SEPARATION AGREEMENT

EXHIBIT 10.16

SEPARATION AGREEMENT

        This Separation Agreement (hereinafter the "Agreement") is made and entered into by and between State Street Corporation ("State Street"), and on behalf of State Street Bank and Trust Company (together with State Street, the "Company"), and William W. Hunt (the "Executive"), dated as of January 2, 2008, and effective on the Effective Date (as defined in Section 20(i) hereof). The parties seek through this Agreement to recite the mutually agreed upon terms and conditions of the Executive's separation from the Company.

        1.     Termination of Employment.     The Executive hereby resigns, as of January 2, 2008 (the "Separation Date"), from his position of employment as Vice Chairman of State Street and Chief Executive Officer of the State Street Global Advisors business unit of the Company, as well as from all officerships and directorships of the Company and any of its affiliates and subsidiaries (the "Company Group"), including from the boards and committees of any related trusts or foundations and from any other entities controlled by the Company Group. The Company hereby accepts the Executive's voluntary resignation from the Company Group, as herein described, effective as of the Separation Date.

        2.     Base Salary; Additional Payments.     The Executive shall be entitled to receive base salary at the annualized rate of $750,000 currently in effect (the "Base Pay") for any unpaid periods of employment through and including the Separation Date, such amount to be paid in accordance with the Company's standard payroll practices. The Executive shall receive reimbursement for all properly documented and reimbursable business expenses that are submitted to the Company within 30 days of the Effective Date. The Executive shall additionally receive payment for any accrued but unused vacation, as reflected in the books and records of the Company, within two weeks of the Effective Date.

        3.     Severance Compensation.     Subject to Section 20(i) hereof, upon the Separation Date and continuing until the second anniversary of the Separation Date (the "Severance Compensation Period"), the Company will provide the Executive with severance compensation in an amount equal to the Base Pay for such two-year period in accordance with the terms of the State Street Corporation Severance Plan (the "Severance Plan") (except as otherwise modified herein); provided that so much of such severance compensation as would be payable on such basis within the first six months following the Separation Date shall instead be paid in a single lump sum on that day that falls six months and one day after such Separation Date (the "Delayed Payment Date"), and the balance shall be paid thereafter in accordance with the Company's standard payroll practices as in effect on the Separation Date.

        4.     Benefits Continuation.     

        (a)   Provided he makes a timely election to participate and in accordance with the terms of the Severance Plan (except as modified herein), the Executive shall be eligible for continuation of coverage, at his expense, under the Company's group medical, dental and vision plans, but only to the extent required by and subject to the terms of Part 6 of Subtitle B of Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). If, at the conclusion of the first 18 months of the Severance Compensation Period, the Executive immediately prior thereto is still receiving continuation coverage pursuant to the immediately preceding sentence, has not accepted new employment and has not secured alternate health, dental and vision insurance coverages, either through new employment or otherwise, the Company will arrange for comparable coverage (through self-insurance or otherwise) at comparable cost to the Executive through the balance of the Severance Compensation Period or, if earlier, until the Executive accepts new employment. The Executive agrees to notify the Company immediately if he accepts new employment during the Severance Compensation Period.

        (b)   Eligibility to participate in the Company's short-term disability plan will end as of the Separation Date, and eligibility to participate in the Company's long-term disability plan will end as of the last day of the calendar month in which the Executive's Separation Date occurs.

        (c)   The Executive may continue his life insurance ( i.e. , Basic Life Insurance, Optional Employee Life Insurance, Spouse/Domestic Partner Life Insurance and Dependent Child Life Insurance, as applicable) during the Severance Compensation Period by making the premium payments therefor. Such coverage will terminate at the conclusion of the Severance Compensation Period, unless the Executive directly elects to convert his coverage pursuant to the terms of these policies by private arrangement with the life insurance carrier.

        (d)   The Executive shall continue to receive repatriation tax equalization and tax preparation benefits related to his service with the Company Group as an expatriate in accordance with Company policy in effect as of the date hereof.

        (e)   The Executive's participation in all other Company benefit plans and programs, including, but not limited to, the Qualified Plan and the Savings Plan (each as defined below), will end as of the Separation Date, in accordance with the terms of the respective plans.

