EMPLOYMENT AGREEMENT
This Employment Agreement, made and entered into as of the 6th day of May, 2008, by
and between Wachovia Corporation (the “Company”), a North Carolina corporation, and
Xxxx X. Xxxxxxxxx (the “Executive”);
WHEREAS, the Management Resources & Compensation Committee (the “Committee”) of the Board of
Directors of the Company (the “Board”) has determined that it is in the best interests of the
Company and its stockholders to assure that the Company employ the Executive and have the continued
service of the Executive. The Committee believes it is imperative to encourage the Executive’s
full attention and dedication to the Company, and to provide the Executive with compensation and
benefits arrangements upon a termination of employment with the Company which ensure that the
compensation and benefits expectations of the Executive will be satisfied and which are competitive
with those of other corporations.
NOW, THEREFORE, in order to accomplish the objectives set forth above and in consideration of
the mutual covenants herein contained, the parties hereby agree as follows:
1. Employment Period. (a) The “Effective Date” shall mean the first day that the
Executive commences performing her duties for the Company. It is expected that the Effective Date
will be August 1, 2008 but such date may be altered by agreement between the Company and the
Executive; provided that in the event that the Executive is unable to commence performing her
duties by October 1, 2008, then this Agreement shall be void and of no effect.
(b) The Company hereby agrees to employ the Executive and to continue the Executive in its
employ, and the Executive hereby agrees to be employed by and to remain in the employ of the
Company upon the terms and conditions set forth in this Agreement, for the period commencing on the
Effective Date and ending on the third anniversary thereof (the “Employment Period”); provided,
however, that commencing on the third anniversary, and on each annual anniversary of such date
(such date and each annual anniversary thereof shall be hereinafter referred to as the “Renewal
Date”), unless previously terminated, the Employment Period shall be automatically extended so as
to terminate one year from such Renewal Date, unless at least 90 days prior to the Renewal Date the
Company or the Executive, respectively, shall give notice to the Executive or the Company,
respectively, that the Employment Period shall not be so extended. Notwithstanding the foregoing,
in the event a “Change in Control” (as defined herein) occurs, the Employment Period, unless
previously terminated, shall be extended immediately prior to the Change in Control so that the
Employment Period shall terminate no earlier than three years from such Change in Control.
2. Terms of Employment. (a) Positions and Duties. (i) During the Employment
Period, the Company agrees to employ the Executive, and the Executive agrees to serve as an
employee of the Company and as an employee of one or more of its subsidiaries. The Executive shall
perform such duties and responsibilities, in such capacity and with such authority, for the Company
(or one or more of its subsidiaries) as the Company may designate from time to time.
1
Such duties shall be of a type for which the Executive is suited by background, experience and
training, in the Company’s reasonable discretion.
(ii) During the Employment Period, and excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive agrees to devote her 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 (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational
institutions, and (C) manage personal investments, so long as such activities do not interfere with
the performance of the Executive’s responsibilities as an employee of the Company in accordance
with this Agreement and are consistent with the Company’s policies. It is expressly understood and
agreed that to the extent that any such activities have been conducted by the Executive prior to
the Effective Date, the continued conduct of such activities (or the conduct of activities similar
in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive’s responsibilities to the Company.
(b) Compensation. (i) Salary and Bonus. For all services rendered by the
Executive in any capacity under this Agreement, the Company shall pay the Executive during the
Employment Period as compensation (i) an annual salary in an amount not less than the amount of the
Executive’s annual salary as of the Effective Date (as set forth in Appendix A, the “Annual Base
Salary”) and (ii) such annual cash incentive bonus, if any, as may be awarded to her by the Board
or by a Committee designated by the Board (the “Annual Bonus”). Such salary shall be payable in
accordance with the Company’s customary payroll practices, and any such bonus shall be payable in
cash in accordance with the Company’s incentive bonus plans from which the Annual Bonus is awarded.
During the Employment Period prior to the Date of Termination, the Annual Base Salary shall be
reviewed in accordance with the Company’s policies and procedures applicable to the Executive and
may be increased from time to time consistent with such procedures. Any increase in Annual Base
Salary shall not serve to limit or reduce any other obligation to the Executive under this
Agreement. In the event the Executive’s actual Annual Base Salary is increased above the then
current Annual Base Salary during the Employment Period, such increased Annual Base Salary shall
constitute “Annual Base Salary” for purposes of this Agreement, and may not thereafter be reduced
except with the written consent of the Executive.
(ii) 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 employee benefit plans generally available to other peer executives of the Company
or its subsidiaries, including without limitation, savings plans, retirement plans, welfare benefit
plans (including, without limitation, medical, dental, disability and life, but excluding severance
plans) and similar plans, practices, policies and programs. In addition, during the Employment
Period, the Executive shall be eligible to participate in the Company’s stock-based incentive
compensation plans then available to other peer executives of the
2
Company with awards thereunder determined by the Board or by a Committee designated by the
Board, in its sole discretion, except as provided in this Agreement.
(iii) Expenses. During the Employment Period prior to the Date of Termination, the
Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the policies, practices and procedures of the Company and its
affiliated companies in effect for the Executive at the time the expense is incurred.
(iv) Fringe Benefits. During the Employment Period prior to the Date of Termination,
the Executive shall be entitled to fringe benefits and perquisite plans or programs of the Company
and its affiliated companies generally available to executives who are peers of the Executive;
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.
(v) 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 her duties hereunder, and directors’ and officers’ liability insurance, on the same
terms and conditions as generally available to other peer executives of the Company and its
affiliated companies.
(vi) Sign-On Arrangements. In order to induce the Executive to accept employment with
the Company and to replace equity compensation which she will forfeit as a consequence, the Company
will make certain payments and grant retention awards to the Executive as set forth in Appendix A.
