Exhibit 10.20

TRANSITION AGREEMENT

This Agreement dated September 8, 2009 is between Donald H. Layton (“Executive”)
and E*TRADE Financial Corporation (the “Company”) (the “Parties”).

WHEREAS, the Parties entered into the Employment Agreement, dated as of March 2,
2008 (the “Employment Agreement”), pursuant to which Executive agreed to serve
as the Company’s Chief Executive Officer until December 31, 2009, or until such
earlier time as a successor Chief Executive Officer was hired, or one of the
Parties otherwise terminated the relationship; and

WHEREAS, the Parties wish to set forth their intentions and commitments
regarding the transition of the Executive during the remaining portion of his
term as Chief Executive Officer.

1. Transition.

(a) The Parties hereby agree that Executive’s employment with the Company will
continue until the earlier of: (i) the date on which the Company hires a new
Chief Executive Officer; or (ii) December 31, 2009 (as applicable, the
“Transition Period”), unless Executive’s employment is otherwise terminated by
either Party prior to the end of the Transition Period in accordance with the
Employment Agreement. Upon completion of the Transition Period, Executive shall
resign (and the Company shall accept such resignations) from any and all
director, manager, officer, employee, or other positions he may hold with the
Company, its subsidiaries and any of its affiliates and from the Board of
Directors of the Company and the board of directors or any subsidiary of the
Company on which Executive serves.

(b) During his continued employment during the Transition Period, Executive
shall continue to receive the salary and benefits set forth in the Employment
Agreement, in addition to the benefits set forth in Section 2 below.

(c) Executive agrees to actively assist in the search for and transition to a
permanent Chief Executive Officer during the Transition Period, including
undertaking all necessary corporate communications, using best efforts to keep
the management team together, maintaining relationships with regulators and
analysts, assisting in the search for a permanent Chief Executive Officer and in
the transition of Executive’s responsibilities.

2. Special Recognition Awards. To recognize Executive’s successful efforts in
the recapitalization and stabilization of the Company since his hiring,
Executive shall receive the following cash awards subject to his continued
employment during the Transition Period:

(a) A payment of $375,000 per month, payable effective starting September 1,
2009 through December 31, 2009.

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(b) Upon completion of the Transition Period in exchange for the services
described in Section 1(c) during the Transition Period, a lump sum payment of
$1,500,000.00 (the “Transition Payment”), subject to Executive having signed a
release of claims in the form set forth on Exhibit A hereto (the “Release”),
which unless otherwise requested by Executive shall be paid by wire transfer on
the day following the date on which the Release becomes effective and
irrevocable (or as promptly as practicable thereafter). Notwithstanding the
foregoing, in the event that the Executive engages in an act that would give
rise to “Cause” as defined in his existing employment agreement, or in the event
that he materially breaches the terms of this Agreement, he shall forfeit the
Transition Payment.

3. Other Benefits.

(a) The Company shall pay for the reasonable attorney’s fees and expenses
incurred by Executive in connection with the review and negotiation of this
Agreement, such payment to be made no later than 60 days after the date hereof.

(b) The Company agrees to provide to Executive the use of an office through the
first anniversary of the last day of his employment, along with other routine
support services (e.g., email access) and either (i) email access and desk space
to an assistant who will be paid by Executive personally or (ii) reasonable
assistant services from existing Company resources.

4. Tax Matters: All amounts referenced in Section 2 and elsewhere in this
Agreement shall be subject to any required tax withholding by the Company. The
payments under Section 2 are intended to qualify for the short-term deferral
exception to Section 409A of the Code and therefore, for the avoidance of doubt,
shall in no event be paid later than March 15, 2010.

5. Continuing Agreements: The Employment Agreement shall remain in effect during
the Transition Period, and Executive shall continue to be bound by and comply
with the Agreement Regarding Employment and Proprietary Information and
Inventions between the Company and Executive. Executive shall retain his equity
incentive awards on their existing terms, as set forth in the applicable award
agreements and the Employment Agreement.

6. Necessary Approvals. If after the date of this Agreement, any amounts payable
hereunder become prohibited by applicable law or regulation, the Company and
Executive will work together to honor the intent of this Agreement in a manner
that complies with applicable regulatory authority.

7. Mutual Non-Disparagement; Disclosure of Agreement: During and following
Executive’s employment with the Company, Executive agrees that he shall not
disparage the Company or any of its current or future officers, directors,
employees with whom he is acquainted, or its current products or services, and
the Company agrees that it

 

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will not disparage Executive in the course of any authorized internal or
external communication, and the Company shall cause its current and future
directors and executive officers not to disparage Executive and shall instruct
its executive officers and directors to refrain from making such statements and
to instruct their respective representatives to so refrain. Notwithstanding the
foregoing, nothing contained in this Agreement shall prohibit Executive or the
Company from (x) responding publicly to incorrect, disparaging or derogatory
public statements to the extent reasonably necessary to correct or refute such
public statement or (y) making any truthful statement to the extent
(i) necessary with respect to any litigation, arbitration or mediation involving
this Agreement, including, but not limited to, the enforcement of this Agreement
or (ii) required by law or by any court, arbitrator, mediator or administrative
or legislative body (including any committee thereof) with apparent jurisdiction
over Executive or the Company. Executive and the Company acknowledge that the
Company will be required to disclose this Agreement and its terms in its public
filings with the SEC.