        5.     Stock-Based Compensation, Retirement and Other Benefits.     

        (a)     Stock Options/SARs.     State Street has previously awarded stock options and stock appreciation rights to the Executive under its 1997 Equity Incentive Plan (the "1997 Plan") and its 2006 Equity Incentive Plan (the "2006 Plan" and collectively with the 1997 Plan, the "Equity Plans"). The Company has furnished the Executive a schedule (including vesting schedules and expiration dates), appended hereto as Exhibit A , reflecting those outstanding ( i.e. , not earlier expired or been exercised) stock options and stock appreciation rights held by the Executive as of the Separation Date (each, a "Stock Option"). The Stock Options shall continue to vest and be exercisable, subject to the Executive's compliance with Section 6, Section 7 and Section 8 hereof, and/or become forfeitable in accordance with the terms of the applicable Equity Plan and/or the applicable option agreement or other award documentation. The Company and the Executive agree that the restraints and obligations of the Executive pursuant to Section 6, Section 7 and Section 8 hereof shall be deemed for all purposes as controlling, in lieu of any different restraints or undertakings of the Executive on the same subject under the Equity Plans and any related award documentation. For the avoidance of doubt, those 8,271 Stock Options granted to the Executive under the 1997 Plan that were scheduled to vest on March 2, 2010 shall be immediately and automatically forfeited as of the Separation Date in accordance with their terms.

        (b)     Performance Awards.     The Executive holds performance share awards granted under the Equity Plans. The following provisions shall govern the treatment of certain of these awards:

•         (i)     Cycle O Performance Award.     State Street has previously awarded to the Executive a Cycle O performance award under the 1997 Plan as set forth on Exhibit A hereto (the "Cycle O Award"), that vested on December 31, 2007. Notwithstanding anything to the contrary under the terms of the 1997 Plan and/or the applicable performance share award agreement or other award documentation, but subject to the Executive's compliance with Section 6, Section 7 and Section 8 hereof, the Company shall deliver to the Executive, on or about February 15, 2008, but not later than March 15, 2008, that number of shares of common stock of State Street, par value $1 ("Common Stock"), equal to the number of such shares the Executive would have received under the Cycle O Award had the Executive remained employed by the Company Group. The Company and the Executive agree that the restraints and obligations of the Executive pursuant to Section 6, Section 7 and Section 8 hereof shall be deemed for all purposes as controlling, in lieu of any different restraints or undertakings of the Executive on the same subject under the 1997 Plan and the award documentation with respect to the Cycle O Award.

          (ii)     2006 PEP Performance Award.     State Street has previously awarded to the Executive performance-based equity awards under the 2006 State Street Global Advisors Performance Equity Program pursuant to the 1997 Plan as set forth on Exhibit A hereto (the "2006 PEP Award"). In

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  accordance with the terms of the 2006 PEP Award (as modified herein) and subject to the Executive's compliance with Section 6, Section 7 and Section 8 hereof, the Company shall deliver to the Executive in full satisfaction of the 2006 PEP Award, on February 15, 2009 (the "Settlement Date"), but not later than March 15, 2009, that number of shares of Common Stock (the "2006 PEP Shares") equal to the product of (I) the number of the shares of Common Stock the Executive would have received under his 2006 PEP Award had the Executive remained employed by the Company Group through the Settlement Date and (II) 24/36 (66.66%); provided that if the aggregate value of the 2006 PEP Shares (determined using the closing price of a share of Common Stock on the New York Stock Exchange on the Settlement Date) is greater than $5 million, the Executive shall only be entitled to the delivery, in full satisfaction of the 2006 PEP Award, of such number of 2006 PEP Shares with an aggregate value equal to $5 million, and the remainder of the 2006 PEP Shares shall be forfeited. The Company and the Executive agree that the restraints and obligations of the Executive pursuant to Section 6, Section 7 and Section 8 hereof shall be deemed for all purposes as controlling, in lieu of any different restraints or undertakings of the Executive on the same subject under the 1997 Plan and the award documentation with respect to the 2006 PEP Award.