3. Termination of Employment. (a) Retirement, Death or Disability. The
Executive’s employment shall terminate automatically upon the Executive’s death or Retirement (as
defined herein) during the Employment Period. For purposes of this Agreement, “Retirement” shall
mean either (i) voluntary termination by the Executive of the Executive’s employment upon
satisfaction of the requirements for early retirement under the Company’s tax-qualified defined
benefit pension plan or (ii) voluntary termination by the Executive of the Executive’s employment
upon satisfaction of the requirements for normal retirement under the terms of the Company’s
tax-qualified pension plan. If the Company determines in good faith that Disability of the
Executive has occurred during the Employment Period (pursuant to the definition of Disability set
forth below), it may give to the Executive written notice in accordance with 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 the Company’s long-term disability
plan.
3
(b) Cause. The Company may terminate the Executive’s employment during the Employment
Period for 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, or
(ii) the willful engaging by the Executive in illegal conduct or gross misconduct which is
materially injurious to the Company.
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 or upon the instructions of the Chairman of the Board or a senior executive
officer of the Company or based 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. Following a Change in Control (as defined herein), the Company’s
termination of the Executive’s employment shall not be deemed to be for Cause unless and until
there shall have been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-fourths of the entire membership of the Board at a meeting
of the Board called and held for such purpose (after reasonable notice is provided to the Executive
and the Executive is given an opportunity, together with counsel, to be heard before such Board),
finding that, in the good faith opinion of such Board, the Executive is guilty of the conduct
described in subparagraph (i) or (ii) above, and specifying the particulars thereof in detail.
(c) Good Reason. The Executive’s employment may be terminated by the Executive for
Good Reason. For purposes of this Agreement, “Good Reason” shall mean, in the absence of a written
consent of the Executive which expressly refers to a provision of this Section 3(c):
(i) prior to a Change in Control, the substantial diminution in the overall importance of the
Executive’s role, as determined by a reduction in the Executive’s targeted Annual Bonus opportunity
(but not a reduction in the Executive’s actual Annual Bonus payment), targeted stock-based
incentive compensation opportunity (but not a reduction in the Executive’s actual stock-based
incentive awards) or the Executive no longer being deemed to be an “executive officer” of the
Company as determined by the Board; provided, however, that none of (I) a change in the Executive’s
title, (II) a change in the hierarchy, (III) a change in the Executive’s responsibilities from line
to staff or vice versa, and (IV) placing the Executive on
4
temporary leave pending an inquiry into whether the Executive has engaged in conduct that
could constitute “Cause” under this Agreement, either individually or in the aggregate shall be
considered Good Reason;
(ii) any failure by the Company to comply with any material provision of this Agreement
(including, without limitation, any provision of Section 2 of this Agreement), other than an
isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by
the Company promptly after receipt of notice thereof given by the Executive;
(iii) any purported termination by the Company of the Executive’s employment otherwise than
as expressly permitted by this Agreement;
(iv) following a Change in Control, the relocation of the principal place of the Executive’s
employment to a location that is more than 35 miles from such principal place of employment
immediately prior to the date the proposed Change in Control is publicly announced, or the
Company’s requiring the Executive to travel on Company business to a substantially greater extent
than required immediately prior to the Change in Control;
(v) following a Change in Control, the Company’s requiring the Executive or all or
substantially all of the employees of the Company who report directly to the Executive immediately
prior to the date the proposed Change in Control is publicly announced to be based at any office or
location other than such person’s office or location on such date;
(vi) any failure by the Company to comply with and satisfy Section 9(c) of this Agreement; or
(vii) following a Change in Control, assignment to the Executive of any duties inconsistent
in any respect with the Executive’s position as in effect immediately prior to the public
announcement of the proposed Change in Control (including status, offices, titles and reporting
requirements), authority, duties or responsibilities, or any other action by the Company which
results in any diminution in such position, authority, duties or responsibilities.
For purposes of this Section 3(c), any good faith determination of “Good Reason” made by the
Executive after a Change in Control shall be conclusive (including any such determination when the
Executive is then eligible for Retirement). In the event the Company challenges the Executive’s
determination of Good Reason, the Company shall continue to make the payments and provide the
benefits to the Executive as set forth in Section 4(a). If it is finally determined pursuant to
the procedures set forth in this Agreement that the Executive’s termination was not for Good
Reason, the Executive shall reimburse the Company the amounts to which it is finally determined to
be entitled.
(d) Notice of Termination. Any termination by the Company for Cause, or by the
Executive for Good Reason, shall be communicated by Notice of Termination to the other
party hereto given in accordance with this Agreement. For purposes of this Agreement, a
5
“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) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the termination date (which date shall
be not more than 30 days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such
fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder. To be
effective, a Notice of Termination given by the Executive terminating employment with the Company
for Good Reason must be received by the Company no later than 60 days from the event(s) giving rise
to the Good Reason termination.
(e) Date of Termination. “Date of Termination” means (i) if the Executive’s
employment is terminated by the Company for Cause, the date of receipt of the Notice of
Termination, unless the Company agrees to a later date no more than 30 days after such notice, as
the case may be, (ii) if the Executive’s employment is terminated by the Executive for Good Reason
or Retirement, the date of receipt of the Notice of Termination or any later date specified therein
within 30 days of such notice, as the case may be, (iii) if the Executive’s employment is
terminated by the Company other than for Cause or Disability, the date on which the Company
notifies the Executive of such termination or any later date specified therein within 30 days of
such notice, as the case may be, (iv) if the Executive’s employment is terminated by reason of
death or Disability, the date of death of the Executive or the Disability Effective Date, as the
case may be, and (v) if the Executive’s employment is terminated by the Executive for other than
Good Reason, death, Disability or Retirement, the date that is 60 days after the date of receipt of
the Notice of Termination by the Company, provided, however, the Company may elect to waive such
notice or place the Executive on paid leave for all or any part of such 60-day period during which
the Executive will be entitled to continue to receive the Annual Base Salary but shall not receive
any Annual Bonus or any other payment from the Company other than reimbursement for expenses as
contemplated in Section 2(b)(iii) and continued participation in the employee benefit plans as
contemplated in Section 2(b)(ii).
