation (“ Wachovia ”)
(the “ Merger Agreement ”), and the Company and
the Executive have further agreed to the principal terms of the
Executive’s employment with the Company effective as of the
“ Effective Date ” (as defined below).
Therefore, in order to accomplish these objectives, the Executive
and the Company desire to enter into this Agreement.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements
set forth below, and for other good and valuable consideration, it
is hereby covenanted and agreed by the Executive and the Company as
follows:
1.
Effective Date . The “ Effective Date ”
shall mean the date on which the “ Effective Time
” (as defined in the Merger Agreement) of the Merger occurs.
In the event that the Effective Time shall not occur on or before
December 31, 2008, this Agreement shall be null and void
ab initio and of no further force and effect.
2.
Employment Period . The Company hereby agrees to employ the
Executive with its subsidiary Wells Fargo Bank, N.A. (which for
purposes of this Agreement shall be included in references to the
“Company” unless the reference to the
“Company” in the context it is used indicates
otherwise), and the Executive hereby agrees to serve the Company,
subject to the terms and conditions of this Agreement, for the
period commencing on the Effective Date and ending on the first
anniversary of the Effective Date (the “ Employment
Period ”). If continued employment is mutually desired
after the end of the Employment Period, the Executive shall
continue as an at-will employee of the Company.
3.
Position and Duties . (a) During the Employment Period,
the Executive shall (i) serve as a Senior Executive Vice President
of the Company, leading the Company’s new Wealth, Brokerage
and Retirement Services group (the “ Group ”)
with such duties and responsibilities as are commensurate with such
position as are assigned to the Executive from time to time; (ii)
report directly to the Chief Executive Officer of the Company (the
“ CEO ”); and (iii) perform his duties at the
location Executive performed duties for Wachovia immediately prior
to the Merger or such other location as shall be mutually agreed
between the Company and the Executive.
(b) During
the Employment Period, and excluding any periods of paid time off
to which the Executive is entitled, the Executive agrees to devote
his full professional attention and time during normal business
hours to the business and affairs of the Company and to perform the
responsibilities assigned to the Executive hereunder. During the
Employment
Period it shall not be a violation of this
Agreement for the Executive to (i) serve on corporate, civic
or charitable boards or committees, (ii) deliver lectures,
fulfill speaking engagements or teach at educational institutions,
and (iii) manage personal investments, so long as such
activities do not interfere with the performance of the
Executive’s responsibility as an employee of the Company in
accordance with this Agreement and are consistent with the business
or policies of the Company, including but not limited to the
Company’s Code of Ethics and Business Conduct, or any
subsidiary or affiliate thereof (the “ Affiliated
Entities ”).
4.
Compensation . Subject to the terms of this Agreement,
during the Employment Period, the Company shall compensate the
Executive for his services as follows:
(a)
Base Salary . During the Employment Period, the Executive
shall receive an annual base salary (“ Annual Base
Salary ”) of not less than $700,000. Such Annual Base
Salary shall be payable in bi-weekly installments in accordance
with the Company’s payroll policies. The Executive’s
Annual Base Salary may not be decreased at any time during the
Employment Period, except with the written consent of the
Executive. The term Annual Base Salary as utilized in this
Agreement shall refer to Annual Base Salary as in effect from time
to time, including any increases.
(b)
Annual Incentive Payment . With respect to the
Company’s 2009 calendar year, the Executive shall be eligible
to receive an annual incentive payment (the “ Incentive
Payment ”) as determined in accordance with the
Company’s annual incentive plan applicable to senior
executives of the Company (the “ Annual Incentive Plan
”) with a target incentive opportunity of 350% of the Annual
Base Salary, with a maximum annual incentive payment of 600% of the
Annual Base Salary, in each case subject to the terms and
conditions of the Annual Incentive Plan, including, without
limitation, the Company’s achievement of its threshold EPS
goal for the applicable calendar year and the accomplishment of
pre-determined Company and Group financial performance objectives.
Any such Incentive Payment shall be paid to the Executive in cash
no later than March 15, 2010 (unless the Executive has elected
to defer receipt of any such Incentive Payment pursuant to an
arrangement that complies with Section 409A of the Internal
Revenue Code of 1986, as amended (the “ Code
”)), provided that Executive satisfactorily performs his job
duties and remains continuously employed with the Company through
December 15, 2009. For calendar years after 2009 in which the
Executive remains employed by the Company, the Company will review
the Executive’s target and maximum payout opportunities to
ensure the bonus opportunity aligns with the Group’s business
objectives.
(c)
Calendar Year 2009 Stock Option Award . In connection with
the Company’s annual equity award program for calendar year
2009, the Executive will be recommended for a stock option award
with a grant date value of $5,000,000 (the “ 2009 Stock
Option Award ”). The grant of the 2009 Stock Option Award
shall be subject to the approval of the Human Resources Committee
of the Board of Directors of the Company (the “ HRC
”) and contingent upon the Executive’s employment with
the Company on the date of the HRC’s determination to make
any such grant (the “ Grant Date ”). The number
of shares of Company common stock subject to the 2009 Stock Option
Award shall be determined by the Company based on the trading price
of the Company’s common stock at the time that the
recommendation in respect of the 2009 Stock Option Award is
submitted to the HRC for approval. The 2009 Stock Option Award
shall vest in three equal annual installments on the first, second
and third
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anniversaries of the Grant Date, have an
exercise price equal to the fair market value of the
Company’s common stock on the Grant Date, have a term of up
to ten years and such other terms and conditions as are consistent
with the calendar year 2009 annual stock option awards granted to
other executive managers of the Company generally.
