|
Exhibit 10.24
CONFIDENTIAL AND LEGALLY PRIVILEGED
EMPLOYMENT AGREEMENT
between
FEDERAL NATIONAL MORTGAGE ASSOCIATION
and
DAVID O. MAXWELL
TABLE OF CONTENTS
|
|
|
|
|
|
|
|
|
Page
|
|
|
|
|
|
|
|
A. EMPLOYMENT TERM
|
|
|
2
|
|
|
|
|
|
|
|
|
1. Term and Duties
|
|
|
2
|
|
|
|
|
|
|
|
|
2. Annual Salary
|
|
|
3
|
|
|
|
|
|
|
|
|
3. Employee’s Rights Under Certain Plans
Now or Hereafter in Effect
|
|
|
3
|
|
|
|
|
|
|
|
|
4. Termination Without Cause or Termination or
Resignation Upon a Change in Control
|
|
|
10
|
|
|
|
|
|
|
|
|
5. Termination by Employee; Breach by
Employee
|
|
|
13
|
|
|
|
|
|
|
|
|
6. Resignation as Board Member
|
|
|
15
|
|
|
|
|
|
|
|
|
B. DISABILITY
|
|
|
16
|
|
|
|
|
|
|
|
|
7. Disability
|
|
|
16
|
|
|
|
|
|
|
|
|
C. RETIREMENT
|
|
|
17
|
|
|
|
|
|
|
|
|
8. Retirement
|
|
|
17
|
|
|
|
|
|
|
|
|
D. DEATH
|
|
|
18
|
|
|
|
|
|
|
|
|
9. Death
|
|
|
18
|
|
|
|
|
|
|
|
|
E. Miscellaneous
|
|
|
19
|
|
|
|
|
|
|
|
|
10. Enforcement of Agreement
|
|
|
19
|
|
|
|
|
|
|
|
|
11. Assignment by Employee
|
|
|
19
|
|
|
|
|
|
|
|
|
12. Waiver
|
|
|
20
|
|
|
|
|
|
|
|
|
13. Notice
|
|
|
20
|
|
|
|
|
|
|
|
|
14. Applicable Law
|
|
|
20
|
|
|
|
|
|
|
|
|
15. Taxes
|
|
|
20
|
|
|
|
|
|
|
|
|
16. Benefit
|
|
|
21
|
|
|
|
|
|
|
|
|
17. Entire Agreement
|
|
|
21
|
|
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT , effective as of the 21st day of
November, 1989, by and between the FEDERAL NATIONAL MORTGAGE
ASSOCIATION (the "Corporation") and DAVID O. MAXWELL
("Employee"),
WITNESSETH THAT:
WHEREAS , Employee has been employed by the Corporation as
the Chairman of its Board of Directors (the "Board") and Chief
Executive Officer continuously since May 21, 1981;
WHEREAS , the terms and conditions of Employee’s
employment by the Corporation are set forth in an Employment
Agreement, dated as of November 15, 1988 (the "Employment
Agreement"); and
WHEREAS , in view of the Corporation’s outstanding
operating results the Corporation desires to amend and extend the
term of the Employment Agreement; and
WHEREAS , the terms of this Agreement were duly approved and
authorized for and on behalf of the Corporation by the Board at a
meeting held on November 21, 1989, at which meeting a quorum
was present and voted, and the Chairman of the Compensation
Committee of the Board was authorized to finalize and enter into
this Agreement with Employee on behalf of the Corporation;
NOW, THEREFORE , in consideration of the foregoing and of
the mutual promises and covenants herein contained, the parties
hereto agree to substitute the provisions of this Agreement, in
their entirety, for the provisions of the Employment Agreement.
2
A. EMPLOYMENT TERM
(a) The
Corporation hereby agrees to employ Employee as Chairman of the
Board and Chief Executive Officer of the Corporation, and Employee
hereby agrees to serve in such capacity, upon the terms and
conditions herein contained, for a term ending on the later of
(i) January 31, 1991 and (ii) the last day of the
month in which a successor Chief Executive Officer of the
Corporation is employed and assumes the duties of his office, but
not later than the last day of the month in which is held the
Annual Meeting of the Stockholders of the Corporation in 1991. As
used in this Agreement, "Employment Term" shall mean the period of
time from November 21, 1989 until the later of
(i) January 31, 1991 and (ii) the last day of the
month in which a successor Chief Executive Officer of the
Corporation is employed and assumes the duties of his office, plus
any extension of such period pursuant to Paragraph l(c) below or
otherwise pursuant to the written agreement of the
parties.