(f) Change in Control. For purpose of this Agreement, a “Change in Control” shall
mean:
(i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”)
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
20% or more of either (A) the then outstanding shares of common stock of the Company (the
“Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that for purposes of this subsection (i), the
following acquisitions shall not constitute a
6
Change in Control: (1) any acquisition directly from the Company, (2) any acquisition by the
Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or (4) any acquisition by
any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of
subsection (iii) of this Section 3(f); or
(ii) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or nomination for
election by the Company’s shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (either by a specific vote or by approval of the
proxy statement of the Company in which such person is named as a nominee for director, without
written objection to such nomination) shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened solicitation of proxies or
contests by or on behalf of a Person other than the Board; or
(iii) Consummation of a reorganization, merger, share exchange or consolidation or sale or
other disposition of all or substantially all of the assets of the Company (a “Business
Combination”), in each case, unless, following such Business Combination, (A) all or substantially
all of the individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to
such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively,
the then outstanding shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as the case may be, of
the corporation resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or substantially all of
the Company’s assets either directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business Combination of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person
(excluding any corporation resulting from such Business Combination or any employee benefit plan
(or related trust) of the Company or such corporation resulting from the Business Combination)
beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such corporation except to the extent
that such ownership existed prior to the Business Combination and (C) at least a majority of the
members of the board of directors of the corporation resulting from such Business Combination were
members of the Incumbent Board immediately prior to the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business Combination; or
(iv) Approval by the stockholders of the Company of a complete liquidation or dissolution of
the Company.
7
4. Obligations of the Company upon Termination. (a) Good Reason; Company
Termination other than for Cause, Death, Disability or Retirement. If, during the Employment
Period, the Company shall terminate the Executive’s employment other than for Cause, Death,
Disability or Retirement or the Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in cash within 30 days after the
Date of Termination the aggregate of (A) the Executive’s Annual Base Salary through the Date of
Termination to the extent not theretofore paid, and (B) the product of (1) an Annual Bonus of an
amount equal to the greater of (x) the highest annual cash incentive bonus paid by the Company to
the Executive for the three calendar years prior to the Date of Termination or (y) the Executive’s
then applicable “target” incentive bonus under the then applicable cash incentive compensation plan
prior to the Date of Termination (the greater of clauses (x) or (y) is defined as the “Base
Bonus”), and (2) a fraction, the numerator of which is the number of days in the fiscal year in
which the Date of Termination occurs through the Date of Termination, and the denominator of which
is 365, to the extent not theretofore paid (the “Pro Rata Bonus”), (C) any unpaid Annual Bonus for
the prior year, and (D) any accrued paid time off, in each case to the extent not theretofore paid
(the sum of the amounts described in clauses (A), (B), (C), and (D) shall be hereinafter referred
to as the “Accrued Obligations”).
For purposes of determining the Base Bonus hereunder, the Company shall exclude any special or
one-time bonuses and any premium enhancements to bonuses but shall include any portions of bonuses
(other than the excluded bonuses) which have been deferred by the Executive;
(ii) for each of the two years after the Executive’s Date of Termination (the “Compensation
Continuance Period”), the Company shall pay to the Executive a cash benefit equal to the sum of (A)
the Executive’s highest Annual Base Salary during the twelve months immediately prior to the Date
of Termination, (B) the Base Bonus, and (C) the amount equal to the highest matching contribution
by the Company to the Executive’s account in the Company’s 401(k) plan for the three years
immediately prior to the Date of Termination (the payments described in clauses (A), (B) and (C)
shall be hereinafter referred to as the “Compensation Continuance Payments” and, together with the
benefits referred to in Sections 4(a)(iii), (iv), (v), (vi) and (vii), shall be hereinafter
referred to as the “Compensation Continuance Benefits”). The Company shall make the Compensation
Continuance Payments no more frequently than semi-monthly (and may make the Compensation
Continuance Payments in accordance with the Company’s normal payroll policies and practices), and
shall withhold from the Compensation Continuance Payments all applicable federal, state and local
taxes. Notwithstanding anything contained in this Agreement to the contrary, in the event a Change
of Control has occurred on or prior to the Date of Termination, the Company shall pay the
Compensation Continuance Payments to the Executive in a lump sum in cash within 30 days after the
Date of Termination.
(iii) during the Compensation Continuance Period, the Company shall continue medical, dental
and life insurance benefits to the Executive and/or the Executive’s
8
family on a substantially equivalent basis to those which would have been provided to them in
accordance with the medical, dental and life insurance programs described in Section 2(b)(iv) of
this Agreement if the Executive’s employment had not been terminated. At the end of the
Compensation Continuance Period, if eligible to participate in the applicable programs described in
Section 2(b)(iv) as a “retiree”, the Executive will be treated as a “retiree” under such programs.