8. Dispute Resolution: Consistent with the Employment Agreement, in the event of
any dispute or claim relating to or arising out of this Agreement (including,
but not limited to, any claims of breach of contract, wrongful termination or
age, sex, race or other discrimination), Executive and the Company agree that
all such disputes shall be fully and finally resolved by binding arbitration
conducted by the American Arbitration Association in New York, New York in
accordance with its National Employment Dispute Resolution rules. Executive
acknowledges that by accepting this arbitration provision he is waiving any
right to a jury trial in the event of such dispute. In connection with any such
arbitration, the Company shall bear all costs not otherwise borne by a plaintiff
in a court proceeding. The prevailing party shall be entitled to recover from
the losing party its attorneys’ fees and costs incurred in any action brought to
enforce any right arising out of this Agreement.

9. Due Authority. By executing this Agreement, the representative of the Company
represents and warrants that he is duly authorized to bind the Company to the
terms of this Agreement and that all necessary or appropriate corporate
approvals for this Agreement to be effective have been obtained.

10. Entire Agreement; Miscellaneous: This Agreement, the Employment Agreement,
any confidentiality, proprietary rights and dispute resolution agreement between
Executive and the Company, and any agreement or plan concerning any stock
options and other equity awards issued to Executive, constitute the entire
agreement between the parties with respect to the subject matter hereof and
thereof and supersede all prior negotiations and agreements, whether written or
oral. This Agreement may not be altered or amended except by a written document
signed by Executive and an authorized representative of the Company. Executive
and the Company agree that this Agreement shall be interpreted in accordance
with and governed by the laws of the State of New York.

 

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Date: September 8, 2009     E*TRADE Financial Corporation     By:   /s/ Ron
Fisher       Name:   Ron Fisher       Title:   Chair of the Compensation
Committee

 

Date: September 8, 2009     /s/ Donald H. Layton     Donald H. Layton

 

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EXHIBIT A – Release of Claims

1. Full Release: In exchange for the benefits described in the Transition
Agreement, dated September 8, 2009 (the “Transition Agreement”), between Donald
H. Layton (“Executive”) and E*TRADE Financial Corporation (the “Company”) (the
“Parties”), Executive and his successors and assigns release and absolutely
discharge the Company and its subsidiaries and other affiliated entities, and
each of their respective shareholders, directors, employees, agents, attorneys,
legal successors and assigns of and from any and all claims, actions and causes
of action, whether now known or unknown, which Executive now has, or at any
other time had, or shall or may have, against those released parties arising out
of or relating to any matter, cause, fact, thing, act or omission whatsoever
occurring or existing at any time to and including the date of execution of this
Transition Agreement by Executive, including, but not limited to:

(a) claims relating to any letter or agreement offering Executive service or
employment with the Company, the Employment Agreement between Executive and the
Company dated as of March 2, 2008, the parties’ employment relationship, the
termination of that relationship, and any claims for breach of contract,
infliction of emotional distress, fraud, defamation, personal injury, wrongful
discharge or age, sex, race, national origin, industrial injury, physical or
mental disability, medical condition, sexual orientation or other
discrimination, harassment or retaliation, claims under the federal Americans
with Disabilities Act, Title VII of the federal Civil Rights Act of 1964, as
amended, 42 U.S.C. Section 1981, the federal Fair Labor Standards Act, the
federal Executive Retirement Income Security Act, the federal Worker Adjustment
and Retraining Notification Act, the federal Family and Medical Leave Act, the
National Labor Relations Act, and applicable state statues preventing employment
discrimination,

(b) the Age Discrimination in Employment Act (subject to Section 3 below); or

(c) any other federal, state or local law, all as they have been or may be
amended, and all claims for attorneys fees and/or costs, to the full extent that
such claims may be released.

This Release does not apply to (i) claims which cannot be released as a matter
of law, including claims for indemnification under applicable state law,
(ii) any right Executive may have to enforce the Transition Agreement, including
the agreements that are incorporated by reference therein, (iii) any right or
claim that arises after the date of this Release, (iv) Executive’s eligibility
for indemnification and advancement of expenses in accordance with applicable
laws or the certificate of incorporation and by-laws of Company and/or its
subsidiaries, or any applicable insurance policy or (v) any right Executive may
have to obtain contribution as permitted by law in the event of entry of
judgment against Executive as a result of any act or failure to act for which
Executive, on the one hand, and Company or any other release hereunder, on the
other hand, are jointly liable. This Release does not amend any equity
compensation award agreement between Executive and the Company.

 

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2. All Claims Waived: Executive understands that he is releasing claims that he
may not know about. That is Executive’s knowing and voluntary intent even though
he recognizes that someday he may regret having signed the Transition Agreement
and this Release. Nevertheless, by signing the Transition Agreement and this
Release, Executive agrees that he is assuming that risk, and he agrees that the
Transition Agreement and this Release shall remain effective in all respects in
any such case. Executive expressly waives all rights he may have under any law
that is intended to protect him from waiving unknown claims.

