THIS EMPLOYMENT
AGREEMENT (the “Agreement”) dated as of January 5,
2011 is entered into by and between Laurent C. Lutz, a resident of
the State of Illinois (“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 Executive Vice President and General Counsel 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 Executive Vice President and General Counsel of the Company and
the Company hereby agrees to retain Executive as Executive Vice
President and General Counsel. Executive’s employment under
this Agreement may be maintained through the Company 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 SLM
Corporation or such other subsidiary. The term of this Agreement
and of Executive’s employment as Executive Vice President and
General Counsel under this Agreement shall be the period commencing
on January 5, 2011 (the “Commencement Date”) and
ending on the earlier of January 5, 2013 and the effective
date of any termination pursuant to the provisions of
Section 13 (the “Term”).
2. Duties
and Title . During the Term, Executive will have the title of
Executive Vice President and General Counsel 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, (i) day-to-day administrative and
management oversight of the Company’s Legal and corporate
secretarial functions, (ii) collaboration with the
Company’s Chief Executive Officer and Chief Financial Officer
with regard to relationships involving regulators, rating agencies
and investor relations and (iii) assisting the Chief Executive
Officer in the day-to-day administrative and management oversight
of the Company’s Compliance and Internal Audit functions. The
Executive shall report directly to the Company’s Chief
Executive Officer and shall work based out of the Company’s
Newark, Delaware offices. The Company agrees that Executive shall
be permitted to work remotely in Chicago one business day per week
for up to six months after the Commencement Date, and the Company
acknowledges that Executive and/or Executive’s family may not
relocate to the Delaware area prior to July, 2011. 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 employed by the Company hereunder, 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,
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 $500,000 (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 2009-2012
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 one and
one-half (1.5) times his Base Salary (“Annual Incentive
Compensation Opportunity”). Executive’s Incentive
Compensation shall, except as otherwise stated in this Agreement,
be payable in the same form and proportions of cash and/or equity
awards as the Company’s other executive officers.
6.
Initial Stock Option Award . As a material inducement for
Executive to accept employment with the Company, on the
Commencement Date, Executive will be granted a stock option award
covering two hundred thousand (200,000) shares of the
Company’s common stock which will be granted under the
Incentive Plan (the “Initial Stock Option” pursuant to
a stock option agreement substantially in the form of
Exhibit B hereto (the “Initial Stock Option
Agreement”).
6.1 Exercise
Price; Net Exercise of Option . The Initial Stock Option shall
have a per share exercise price equal to the per share closing
price of the
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Company’s
common stock on the Commencement Date and shall be net settled
according to the standard terms and conditions applicable to
officer options granted under the Incentive Plan.
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 Sections 8.1 and 8.2 and the form of
stock option agreement. The Initial Stock Option shall become
vested and exercisable ratably as follows: one-third on the first
anniversary of the Commencement Date, one-third on the second
anniversary of the Commencement Date and the remainder on the third
anniversary of the Commencement Date; provided, however, provided,
however, the Initial Stock Option shall earlier vest its entirety
upon the Executive’s death or Disability (as defined
herein).
7.
Initial Restricted Stock Award . On the Commencement Date,
Executive shall be granted a restricted stock award covering one
hundred thousand (100,000) shares of the Company’s common
stock and granted to Executive under the Incentive Plan (the
“Restricted Stock” pursuant to a restricted stock award
agreement substantially in the form of Exhibit C attached
hereto (the “Restricted Stock Agreement”) and shall be
net settled according to the standard terms and conditions
applicable to officer restricted stock granted under the Incentive
Plan.
7.1
Vesting . The extent to which the Restricted Stock vests
shall be determined under this Section 7.1 and
Sections 8.1 and 8.2 and the Restricted Stock Agreement. The
Restricted Stock Award shall vest ratably one-third on the first
anniversary of the Commencement Date, one-third on the second
anniversary of the Commencement Date and the remainder on the third
anniversary of the Commencement Date; provided, however ,
all of the shares of Restricted Stock shall earlier vest in their
entirety upon the Executive’s death or Disability (as defined
herein).
8.
Additional Terms Applicable to the Initial Stock Option and the
Restricted Stock .