If the Date of Termination is after a Change in Control and the Executive is not eligible for
retiree coverage after the Compensation Continuance Period, the Executive and/or the Executive’s
family will receive medical coverage for the remainder of the Executive’s life through the Company
at its cost of providing this coverage. Notwithstanding the foregoing, in the event the Executive
becomes reemployed with another employer and becomes eligible to receive medical, dental and/or
life insurance benefits from such employer, the medical, dental and/or life insurance benefits
described herein shall be secondary to such benefits during the period of the Executive’s
eligibility, but only to the extent that the Company reimburses the Executive for any increased
cost and provides any additional benefits necessary to give the Executive the benefits provided
hereunder. For purposes of determining eligibility (but not the time of commencement of benefits)
of the Executive for retiree benefits pursuant to such plans, practices, programs and policies, the
Executive shall be considered to have terminated employment with the Company on the Date of
Termination. Notwithstanding the foregoing, if the Company reasonably determines that providing
continued coverage under one or more of its welfare benefit plans contemplated herein could
adversely affect the tax treatment of other participants covered under such plans, or would
otherwise have adverse legal ramifications, the Company may, in its discretion, either (A) provide
other coverage at least as valuable as the continued coverage through insurance or otherwise, or
(B) pay the Executive a lump sum cash amount that reasonably approximates the after-tax value to
the Executive of the premiums for continued coverage, in lieu of providing such continued coverage;
(iv) during the Compensation Continuance Period, to the extent not otherwise vested in
accordance with the Company’s stock compensation plans nor pursuant to the terms of the applicable
awards, all unvested options to purchase shares of Company common stock and restricted stock awards
will continue to vest in accordance with the applicable terms of such stock option or restricted
stock grants as if the Executive’s employment with the Company had not been terminated. At the end
of the Compensation Continuance Period, to the extent not otherwise vested in accordance with the
preceding sentence, all unvested stock options and restricted stock awards will vest.
Notwithstanding the termination of the Executive’s employment with the Company, all stock options
granted to the Executive as of the date of this Agreement and during the Employment Period will be
exercisable until the scheduled expiration date of such stock options; provided, however, in the
event any such stock options are designated as “incentive stock options” pursuant to section 422 of
the Code (as defined herein), such stock options shall be treated as non-qualified stock options
for purposes of this sentence to the extent that they are exercised after the period specified in
section 422(a)(2) of the Code (to the extent such provision applies);
(v) during the Compensation Continuance Period, the Executive shall be entitled to continue
to participate in the Company’s fringe benefit and perquisite plans or
9
programs in which the Executive participated immediately prior to the Date of Termination, in
each case in accordance with the Company’s plans, programs, practices and policies;
(vi) to the extent not theretofore paid or provided, the Company shall timely pay or provide
to the Executive any other amounts or benefits required to be paid or provided or which the
Executive is eligible to receive under any plan, program, policy or practice or contract or
agreement of the Company and its affiliated companies (excluding any severance plan, program,
policy or practice) through the Date of Termination, including without limitation, payment of any
amounts previously deferred by the Executive in the Company’s deferred compensation plans in
accordance with the terms of such plans and the Executive’s elections thereunder (such other
amounts and benefits shall be hereinafter referred to as the “Other Benefits”); and
(vii) the Company will provide outplacement services to the Executive in accordance with the
Company’s policies generally applicable to involuntarily terminated employees.
(b) Death. If the Executive’s employment is terminated by reason of the Executive’s
death during the Employment Period, this Agreement shall terminate without further obligations to
the Executive’s legal representatives under this Agreement, other than for payment of Accrued
Obligations, Other Benefits, and the payment of an amount equal to the Executive’s Annual Base
Salary. Accrued Obligations and cash payments pursuant to the preceding sentence shall be paid to
the Executive’s estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the
Date of Termination. With respect to the provision of Other Benefits, the term Other Benefits as
utilized in this Section 4(b) shall include, without limitation, and the Executive’s estate and/or
beneficiaries shall be entitled to receive, death benefits then applicable to the Executive.
(c) Retirement. If the Executive’s employment is terminated by reason of the
Executive’s Retirement during the Employment Period, this Agreement shall terminate without further
obligations to the Executive under this Agreement, other than for payment of Accrued Obligations
and Other Benefits. Accrued Obligations shall be paid to the Executive in a lump sum in cash
within 30 days of the Date of Termination. With respect to the provision of Other Benefits, the
term Other Benefits as utilized in this Section 4(c) shall include, without limitation, and the
Executive shall be entitled to receive, all retirement benefits then applicable to the Executive.
(d) Disability. If the Executive’s employment is terminated by reason of the
Executive’s Disability during the Employment Period, this Agreement shall terminate without further
obligations to the Executive, other than for payment of Accrued Obligations, Other Benefits, and
the payment of an amount equal to the Executive’s Annual Base Salary. Accrued Obligations and the
cash payments pursuant to the preceding sentence shall be paid to the Executive in a lump sum in
cash within 30 days of the Date of Termination. With respect to the provision of Other Benefits,
the term Other Benefits as utilized in this Section 4(d) shall include,
10
and the Executive shall be entitled after the Disability Effective Date to receive, disability
and other benefits then applicable to the Executive.
(e) Cause; Other than for Good Reason. If the Executive’s employment shall be
terminated by the Company for Cause or by the Executive without Good Reason (other than for
Retirement) during the Employment Period, this Agreement shall terminate without further
obligations of the Company to the Executive other than the obligation to pay to the Executive (x)
her Annual Base Salary through the Date of Termination, (y) the amount of any compensation
previously deferred by the Executive, and (z) Other Benefits, in each case only to the extent owing
and theretofore unpaid.