(d)
Retention Bonus . The Executive shall be eligible for a
retention bonus award opportunity of $8,000,000 (the “
Retention Bonus ”). Twenty-five percent of the
Retention Bonus (i.e., $2,000,000) will vest and be paid to the
Executive on January 31, 2009, 25% of the Retention Bonus
(i.e., $2,000,000) will vest and be paid to the Executive on
April 30, 2009 and 50% of the Retention Bonus (i.e.,
$4,000,000) will vest and be paid to the Executive on
December 31, 2009 (each date of vesting and payment a “
Payment Date ”), provided that the Executive
satisfactorily performs his job duties and remains continuously
employed with the Company through the applicable Payment Date.
(e)
Employee Benefits . During the Employment Period prior to
the Date of Termination, the Executive and/or the Executive’s
family, as the case may be, shall be eligible to participate in the
Wachovia employee benefit plans (as in effect from time to time)
generally available to other peer executives of Wachovia following
the Merger (“ Wachovia Peer Executives ”), which
may include, without limitation, employee stock purchase plans,
savings plans, retirement plans, welfare benefit plans (including,
without limitation, medical, prescription, dental, disability,
life, accidental death, and travel accident insurance, but
excluding severance plans) and similar plans, practices policies
and programs. The Executive’s qualifying service with
Wachovia will be credited for purposes of eligibility,
participation and vesting in such employee benefit plans (including
paid time off) to the extent provided in Section 6.5(b) of the
Merger Agreement.
(f)
Expenses . During the Employment Period, the Executive shall
be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the policies,
practices of the Company and the Affiliated Entities in effect from
time to time for peer executives at the time when the expense is
incurred.
(g)
Fringe Benefits . During the Employment Period, the
Executive shall be entitled to fringe benefits and perquisite plans
or programs generally available to Wachovia Peer Executives;
provided that the Company reserves the right to modify, change or
terminate such fringe benefits and perquisite plans or programs
from time to time, in its sole discretion. As of the Effective
Date, such fringe benefits include the Wachovia Executive Financial
Planning Program, the Wachovia Executive Long-Term Disability Plan
and the Wachovia Executive Life Insurance Program.
(h)
Indemnification/D&O Insurance . During the Employment
Period for acts prior to the Date of Termination, the Executive
shall be entitled to indemnification with respect to the
performance of his duties hereunder, and directors’ and
officers’ liability insurance, on the same terms and
conditions as generally available to peer executives of the
Company.
5.
Termination of Employment . (a) Death or Disability .
The Executive’s employment shall terminate automatically upon
the Executive’s death during the Employment Period. If the
Company determines in good faith that the Disability of the
Executive has
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occurred during the Employment Period
(pursuant to the definition of Disability set forth below), it may
provide the Executive with written notice in accordance with
Section 11(f) of this Agreement of its intention to terminate the
Executive’s employment. In such event, the Executive’s
employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the “
Disability Effective Date ”), provided that, within
the 30 days after such receipt, the Executive shall not have
returned to full-time performance of the Executive’s duties.
For purposes of this Agreement, “ Disability ”
shall mean termination of the Executive’s employment upon
satisfaction of the requirements to receive benefits under
Wachovia’s long-term disability plan.
(b)
Cause . The Company may terminate the Executive’s
employment during the Employment Period either with or without
Cause. For purposes of this Agreement, “ Cause ”
shall mean:
(i) the
continued and willful failure of the Executive to perform
substantially the Executive’s duties with the Company or one
of its affiliates (other than any such failure resulting from
incapacity due to physical or mental illness), after a written
demand for substantial performance is delivered to the Executive by
the Company which specifically identifies the manner in which the
Company believes that the Executive has not substantially performed
the Executive’s duties and a reasonable time for such
substantial performance has elapsed since delivery of such
demand;
(ii) the
willful engaging by the Executive in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the
Company;
(iii) the
Executive’s conviction of a crime involving dishonesty or
breach of trust, conviction of a felony, or commission of any act
that makes Employee ineligible for coverage under the
Company’s fidelity bond or otherwise makes him ineligible for
continued employment; or
(iv) the
Executive’s violation of the Company’s written
employment policies as set forth in the Handbook for Wells Fargo
Team Members, including, but not limited to, the Wells Fargo Code
of Ethics and Business Conduct.
For purposes of this provision, no act or
failure to act, on the part of the Executive, shall be considered
“willful” unless it is done, or omitted to be done, by
the Executive in bad faith or without reasonable belief that the
Executive’s action or omission was in the best interests of
the Company. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board of Directors of
the Company (the “ Board ”), upon instruction
from the CEO or upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the
Company.
(c)
Voluntary Resignation by the Executive other than a Window
Period Termination . The Executive’s employment may be
terminated by the Executive during the Employment Period at any
time upon 30 days’ prior written notice to the Company
other than a Window Period Termination (a “ Voluntary
Resignation ”).
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(d)
Window Period Termination . The Executive’s employment
may be terminated either by the Company without Cause or by the
Executive for any reason, during the period commencing on May 1,
2009 and ending on December 15, 2009, provided the
Executive’s “separation from service” within the
meaning of Section 409A of the Code occurs on or before
December 15, 2009 (any such termination, a “ Window
Period Termination ”).
(e)
Notice of Termination . Any termination of the
Executive’s employment by the Company for Cause or due to a
Window Period Termination or by the Executive due to a Voluntary
Resignation, shall be communicated by Notice of Termination to the
other party hereto given in accordance with Section 11(f) of this
Agreement. For purposes of this Agreement, a “ Notice of
Termination ” means a written notice which
(i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets
forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive’s employment
under the provision so indicated and (iii)&n
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