8.1
Expiration . If the Executive’s employment is
terminated during the term hereof (i) by the Company other
than for Cause (as hereinafter defined) or (ii) by the
Executive as a Termination For Good Reason (as hereinafter
defined), the Initial Stock Option and the Restricted Stock shall
continue to vest, become exercisable and settle as if the Executive
continued in active employment with the Company until the relevant
vesting dates and none of the Initial Stock Option or Restricted
Stock shall be forfeited by reason of such termination. Except as
provided in Section 8.2, upon a termination by the Company for
Cause or by the Executive other than For Good Reason, any Initial
Stock Options and any Restricted Stock shall be forfeited and shall
immediately expire and terminate to the extent 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
Initial Stock Option has not been forfeited or previously
exercised, the Initial
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Stock Option
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) or (c) the date
Executive’s employment is terminated by the Company for Cause
or by Executive other than a Termination for Good
Reason.
8.2 Change of
Control . Notwithstanding anything to the contrary in
Section 6.2, Section 7.1 and Section 8.1, vesting,
exercise, and expiration of the Initial Stock Options and vesting
of the Restricted Stock in the context of any Equity Acceleration
Change of Control or Cash Acceleration Change of Control, each as
defined in the Change of Control Severance Plan for Senior Officers
effective January 1, 2006, as amended by all of the amendments
through and including December 8, 2010 but without regard to
any amendments thereafter (the “Change in Control Severance
Plan”), shall be governed by the terms of such Change in
Control Severance Plan, the Initial Stock Option Agreement and the
Restricted Stock Agreement.
8.3 Other Terms
and Conditions . The Initial Stock Options and Restricted Stock
shall be subject to all of the terms and provisions of the
Incentive Plan and to the extent not inconsistent with the
Incentive Plan, the terms and conditions set forth in this
Agreement. To the extent not addressed or provided otherwise in
this Agreement, the Initial Stock Option Award and the Restricted
Stock Award shall also be subject to the terms and conditions of
the Initial Stock Option Agreement and the Restricted Stock
Agreement, respectively, pursuant to which they are
issued.
(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 Mae Supplemental 401(k)
Savings Plan (collectively, “the Company Plans”), in
accordance with the terms of the Company 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
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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)
Relocation . The Company shall pay Executive a relocation
allowance of $27,500 a month for a period of six months from the
Commencement Date, for Executive and Executive’s
family’s relocation expenses, including, without limitation,
moving expenses, real estate commissions and related real estate
closing costs in connection with the sale of his Chicago area home
and the purchase of a Wilmington area home, temporary living
expenses, family house hunting trips, expenses to commute to and
from Chicago until Executive and his family relocates and related
expenses of Executive. In addition, the Company will reimburse
Executive up to $100,000 in the event of a gross sales price from
the sale of Executive’s Chicago home is below Seller’s
adjusted cost basis of $750,000 in Executive’s existing
Chicago home, which adjusted basis shall consist of the
home’s original purchase price, as stated on the closing
statement for Seller’s purchase of the home and documented
additional costs for installation of central air conditioning,
window installation and damaged floorboard replacements. In the
event Executive voluntarily terminates employment with the Company
other than a Termination For Good Reason within twelve
(12) months after the Commencement Date, Executive shall
promptly reimburse and pay the Company 100% of expenses actually
expended by the Company on Executive’s behalf pursuant to
this section.
(f)
Indemnification . The Company shall indemnify Executive as
provided in the Company’s Articles of Incorporation and
Bylaws, to the fullest extent provided to directors and officers
thereunder, as in effect as of the Commencement Date (regardless of
any subsequent changes to such Articles or Bylaws) with respect to
Executive’s activities on behalf of the Company.
10. No
Other Compensation . Except as set forth in Sections 4
through 9 above, Executive shall have no right to any other
remuneration from the Company in respect of his services as
Executive Vice President and General Counsel of the Company during
the Term.
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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 subsidiaries (the “Proprietary
Information”). Proprietary Information includes, but is not
limited to, the following:
(i)
Business Procedures . All information concerning or relating
to the way the Company and its subsidiar
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