(f) Delayed Payment Date. Notwithstanding any provision to the contrary in this
Agreement, if the Executive is deemed at the time to be a “key employee” within the meaning of that
term under Section 416(i) of the Internal Revenue Code of 1986, as amended (the “Code”), and such
delayed commencement is otherwise required in order to avoid a prohibited distribution under
Section 409A(a)(2) of the Code, no payments or benefits to which the Executive otherwise becomes
entitled under this Agreement shall be made or provided to the Executive prior to the earlier of
(i) the expiration of the six (6)-month period measured from the date of the Executive’s
“separation from service” (as such term is defined in Treasury Regulations issued under Section
409A of the Code) or (ii) the date of the Executive’s death. Upon the expiration of the applicable
Code Section 409A(a)(2) deferral period referred to in the preceding sentence, all payments and
benefits deferred pursuant to this Section 4(f) (whether they would have otherwise been payable in
a single sum or in installments in the absence of such deferral) shall be paid or reimbursed to the
Executive in a lump sum, and any remaining payments and benefits due under this Agreement shall be
paid or provided in accordance with the normal payment dates specified for them herein.
5. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the
Executive’s continuing or future participation in any plan, program, policy or practice provided by
the Company or any of its affiliated companies and for which the Executive may qualify (excluding
any severance plan or program of the Company), nor shall anything herein limit or otherwise affect
such rights as the Executive may have under any contract or agreement with the Company or any of
its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any plan, policy, practice or program of or any contract or agreement
with the Company or any of its affiliated companies at or subsequent to the Date of Termination
shall be payable in accordance with such plan, policy, practice or program or contract or agreement
except as explicitly modified by this Agreement.
6. Full Settlement. Except as specifically provided in this Agreement, the Company’s
obligation to make the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or
other claim, right or action which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the provisions
11
of this Agreement and, such amounts shall not be reduced whether or not the Executive obtains
other employment. The Executive acknowledges and agrees that subject to the payment by the Company
of the benefits provided in this Agreement to the Executive, in no event will the Company or its
subsidiaries or affiliates be liable to the Executive for damages under any claim of breach of
contract as a result of the termination of the Executive’s employment. In the event of such
termination, the Company shall be liable only to provide the benefits specified in this Agreement.
The Company agrees to pay as incurred, to the full extent permitted by law, all legal fees and
expenses which the Executive may reasonably incur as a result of any contest by the Company, the
Executive or others of the validity or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a result of any contest by the
Executive about the amount of any payment pursuant to this Agreement), plus in each case interest
on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the
Code. Notwithstanding the foregoing, if it is finally judicially determined that the Executive
brought any claims contemplated in the previous sentence in bad faith, the Executive shall
reimburse the Company for such fees and expenses which are reasonably related to such bad faith
claim.
7. Covenants. (a) The Executive shall hold in a fiduciary capacity for the benefit of
the Company all secret, non-public or confidential information, knowledge or data relating to the
Company or any of its affiliated companies, and their related businesses, which shall have been
obtained by the Executive during the Executive’s employment by the Company or any of its affiliated
companies (or predecessors thereto). After termination of the Executive’s employment with the
Company, the Executive shall not, without the prior written consent of the Company or as may
otherwise be required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Company and those designated by it. In addition to the
foregoing, the Executive will refrain from taking any action or making any statements, written or
oral, which are intended to or which disparage the business, goodwill or reputation of the Company
or any of its affiliated companies, or their respective directors, officers, executives or other
employees, or which could adversely affect the morale of employees of the Company or any of its
affiliated companies.
(b) (i) While employed by the Company and for two years after the Date of Termination (which
may include the Compensation Continuance Period), the Executive shall not, directly or indirectly,
on behalf of the Executive or any other person, (A) solicit for employment by other than the
Company, (B) encourage to leave the employ of the Company, or (C) interfere with the Company’s or
its affiliated companies’ relationship with, any person employed by the Company or its affiliated
companies.
(ii) While employed by the Company and for two years after the Date of Termination (which may
include the Compensation Continuance Period), subject to the provisions of Rule 5.6 of the North
Carolina State Bar Code of Professional Responsibility, the Executive will not become a director,
officer, employee or consultant engaging in activities similar to those performed by a senior
officer for any business which is in competition with any line of business of the Company or its
affiliates and in which the Executive participated in a
12
direct capacity while she was employed by the Company or its affiliates (including
predecessors thereof) at any time within the one year period preceding the Date of Termination and
which has offices in any location in which the Executive had supervisory responsibility in the
geographic footprint of Wachovia Bank, National Association (or successors thereto, including but
not limited to, Alabama, Arizona, California, Connecticut, Delaware, Florida, Georgia, Maryland,
Mississippi, Nevada, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee,
Texas, Virginia, and Washington, D.C. plus any other state or states added during the Employment
Period) during that one year period; provided that the parties acknowledge that the Executive
engaging in the private practice of law shall not constitute a violation of this Section 7(b)(ii).
The Executive expressly acknowledges the reasonableness of such restrictions and such geographic
area. Further, during such period, the Executive will not acquire an equity or equity-like
interest in such an organization for her own account, except that he may acquire equity interests
of not more than 5% of any such organization from time to time as an investment. Notwithstanding
anything to the contrary contained herein, this Section 7(b)(ii) shall not apply if the Executive
terminates employment with the Company pursuant to Retirement or the Executive terminates
employment with the Company for any reason following a Change in Control or the Company terminates
the Executive’s employment for any reason following a Change in Control. Upon the Executive’s
request to the Company’s Chief Executive Officer, the Company will provide an advance opinion as to
whether a proposed activity would violate the provisions of this Section 7(b)(ii).
(iii) During the Compensation Continuance Period, the Executive shall provide consulting
services to the Company at such time or times as the Company shall reasonably request, subject to
appropriate notice and to reimbursement by the Company of all reasonable travel and other expenses
incurred and paid by the Executive in accordance with the Company’s then-current policy for expense
reimbursement. In the event the Executive shall engage in any employment permitted hereunder
during the Compensation Continuance Period for another employer or on a self-employed basis, the
Executive’s obligation to provide the consulting services hereunder shall be adjusted in accordance
with the requirements of such employment.