(b) Employee
shall perform such duties for the Corporation as may be determined
from time to time by the Board; provided, that such duties are
reasonable and customary for a chairman and chief executive officer
and do not require Employee to relocate his residence from
Washington, D.C.
(c)
The Corporation and Employee acknowledge that the Employment Term
may be extended for an additional period by mutual written
agreement.
3
(a) During
the Employment Term, the Corporation shall continue to pay to
Employee an annual base salary of not less than $650,000, payable
in equal bi-weekly installments on the same dates the other
officers of the Corporation are paid. Employee’s base annual
salary payable pursuant to this Paragraph (including any increases
therein approved by the Board pursuant to this Paragraph) is
hereinafter referred to as "Employee’s Basic
Compensation."
(b) The
Corporation and Employee acknowledge that the Board shall, from
time to time, review Employee’s Basic Compensation and may
increase (but in no event decrease) such payments by such amounts
as the Board deems proper. The criteria which the Board may take
into consideration in providing for any such increases are the base
compensation payable to chairmen and chief executive officers of
comparable financial institutions, Employee’s ability and
performance, the success achieved by the Corporation, the total
economic return to the Corporation’s shareholders, increases
in the cost of living, the relationship of the Corporation to its
constituents and the public and all such other criteria as the
Board may deem relevant.
|
3.
|
|
Employee’s Rights Under
Certain
Plans Now or Hereafter in Effect
|
(a) Executive Pension Plan . Employee and the
Corporation acknowledge that Employee previously waived any and all
rights which he or his surviving spouse may have had under
the
4
Deferred Compensation Contract (formerly called the "10-Year
Deferred Compensation Agreement Program") and under the Retirement
Supplement Award Plan (formerly called the "Incentive Performance
Annuity Plan"), and that the Corporation has designated Employee as
a participant in the Executive Pension Plan of the Federal National
Mortgage Association (the "Executive Pension Plan").
Notwithstanding any of the provisions of the Executive Pension Plan
to the contrary, the following provisions shall apply to
Employee:
|
|
(i)
|
|
Employee’s Pension Goal under the Executive
Pension Plan shall at all times be equal to at least 60% of his
High-Three Total Compensation, as such terms are defined in the
Executive Pension Plan, and as modified by this
Paragraph 3;
|
|
|
|
|
|
|
|
(ii)
|
|
Employee’s High-Three Total Compensation
shall be determined by reference to the three (3) calendar
years or partial calendar years of employment, whether or not
consecutive, preceding his termination of employment for any reason
or death while employed by the Corporation during which his Total
Compensation, as defined in Subparagraph 3(a)(iii) below, was the
highest;
|
|
|
|
|
|
|
|
(iii)
|
|
Employee’s "Total Compensation" means
Employee’s Basic Compensation, including amounts deferred by
Employee under the Federal National Mortgage Association Optional
Deferred Compensation Plan, and any successor plan or plans
thereto, and amounts which, pursuant to the election of Employee,
the
|
5
|
|
|
|
Corporation has contributed to any cash or
deferred arrangement qualified under Section 401(k) of the Internal
Revenue Code. Total Compensation shall also include (A) 100%
of any cash bonuses awarded to Employee by the Corporation,
pursuant to the terms of the Federal National Mortgage Association
Annual Incentive Plan (the "Annual Incentive Plan") or otherwise,
with respect to the calendar year in which it is earned and
(B) 100% of the amount of any cash paid and the fair market
value on the date of delivery of any stock transferred to Employee
pursuant to the terms of the Performance Share provisions of the
Federal National Mortgage Association Stock Compensation Plan, or
any successor plan, with respect to the calendar year in which such
cash and stock is paid and delivered; provided, however, that for
purposes of the Executive Pension Plan 100% of any cash and stock
paid and delivered with respect to the 1988-1990 award cycle shall
be deemed to have been paid and delivered in 1990, and 100% of any
cash and stock paid and delivered with respect to the 1989-1991
award cycle shall be deemed to have been paid and delivered in
1991. Employee’s Total Compensation shall not include any
cash or the fair market value of any stock paid to Employee
pursuant to the terms of the Federal National Mortgage Association
1984 Stock
|
6
|
|
|
