Exhibit 10.39

 

AMENDMENT TO EMPLOYMENT AGREEMENT

 

THIS AMENDMENT to the EMPLOYMENT AGREEMENT between The Ryland Group, Inc., a
Maryland corporation (the “Company”) and R. Chad Dreier (the “Executive”) is
effective as of February 25, 2009 (the “Effective Date”) and amends the
Employment Agreement between the Company and the Executive originally dated as
of July 1, 2002 which was amended and restated as of April 20, 2005 (the
“Employment Agreement”).

 

The Employment Agreement currently provides for the employment of the Executive
through December 31, 2010.  In agreeing to terminate the Employment Agreement
effective May 29, 2009, the Executive is giving up significant compensation and
other benefits that otherwise would be payable to him, including significant
amounts that would be payable in the event he remained in the employment of the
Company or the Company were to terminate the Employment Agreement without
cause.  Accordingly, in consideration of the mutual covenants and agreements of
the parties set forth in this Amendment of the Employment Agreement, and other
good and valuable consideration, the receipt and sufficiency of which are
acknowledged, the parties agree as follows:

 

1.                                       Termination of Employment Agreement. 
The Employment Agreement will terminate effective May 29, 2009.

 

2.                                       Term of Employment, Position and
Responsibilities.  Effective May 29, 2009 (the “Retirement Date”), the Executive
will terminate employment with the Company and cease to serve as Chief Executive
Officer.  The Executive and the Company mutually agree that this termination of
employment will be treated as a “Retirement” of the Executive for all purposes,
including pursuant to the Employment Agreement and any incentive, benefit or
other plans or programs of the Company.  After May 29, 2009, the Executive will
serve as Chairman of the Board and as a non-employee Director of the Company,
receiving compensation as a Director of the Company.

 

3.                                       Compensation and Benefits.  From the
Effective Date of this Amendment until May 29, 2009 (the “Remaining Term”), the
Executive will receive a pro-rated annual Base Salary of $900,000 per year paid
in installments consistent with the normal payroll practices of the Company.

 

On November 30, 2009, the Executive will receive a lump sum cash payment of
$2 million, subject to withholding by the Company, in consideration for the
amendment and termination of the Employment Agreement and his agreement to treat
the termination as a “Retirement.”

 

The Executive is eligible to receive an Annual Bonus for 2009 pro-rated for the
period from January 1, 2009 until the Executive’s date of retirement on May 29,
2009, which is 5/12 of the 2009 Annual Bonus payment for which the Executive is
eligible.  Subject to the terms and conditions of the Executive’s 2009 Annual
Bonus program, the Executive can receive this payment of the 2009 Annual Bonus
after December 31, 2009 and on or before January 25, 2010.

 

 

During the Remaining Term, the Executive is entitled to receive other employee
benefits, such as disability, group life, sickness, accident and health
insurance programs, executive life insurance programs and other perquisites
available to executive officers of the Company.

 

4.                                       Equity Awards and Outstanding Grants. 
Effective as of May 29, 2009, the Executive will receive no further equity
awards from the Company.  Also effective on May 29, 2009, the Executive will
cease to be eligible to vest in the remaining 40,000 Stock Units scheduled to
vest, subject to satisfaction of performance objectives, on March 1, 2010, and
these Stock Units are forfeited and cancelled as of May 29, 2009.

 

5.                                       TRG Incentive Plan.  The Executive is
not eligible to receive a 2009 TRGIP Performance Award.  Effective May 29, 2009,
the Executive is fully vested in his remaining Deferred 2007 TRGIP Performance
Award and Deferred 2008 TRGIP Performance Award.  On November 30, 2009 (six
months after his Retirement Date), the Executive will receive payment of the
remaining amount of his Deferred 2007 TRGIP Performance Award and the full
amount of his Deferred 2008 TRGIP Performance Award, including all earnings
credited by the Company and established by the Compensation Committee with
respect to the Cash Accounts of Participants pursuant to the TRG Incentive Plan.

 

6.                                       Supplemental Executive Retirement
Plan.  On May 29, 2009, which is the Executive’s Retirement Date, the Executive
will receive a lump sum cash payment of $8,217,100, subject to withholding by
the Company, in payment of the Executive’s vested SERP Benefit pursuant to the
Dreier Supplemental Executive Retirement Plan (SERP) which was previously
entered into and effective as of July 1, 2002.  On November 30, 2009, which is
the date that is six (6) months after the Executive’s Retirement Date, the
Executive will receive a lump sum cash payment of $16,434,199, subject to
withholding by the Company, in payment of the Executive’s vested SERP II Benefit
pursuant to the Dreier Supplemental Executive Retirement Plan II (SERP II) which
was previously entered into and effective as of January 1, 2005.

 

7.                                       Executive Retirement Health Insurance
Program.  Effective May 29, 2009, the Executive will receive an Executive
Retirement Health Insurance Program for the Executive and the Executive’s spouse
for a period of fifteen (15) years extending until May 29, 2024.  The Executive
Retirement Health Insurance Program is equivalent to and shall provide the same
coverage and benefits as the Company’s executive health insurance program in
which the Executive currently participates as of the Effective Date of this
Amendment.

 

{Signature page follows}

 

 

IN WITNESS WHEREOF, the Executive and the Company have executed this Amendment
to the Employment Agreement as of February 25, 2009.

 

THE RYLAND GROUP, INC.

 

EXECUTIVE:

 

 

 

 

 

 

By:

/s/ William L. Jews

 

/s/ R. Chad Dreier

 

 

     William L. Jews,

 

R. Chad Dreier

 

     Lead Director of the

 

 

 

     Board of Directors

 

 

 

 

 

 

 

 

 

 

By:

/s/ Norman J. Metcalfe

 

 

 

     Norman J. Metcalfe

 

 

 

     Chairman of the

 

 

 

     Compensation Committee of

 

 

 

     the Board of Directors

 

 

 

 

 

 

 

 

 

 

By:

/s/ Robert J. Cunnion, III

 

 

 

     Robert J. Cunnion, III

 

 

 

     Senior Vice President

 

 

 

 

 

 

 

 

 

Attest:

/s/ Timothy J. Geckle

 

 

 

Timothy J. Geckle

 

 

 

Secretary