(c) In the event of a breach or threatened breach of this Section 7, the Executive agrees that
the Company shall be entitled to injunctive relief in a court of appropriate jurisdiction to remedy
any such breach or threatened breach and, prior to a Change in Control, the Company may terminate
the Compensation Continuance Period and the Compensation Continuance Benefits, if applicable, in
its sole discretion. The Executive acknowledges that monetary damages would be inadequate and
insufficient remedy for a breach or threatened breach of Section 7. Following the occurrence of a
Change in Control, in no event shall an asserted violation of the provisions of this Section 7
constitute a basis for deferring or withholding any amounts otherwise payable to the Executive
under this Agreement. If it is finally determined pursuant to the procedures set forth in this
Agreement that the Executive did not breach this Section 7, the Company shall reimburse the
Executive the amounts to which it is finally determined to be entitled.
13
(d) Any termination of the Executive’s employment or of this Agreement shall have no effect on
the continuing operation of this Section 7; provided, however, upon termination of this Agreement
due to the Company’s or the Executive’s failure to extend the term of this Agreement pursuant to
Section 1(b), Section 7(b)(ii) shall no longer apply to the Executive if the Executive’s employment
shall terminate after the term of this Agreement expires; and provided, further, Section 7(b)(ii)
shall not apply if the Executive terminates employment with the Company pursuant to Retirement or
the Executive terminates employment with the Company for any reason following a Change in Control
or the Company terminates the Executive’s employment for any reason following a Change in Control.
(e) The Executive hereby agrees that prior to accepting employment with any other person or
entity during the Employment Period or during the two years following the Date of Termination
(which may include the Compensation Continuance Period), the Executive will provide such
prospective employer with written notice of the existence of this Agreement and the provisions of
Section 3(e) and this Section 7, with a copy of such notice delivered simultaneously to the Company
in accordance with Section 12(c). The foregoing provision shall not apply if the Company
terminates the Executive’s employment without Cause following a Change in Control, or if the
Executive terminates employment for Good Reason following a Change in Control.
(f) The Executive hereby covenants that her execution of this Agreement and performance of the
obligations under this Agreement do not and will not conflict with, violate the terms of, or
constitute a default under, and will be in compliance with (i) any agreement or instrument to which
the Executive is a party or by which the Executive is bound, or to which the Executive is subject
and (ii) any order, rule, law, regulation or other legal requirement applicable to the Executive.
The Executive covenants that she is not a party to any employment agreement. In addition, she
covenants that she is not subject to any contractual post-termination employment restrictions other
than a covenant not to solicit away Citigroup employees for a period of twelve months following her
termination of employment with Citigroup.
8. Certain Additional Payments by the Company. (a) Except as set forth below or in
Section 11 of this Agreement, in the event it shall be determined that any payment or distribution
by the Company to or for the benefit of the Executive following a Change in Control (whether paid
or payable or distributed or distributable pursuant to the terms of the Agreement or otherwise, but
determined without regard to any additional payments required under this Section 8) (a “Payment”)
would be subject to the excise tax imposed by Section 4999 of the Code (or any successor statute)
or any interest or penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter collectively referred to
as the “Excise Tax”), then the Executive shall be entitled to receive an additional payment (a
“Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including
any interest or penalties imposed with respect to such taxes), including, without limitation, any
income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed
upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments.
14
(b) Subject to the provisions of Section 8(c), all determinations required to be made under
this Section 8, including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be
made by KPMG LLP or such other certified public accounting firm reasonably acceptable to the
Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the
Company and the Executive within 30 business days of the receipt of notice from the Company that
there has been a Payment, or such earlier time as is requested by the Company. All fees and
expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 8, shall be paid by the Company to the Executive by the due
date for the payment of any Excise Tax, or, if earlier, 30 days after the receipt of the Accounting
Firm’s determination. Any determination by the Accounting Firm shall be binding upon the Company
and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code
at the time of the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been made
(“Underpayment”), consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 8(c) and the Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to
or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but no later than ten business days after
the Executive is informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The Executive shall not pay
such claim prior to the expiration of the 30-day period following the date on which it gives such
notice to the Company (or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the Company relating to such
claim,
(ii) take such action in connection with contesting such claim as the Company shall reasonably
request in writing from time to time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order to effectively contest such claim, and
(iv) permit the Company to participate in any proceedings relating to such
15
claim;
provided, however, that the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and shall indemnify and
hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such representation and payment
of costs and expenses. Without limitation on the foregoing provisions of this Section 8(c), the
Company shall control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and xxx for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and xxx for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties
with respect thereto) imposed with respect to such advance or with respect to any imputed income
with respect to such advance; and further provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the
Company’s control of the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the
case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt of an amount advanced by the Company pursuant to Section 8(c), the
Executive becomes entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Company’s complying with the requirements of Section 8(c)) promptly pay to the
Company the amount of such refund (together with any interest paid or credited thereon after taxes
applicable thereto) upon receipt thereof. If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 8(c), a determination is made that the Executive shall
not be entitled to any refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial or refund prior to the expiration of 30
days after such determination, then such advance shall be forgiven and shall not be required to be
repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.
(e) For purposes of this Section 8, any reference to the Executive shall be deemed to include
the Executive’s surviving spouse, estate and/or beneficiaries with respect to payments or
adjustments provided by this Section 8.
9. Successors. (a) This Agreement is personal to the Executive and without the prior
consent of the Company shall not be assignable by the Executive otherwise than by will or
16
the laws of descent and distribution.
(b) This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.
