SLM (ISM)

 

In January 2008, Mr. Terracciano and the Corporation entered into a retainer agreement for Mr. Terracciano’s service as Chairman of the Board, subject to his re-election by shareholders, for a three-year term, which was subsequently extended to a four-year term. Under the original agreement, Mr. Terracciano’s annual cash compensation was set at $600,000; at the same time that the agreement was extended to a four-year term, however, this amount was reduced at Mr. Terracciano’s request to $480,000, consistent with the Corporation’s expense reduction program. Under the agreement, Mr. Terracciano received 200,000 shares of restricted stock and options to purchase 500,000 shares of the Corporation’s common stock. The options were granted at the closing price on the grant date, $17.83, have a 10-year term, and once vested, may be exercised throughout the 10-year term. The options vest in equal installments on the first, second and third anniversaries of their grant date. As originally granted, the restricted stock vests in equal installments on the first, second and third anniversaries of the grant date; when the agreement was extended to a four-year term, however, the vesting of the first tranche of restricted stock was postponed by one year. Mr. Terracciano is also entitled to reimbursement for office and transportation expenses commensurate with the amount of time he allocates to Board service.

 

 

Upon his retirement as chief executive officer in May 2005, Mr. Lord entered into a compensation arrangement with the Corporation for his services as Chairman of the Board and a non-executive employee of the Corporation. Mr. Lord received an option grant to purchase 300,000 shares of the Corporation’s common stock for a three-year term of service. These options were granted with an exercise price of $48.84 and vest when the share price reaches a closing price of $58.61 for five trading days. To the extent these options are not already vested, the options also vest on May 19, 2010. Once vested, the options may be exercised within five years of Mr. Lord’s separation from Board service. In addition, Mr. Lord was provided office and secretarial support commensurate with his duties as Chairman of the Board. The compensation for Mr. Lord reported in the tables below is on account of his service as Chairman of the Board through November 26, 2007. Mr. Lord’s compensation as a Named Executive Officer is reported in the Executive Compensation section of this proxy statement.

 

 

Upon his retirement as Chief Executive Officer in May 2005, Mr. Lord entered into a compensation arrangement with the Corporation for his services as Chairman of the Board and a non-executive employee of the Corporation. Mr. Lord received an option grant to purchase 300,000 shares of the Corporation’s common stock for a three-year term of service. These options were granted at the closing price for the Corporation’s common stock on May 19, 2005 and vest when the share price reaches a closing price of 120 percent of the grant price for five trading days, but no earlier than 12 months from the date of grant. To the extent these options are not already vested, the options also vest on the fifth anniversary of their grant date. Regardless of whether the options are vested, one-third of the options will be forfeited if Mr. Lord is not elected to the Board at the May 2007 meeting. Once vested, the options may be exercised within five years of Mr. Lord’s separation from Board service. In addition, Mr. Lord is compensated $100,000 in annual base salary. He is provided office and secretarial support commensurate with his duties as Chairman of the Board. He participates in the Corporation’s benefit programs on the same terms and conditions as other part-time employees. These benefits are medical, life and disability insurance (in lieu of the life and travel accident insurance benefits that other Board members receive) and participation in the Corporation’s tax-qualified defined contribution and defined benefit plans. Consistent with the Corporation’s policy for personal use of corporate-owned aircraft, Mr. Lord pays directly the incremental cost to the Corporation for his personal use of such aircraft.