|
Option Plan or the Stock Option or Restricted
Stock provisions of the Federal National Mortgage Association Stock
Compensation Plan, or any successor plans;
|
|
|
|
|
|
|
|
(iv)
|
|
The Corporation acknowledges that Employee has
previously satisfied the requirements for full vesting in the
benefits afforded under the Executive Pension Plan as modified by
this Paragraph 3;
|
|
|
|
|
|
|
|
(v)
|
|
At the termination of his employment for any
reason, Employee shall be paid the actuarially equivalent value of
the benefits due under the Executive Pension Plan, as modified by
this Paragraph 3, in the form of a single lump cash sum
determined on the basis of a joint and 100% survivor annuity as
provided in such plan and the actuarial assumptions used in funding
the Federal National Mortgage Association Retirement Plan for
Employees Not Covered Under Civil Service Retirement Law for the
year ending December 31, 1981, which assumptions included an
interest rate of 6%, or such assumptions in effect on the date of
Employee’s termination of employment, if more favorable to
Employee;
|
|
|
|
|
|
|
|
(vi)
|
|
If Employee dies before the commencement of
payments to him under the Executive Pension Plan, his Surviving
Spouse, as such term is defined in such plan, if any, shall be paid
in a single lump cash sum an amount equal to the amount that would
have
|
7
|
|
|
|
been due Employee under the Executive Pension
Plan, as modified by this Paragraph 3, had he terminated
employment on the day prior to his date of death;
|
|
|
|
|
|
|
|
(vii)
|
|
No actuarial reduction based on age shall be
applied against any benefits payable to Employee or his Surviving
Spouse under the Executive Pension Plan;
|
|
|
|
|
|
|
|
(viii)
|
|
Employee or his Surviving Spouse, if any, shall
be paid his or her entire benefits under the Executive Pension Plan
in cash within ten (10) days after the date of
Employee’s termination of employment for any reason or death,
as applicable, regardless of the age of Employee or his Surviving
Spouse at such time; and
|
|
|
|
|
|
|
|
(ix)
|
|
No amendment of the Executive Pension Plan shall
decrease the benefits to which Employee or his Surviving Spouse, if
any, would have been entitled under such plan as in effect on the
date hereof and modified by this Paragraph 3.
|
(b) Stock Options . Employee shall have the right to
exercise any vested Incentive Stock Option and any vested
Non-qualified Stock Option, whenever granted, until it expires by
its terms, regardless of whether Employee is employed by the
Corporation at the time of such exercise or cancellation. All stock
options granted as of July 15, 1986 that shall not already be
vested on January 31, 1990 shall vest on such date if Employee
is still employed by the Corporation under this Agreement on such
date.
8
All stock options granted as of November 15, 1988 that
shall not already be vested on January 31, 1991 shall vest on
such date if Employee is still employed by the Corporation under
this Agreement on such date.
(c) Annual Incentive Plan . Employee’s Maximum
Potential Award as such term is defined in the Corporation’s
Annual Incentive Plan for each year during the Employment Term
shall be at least 80% of Employee’s Basic Compensation. The
amount to be paid with respect to such Award for each such year
shall be determined by the extent to which any Corporate Goals, as
such term is defined in such plan, are attained. Employee’s
Award to be earned in any year after 1990 in which Employee is not
employed by the Corporation under this Agreement for the full year
because of the expiration of the Employment Term, but in which he
is employed for at least five (5) months of such year, shall
be paid pro rata in January of the next following year based upon
the extent to which any Corporate Goals are attained and the number
of months Employee is employed by the Corporation under this
Agreement during the year in which such Award is earned.
(d) Restricted Stock . All shares of restricted stock
granted to Employee as of July 15, 1986 and November 18, 1986
that shall not already be vested on January 31, 1990 shall
vest on such date if Employee is still employed by the Corporation
under this Agreement on such date.
(e) Performance Shares . If Employee is still
employed by the Corporation under this Agreement on the last day of
the month in which is held the Annual Meeting of the Stockholders
of
9
the Corporation in 1990, Performance Shares granted for the
1988-1990 award cycle shall be paid in full (rather than pro rata)
in January 1991, based upon the extent to which the corporate
goals established for such award cycle are actually attained by the
end of such award cycle. If
|