(c) The Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly in writing and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no such succession had taken
place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
10. Arbitration. Except with respect to the Company’s rights to injunctive relief for
matters arising under Section 7 of this Agreement, any disputes or controversies arising under or
in connection with this Agreement (including, without limitation, whether any such disputes or
controversies have been brought in bad faith) shall be settled exclusively by arbitration in
Charlotte, North Carolina in accordance with the commercial arbitration rules of the American
Arbitration Association then in effect; provided, however, that the Company may invoke the American
Arbitration Association’s Optional Rules for Emergency Measures of Protection. Judgment may be
entered on the arbitrator’s award in any court having jurisdiction.
11. Limitation on Payments. Notwithstanding anything to the contrary contained in
this Agreement, including without limitation, Sections 4, 5, 6, 8 and 12(g), aggregate payments by
the Company to the Executive under this Agreement that constitute “Severance Benefits” within the
meaning of the Wachovia Corporation Policy Regarding Shareholder Approval of Future Severance
Agreements shall not exceed the sum of (a) the Executive’s Annual Base Salary plus (b) the highest
annual bonus awarded to the Executive in any of the three full fiscal years immediately preceding
the Executive’s termination of employment, times 2.99, as determined in accordance with such
policy.
12. General Provisions. (a) Governing Law; Amendment; Modification. This
Agreement shall be governed and construed in accordance with the laws of the State of North
Carolina, without reference to principles of conflict of laws. This Agreement may not be modified
or amended except by an instrument in writing signed by the parties hereto.
(b) Severability. If, for any reason, any provision of this Agreement is held
invalid, such invalidity shall not affect any other provision of this Agreement not held so
invalid, and each such other provision shall to the full extent consistent with law continue in
full force and effect. If any provision of this Agreement shall be held invalid in part, such
invalidity shall in no way affect the rest of such provision not held so invalid and the rest of
such provision, together with all other provisions of this Agreement, shall to the full extent
consistent with law continue in full force and effect.
17
(c) Notices. All notices under this Agreement shall be in writing and shall be deemed
effective when delivered in person (in the Company’s case, to its Secretary) or forty-eight (48)
hours after deposit thereof in the U.S. mail, postage prepaid, for delivery as registered or
certified mail — addressed, in the case of the Executive, to such Executive at her residential
address, and in the case of the Company, to its corporate headquarters, attention of the Secretary,
or to such other address as the Executive or the Company may designate in writing at any time or
from time to time to the other party. In lieu of notice by deposit in the U.S. mail, a party may
give notice by telegram or telex.
(d) Tax Withholding. The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant
to any applicable law or regulation.
(e) Strict Compliance. The Executive’s or the Company’s failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any right the Executive or
the Company may have hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason pursuant to Section 3(c) of this Agreement, shall not be
deemed to be a waiver of such provision or right or any other provision or right of this Agreement.
The waiver, whether express or implied, by either party of a violation of any of the provisions of
this Agreement shall not operate or be construed as a waiver of any subsequent violation of any
such provision.
(f) Entire Understanding. From and after the Effective Date this Agreement (including
Appendix A) shall supersede any other agreement between the parties with respect to the subject
matter hereof.
(g) Conflicts with Plans. To the extent any plan, policy, practice or program of or
contract or agreement with the Company attempts to cap, restrict, limit or reduce payments to the
Executive hereunder, such caps, restrictions, limitations or reductions are expressly modified to
permit the payments contemplated hereby and the parties intend that the terms of this Agreement
shall be construed as having precedence over any such caps, restrictions, limitations or
reductions.
(h) Release and Waiver of Claims. In consideration of any Compensation Continuance
Benefits the Company provides to the Executive under this Agreement, the Executive upon termination
of employment with the Company shall execute a separate general release and waiver of claims in
favor of the Company, its affiliates and personnel in a form acceptable to the Company. The
Executive shall not be eligible for any Compensation Continuance Benefits until the Executive has
executed such release and waiver of claims.
(i) Creditor Status. No benefit or promise hereunder shall be secured by any specific
assets of the Company. The Executive shall have only the rights of an unsecured general creditor
of the Company in seeking satisfaction of such benefits or promises.
18
(j) No Assignment of Benefits. No right, benefit or interest hereunder shall be
subject to assignment, encumbrance, charge, pledge, hypothecation or set off in respect of any
claim, debt or obligation, or similar process.
19
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its officers
thereunto duly authorized, and the Executive has signed this Agreement under seal, all as of the
date and year first above written.
WACHOVIA CORPORATION
|
ATTEST: | |
[SEAL] |
||
By: /s/ X. Xxxxxxx Xxxxxxxx
|
/s/ Xxxx X. Xxxxxxx | |
Name: X. Xxxxxxx Xxxxxxxx
|
Xxxx X. Xxxxxxx | |
Title: Chief Executive Officer
|
Secretary | |
/s/ Xxxx X. Xxxxxxxxx Xxxx X. Xxxxxxxxx |
20
Appendix A
Position as of the Effective Date: Senior Executive Vice President, Secretary, General
Counsel, and member of the Operating Committee of the Company, reporting to the Chief Executive
Officer of the Company.
Annual Base Salary as of the Effective Date: $467,000.
Annual Bonus for 2008: For 2008, the Executive will receive a guaranteed minimum cash
incentive of $1,750,000 (including if the Executive’s employment terminates in 2008 or 2009 prior
to payment of such amount, other than the Executive’s voluntary termination other than for Good
Reason or a termination by the Company for Cause). This payment will be subject to applicable
withholding taxes and standard deductions and will be payable on February 28, 2009 or as soon
thereafter as reasonably practicable. If the Executive’s employment is terminated by the Company
other than for Cause or the Executive terminates her employment for Good Reason, in each case prior
to the payment of the Annual Bonus for 2008, for purposes of Section 4(a)(ii)(B) of this Agreement
the Base Bonus shall be, and for purposes of Section 11(b) of this Agreement the “highest annual
bonus awarded to the Executive in any of the three full fiscal years immediately preceding the
Executive’s termination of employment” shall be, $1,750,000.