3. Older Workers Benefit Protection Act: In accordance with the Older Workers
Benefit Protection Act, Executive understands and acknowledges that he has been
advised to consult an attorney before accepting the Transition Agreement and
signing this Release. Executive further understands and acknowledges that he has
at least 21 days to sign this Release by dating and signing a copy of this
Release and returning it to the Company, although it may be accepted at any time
within such period. Executive further understands that, once having signed this
Release, Executive will have an additional 7 days within which to revoke the
release of claims solely under the Age Discrimination in Employment Act (the
“ADEA Release”), by delivering written notice of revocation of the ADEA Release
to the Company’s General Counsel. If Executive revokes such ADEA Release during
such seven-day period, Executive will not be eligible for the payments and
benefits under Section 2(b) of the Transition Agreement.

EXECUTIVE UNDERSTANDS THAT HE IS ENTITLED TO CONSULT WITH, AND HAS CONSULTED
WITH, AN ATTORNEY PRIOR TO SIGNING THIS RELEASE AND THAT HE IS GIVING UP ANY
LEGAL CLAIMS HE HAS AGAINST THE PARTIES RELEASED ABOVE BY SIGNING THIS RELEASE.
EXECUTIVE IS SIGNING THIS AGREEMENT KNOWINGLY, WILLINGLY AND VOLUNTARILY IN
EXCHANGE FOR THE BENEFITS DESCRIBED IN THE TRANSITION AGREEMENT.

 

Date: December 18, 2009     /s/ Donald H. Layton     Donald H. Layton

 

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CONSULTING AGREEMENT

December 18, 2009

Donald H. Layton

 

Re: Consulting Services Agreement

Dear Don:

This letter agreement sets forth the terms and conditions of your consulting
services to E*TRADE Financial Corp. (the “Company”), effective December 31, 2009
through June 30, 2010 (the “Consulting Period”).

Services. You agree to be available for part-time consultation with the
Company’s Chief Executive Officer, whether interim or permanent, as reasonably
requested by the Company in order to facilitate such Chief Executive Officer’s
transition.

Compensation. Your compensation hereunder during the Consulting Period will
consist of the following:

 

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A fee of $1,100 per hour worked at the request of the Company.

 

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You shall be reimbursed in accordance with the policies of the Company for
necessary and reasonable business and travel expenses incurred by you in
connection with the performance of your duties hereunder.

 

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All fees or expense reimbursements due to you shall be paid promptly upon
submission of a listing of the time or expenses, together with supporting
documentation reasonably requested by the Company.

Independent Contractor Status. You understand that, during the Consulting
Period, you will not be an employee of the Company. To the extent consistent
with applicable law, the Company will not withhold any amounts from any
consulting fees paid hereunder as federal income tax withholding or as employee
contributions under the Federal Insurance Contributions Act or any other state
or federal laws. You shall be solely responsible for the withholding and/or
payment of any federal, state or local income or payroll taxes.

Confidentiality. You agree to treat as confidential and not to publish,
distribute or otherwise disclose in any manner (except to employees, consultants
and advisors of the Company who agree to be bound by these provisions) any
information received from the Company or its representatives in connection
herewith, without the prior written approval of the Company (such approval shall
not be unreasonably withheld). Upon termination of your services hereunder, you
shall promptly deliver to the Company all copies in

 

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whatever form existing (whether written, computerized or otherwise) of any and
all confidential information or documents of the Company.

Indemnification. The Company shall indemnify you and hold you harmless from and
against any and all losses, claims, damages, liabilities, penalties,
obligations, judgments, awards, costs, fees, expenses and disbursements,
including without limitation the costs, fees, expenses and disbursements of
counsel and others, as and when incurred, from the first dollar, of
investigating, preparing or defending any pending or threatened action, claim,
suit, proceeding or investigation, directly or indirectly caused by, relating
to, based upon, arising out of or in connection with the performance by you of
services to the Company pursuant to this letter agreement, other than as is
found in a final judgment by a court of competent jurisdiction (not subject to
further appeal) to have resulted primarily and directly from your gross
negligence, bad faith or willful misconduct. The Company shall be entitled to
participate in and control the defense of any such proceeding under this
provision at its sole cost and expense.

Termination. Your consulting services hereunder may be terminated at any time by
either you or the Company upon written notice to the other party. Such
termination for any reason shall not affect any obligations of either party
which have arisen prior to such termination.

Miscellaneous. This letter agreement describes the entire terms and conditions
of your engagement by the Company during the Consulting Period. Nothing in this
letter agreement shall amend or terminate any other agreement between you and
the Company, whether related to the terms of your employment prior to the
Consulting Period or the termination of such employment. This letter agreement
will be governed by the laws of the State of New York.

 

 

    Sincerely,     E*TRADE FINANCIAL CORPORATION Agreed and accepted:     /s/
Donald H. Layton     Dated: December 21, 2009 (Signature)    

 

 

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