        (c)     Payments in Respect of Other Stock-Based Awards.     The Executive holds certain deferred stock awards and performance share awards (in addition to those discussed under Section 5(b) hereof) granted under the Equity Plans. The following provisions shall govern the treatment of these awards:

•         (i)     Deferred Stock Awards.     State Street has previously awarded to the Executive an award of shares of deferred stock under the 1997 Plan as set forth on Exhibit A hereto (the "DSAs"), which are scheduled to vest on February 15, 2008. In full satisfaction of the DSAs and subject to the Executive's compliance with Section 6, Section 7 and Section 8 hereof, the Company shall pay the Executive on the Delayed Payment Date a single lump sum cash payment of $900,000, provided that in no event shall such payment occur prior to February 15, 2008. The Company and the Executive agree that the restraints and obligations of the Executive pursuant to Section 6, Section 7 and Section 8 hereof shall be deemed for all purposes as controlling, in lieu of any different restraints or undertakings of the Executive on the same subject under the 1997 Plan and the award documentation with respect to the DSAs.

          (ii)     Other Stock-Based Awards.     In full satisfaction of all other equity-based awards held by the Executive under the Equity Plans, including, without limitation, all performance-based equity awards under the 2005 State Street Global Advisors Performance Equity Program pursuant to the 1997 Plan, all performance-based equity awards under the 2007 State Street Global Advisors Performance Equity Program pursuant to the 2006 Plan, and the "Cycle P" and "Vice Chairman" performance awards under the 1997 Plan, but specifically excluding only the Stock Options, the Cycle O Award, the 2006 PEP Award and the DSAs (which shall be subject to Section 5(a), Section 5(b)(i), Section 5(b)(ii) and Section 5(c)(i) hereof, respectively), the Company shall pay the Executive on the Delayed Payment Date a lump sum cash payment of $4.6 million; provided that in the event that the aggregate value of the 2006 PEP Shares (determined in accordance with Section 5(b)(ii) hereof) is less than $5 million as of the Settlement Date, the Company shall pay the Executive on the Settlement Date, but not later than March 15, 2009, an additional lump sum cash payment equal to (i) $5 million less (ii) the aggregate value of the 2006 PEP Shares (determined in accordance with Section 5(b)(ii) hereof). Any amounts payable by the Company pursuant to this Section 5(c)(ii) are subject to the Executive's compliance with Section 6, Section 7 and Section 8 hereof. The Company and the Executive agree that the restraints and obligations of the Executive pursuant to Section 6, Section 7 and Section 8 hereof shall be deemed for all purposes as controlling, in lieu of any different restraints or undertakings of the Executive on the same subject under the Equity Plans and any related award documentation.

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        (d)     Pension Benefits.     The Executive is vested in his currently accrued benefit as of the Separation Date under the Company's tax-qualified defined benefit pension plan, the State Street Retirement Plan (the "Qualified Plan"), and State Street's Management Supplemental Retirement Plan, as amended and restated effective as of January 1, 2008 (the "SERP" and together with the Qualified Plan, the "Retirement Plans"). The Company has furnished to the Executive a schedule showing his vested benefits under the Retirement Plans (the "Retirement Benefits"). The Executive shall be entitled following the Separation Date to receive the Retirement Benefits in accordance with and subject to the terms of the applicable Retirement Plans. In addition to the foregoing benefits, the Executive will be entitled to receive, following the Separation Date, all of his accrued benefits as of the Separation Date under State Street's Salary Savings Program (the "Savings Plan") and its Management Supplemental Savings Plan as amended and restated effective as of January 1, 2008 (formerly, the 401(k) Voluntary Deferral Plan) (the "MSSP"), in each case in accordance with and subject to the terms of the applicable plan. The Company has furnished the Executive a schedule, appended hereto as Exhibit B , reflecting, as of December 31, 2006, the Executive's vested accrued benefits under the Qualified Plan, the SERP, the Savings Plan, the MSSP and the Supplemental Pension Plan, as amended and restated effective as of January 1, 2008 (formerly, the Supplemental Defined Benefit Pension Plan) (the "ESRP"). For the avoidance of doubt, for purposes of determining the Executive's benefits under the foregoing programs, compensation or remuneration paid or payable pursuant to Section 2 hereof or otherwise paid or payable pursuant to this Agreement shall be disregarded.