Annual stock-based compensation award for 2008: The Executive will receive a guaranteed
minimum equity award for 2008 with an economic value of $2,000,000 provided that the Executive has
not voluntarily terminated her employment for any reason other than Good Reason or has not been
terminated by the Company for Cause as of the date such equity award is made. For 2008, the
Executive will receive 20% of the economic value of such award in the form of stock options and 80%
in the form of restricted stock. Both the stock options and restricted stock shall vest over 5
years in equal annual installments from the date of grant (currently scheduled for February 17,
2009). Stock options shall be exercisable for a 10 year period from the date of grant. The grants
will be subject to the terms and conditions of the Stock Incentive Plan (or successor plan) and
applicable award agreements. Applicable award agreements will provide for accelerated vesting in
event of the termination of the Executive’s employment due to death, Disability, by the Company
other than for Cause or by the Executive for Good Reason. In the event that the Executive’s
employment is terminated due to death, Disability, by the Company other than for Cause or by the
Executive for Good Reason prior to granting of such awards, the $2,000,000 will be paid in a cash
lump sum to the Executive (or her estate, if applicable), subject to applicable withholding taxes
and the applicable limits of Wachovia’s Policy Regarding Shareholder Approval of Future Severance
Agreements (it being understood that to the extent such policy limits such cash payments, such cash
payments shall be reduced to the limits imposed by such policy).
Annual Bonus and stock-based incentive plans following 2008: The Executive will be eligible
to participate in the Operating Committee Incentive Plan. In the years following 2008 during the
Employment Period, the Committee will establish the Executive’s target incentive award and target
equity award based on its annual review of target compensation for executive officers and
21
the market for executive compensation in October of each year. Beginning with the 2009 performance
year, the Executive’s incentive compensation will be based on the Executive’s target compensation,
and will be adjusted based on the Company’s performance and the Executive’s individual performance.
Sign-On Arrangements:
| (A) | Upfront Bonus: The Executive is eligible to receive an “upfront” bonus of $500,000, minus required taxes and withholdings, payable in a lump sum as promptly as practicable following the Effective Date. In the event the Executive voluntarily terminates employment with the Company within one year of the Effective Date for any reason other than Good Reason or the Company terminates her employment for Cause, the Executive will reimburse the Company within thirty (30) days of the Date of Termination (or have deducted from amounts still owed the Executive, other than amounts which constitute deferred compensation pursuant to Section 409A of the Code) such upfront bonus (net of taxes withheld) in the following amount: 0-6 months employed — 75%; and 6-12 months employed — 50%. | ||
| (B) | Upfront Stock Award: The Company will recommend at the first meeting of the Committee after the Effective Date, that the Executive be considered to receive stock options or restricted shares with an economic value of $1,750,000 under the Company’s Stock Incentive Plan, provided that the Executive is an active employee of the Company on that date. For purposes of determining the number of stock options to grant, a stock option value equal to 25% of the average closing price for the 30 trading days ending the last trading day in the month prior to grant will be used. For purposes of determining the number of shares of restricted stock to grant, a stock value equal to the average closing price for the 30 trading days ending the last trading day in the month prior to grant will be used. Any grant of restricted stock or stock options will be subject to the approval of the Committee at the meeting wherein they review such awards. The effective date of the grant will be the date of such meeting, and the option price on any options granted will be the closing price of the Company’s common stock on the date of grant. Vesting for both the stock options and restricted shares will occur in equal annual installments over (5) five years. The grants are subject to the terms and conditions of the Stock Incentive Plan. Applicable award agreements will provide for accelerated vesting in event of the termination of the Executive’s employment due to death, Disability, by the Company other than for Cause or by the Executive for Good Reason. The Executive will advise the Company’s Executive Compensation department of her desired mix of stock options and restricted stock (e.g., 20% options and 80% restricted stock) by August 1, 2008. |
22
| (C) | Make-Whole Award: If the Executive becomes an employee of the Company as contemplated herein, the Executive will forfeit certain unvested shares of stock from her current employer. The Company will recommend at the first meeting of the Committee following the Effective Date that the Executive be awarded a grant of restricted shares under the Stock Incentive Plan. The number of shares the Executive will receive will be based on the value of the 30 day average closing price of Citigroup shares in the 30 days preceding the date of such grant times the number of forfeited shares. This value will be converted into a number of shares of the Company’s common stock based on the 30 day average closing price of the Company’s stock over the same period. Such recommendation will be made only if the following two conditions are met: (1) the Executive shall have provided full documentation of the ownership and plan documents for Citigroup shares owned, and (2) the Executive shall remain employed by the Company on the date the recommendation is made. Any grant of stock will be subject to the approval of the Committee at the meeting wherein they review such awards. The effective date of the grant will be the date of such meeting. Vesting of the restricted stock will occur in equal annual installments over (3) three years. The grants are subject to the terms and conditions of the Stock Incentive Plan. Applicable award agreements will provide for accelerated vesting in event of the termination of the Executive’s employment due to death, Disability, by the Company other than for Cause or by the Executive for Good Reason. |
Expenses: The Executive will be reimbursed for the Executive’s weekly commutation costs
between Washington, D.C. and Charlotte, N.C. Such reimbursement will be applicable until August 1,
2010 and may be extended by mutual agreement thereafter. Such reimbursement will be considered
taxable income to the Executive.
23