        6.     Non-Competition/Non-Solicitation.     The Executive agrees that he will not, during the 18-month period commencing on the Separation Date (the "Restricted Period"), (a) accept employment with, work for or otherwise provide services to, whether directly or indirectly or whether with or without compensation, any Institution (as defined below); (b) directly or indirectly solicit or encourage any customer or prospective customer (the latter defined to mean any person or entity with which any member of the Company Group has made a business-seeking contact other than by mass mailing or general advertising within 12 months preceding the Separation Date) of, or investor in, any member of the Company Group as of the Separation Date to conduct with anyone else any business activity which such customer, prospective customer or investor could conduct with the Company Group; (c) directly or indirectly hire or solicit any officer or principal of the Company Group to discontinue or curtail his/her employment with the Company Group (other than through generalized solicitations or advertising); (d) directly or indirectly solicit or encourage any independent contractor providing services to any member of the Company Group to terminate or curtail his/her/its relationship with the Company Group; (e) directly or indirectly attempt to induce a client or customer of the Company Group with whom the Executive has had or with whom persons supervised by the Executive have had significant personal contact while employed by the Company Group to (i) transfer its business from the Company Group to any other person or entity; (ii) cease or curtail its business with the Company Group; or (iii) divert a business opportunity from the Company Group to any other person or entity. Notwithstanding the foregoing, (A)(i) on and after the six-month anniversary of the Separation Date, the Executive may provide services to any hedge fund established after the Separation Date of which the Executive is a founding principal and (ii) on or after the first anniversary of the Separation Date, the Executive may accept employment with, work for or provide services to any hedge fund which is not controlled by or under common control with an Institution, and (B) nothing herein shall prevent the Executive from owning not in excess of 1% of any security issued and outstanding of an entity listed on a national securities exchange or the Nasdaq National Market. For purposes of this Agreement, an "officer", "principal" or "independent contractor" of the Company Group is any person who acquired such status on or within 12 months preceding the date of the asserted breach. For purposes of this Agreement, "control" (including the terms "controlled by" and "under common control with") means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of an entity or person, whether through the ownership of voting securities, by contract, or otherwise.

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        For purposes of this Agreement, each of the following entities (together with its affiliates and subsidiaries) is an "Institution": Fidelity Investments, Barclays Global Investors, N.A., Wellington Management Co., LLP, The Bank of New York Mellon, Putnam Investments, Goldman Sachs Asset Management LP, BlackRock, Inc. and any institution in addition to the foregoing that is among the five institutions with the highest value of total assets under management as listed in Institutional Investor's annual ranking of America's Top Money Managers, Total Assets Under Management (historically published in the month of July) or Pensions & Investments' annual ranking of Top Firms Ranked By Worldwide Assets (historically published in the month of May) (the "Top Five(5)") published most recently prior to the Separation Date (the "Publication Date"); provided that, if one or both of these publications change the title of their rankings, the ranking(s) utilized will be ranking(s) of total assets under management; and provided further that, if one or both of these publications change their names, or cease to carry out the described annual rankings, the ranking(s) utilized will be by the publication(s) that are recognized in the worldwide investment community as the most trustworthy rankings, as determined by the Executive Compensation Committee of the Board (as defined in Section 10 hereof) in its sole discretion. If for any reason the publications used to determine the Top Five (5) institutions have different rankings, then any Institution listed in the Top Five (5) list of any such publication will be considered an Institution. For purposes of this Agreement, Institutions shall be determined without regard to, and shall not include, the Company Group. Furthermore, any successor entity to an Institution, by way of merger, acquisition (either of stock or substantially all of the assets), reorganization, change of name or other similar event occurring subsequent to the Publication Date, shall be deemed to be an Institution.

        7.     Confidential Information.     The Executive agrees that, except as authorized in writing by the Company's Chief Executive Officer, as required by applicable law, rule, regulation or legal process, or as may be reasonably required in connection with obtaining legal advice, he will not, directly or indirectly, use or disclose any Confidential Information belonging to the Company Group. For purposes of this Agreement, "Confidential Information" means any and all information of the Co