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                                                                   Exhibit 10.16

                      LEGG MASON WOOD WALKER, INCORPORATED

                PRIVATE CLIENT GROUP DEFERRED COMPENSATION PLAN
                     (December, 1999 Amending Restatement)


          This document constitutes the Legg Mason Wood Walker, Incorporated
Private Client Group Deferred Compensation Plan (the "Plan"), formerly known as
the Legg Mason Wood Walker, Incorporated Retail Deferred Bonus Compensation
Plan.

          1.  PURPOSE.  The purpose of the Plan is to enhance the ability of
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Legg Mason Wood Walker, Incorporated (the "Company") to attract and retain full-
time financial advisors.

          2.  DEFINITIONS.  As used herein, the following definitions shall
              -----------
apply:

              (a) "Account" means a Financial Advisor's combined Credit
                  ---------
Interest Account and Phantom Stock Account.

              (b) "Committee" means the Legg Mason Wood Walker, Incorporated
                  -----------
Private Client Group Deferred Compensation Plan Committee consisting of such
members as the Company's President shall select from time to time.

              (c) "Company" shall have the meaning set forth in Section 1 of
                  ---------                                     -------
this Plan.

              (d) "Compensation Credit" shall have the meaning set forth in
                  ---------------------
Section 4(b) of this Plan.
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              (e) "Credit Interest Account" means a deferred compensation
                  -------------------------
account established  pursuant to Section 4(a) of this Plan.
                                 -------

              (f) "Credit Interest Rate" means the average of the twelve month
                  ----------------------
end rates of the Company's credit interest rate paid during a Plan Year to the
Company's cash reinvestment accounts.

              (g) "Disability" shall have the meaning set forth in Section 9(h)
                  ------------                                     -------
of this Plan.

              (h) "Eligible Gross Production" means gross commission and fee
                  ---------------------------
revenues generated from sales of all products and services in the capacity of a
Financial Advisor of the Company, excluding production as determined annually by
the PCG Legg Mason Financial Advisor compensation schedule.
<PAGE>

              (i) "Fair Market Value" shall have the meaning set forth in
                  -------------------
Section 4(b)(i) of this Plan.
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              (j) "Financial Advisor" or "FA" means an employee who devotes full
                  ------------------     ----
time to the generation of commission and fee revenues through the sale of
investment products and services to the public and is compensated on a
commission basis.  This definition excludes any executive office/departmental
personnel unless specifically included by separate agreement.  A Branch Manager
who receives some compensation in addition to commissions shall be eligible to
participate in the Plan solely on the basis of personal Gross Production.

              (k) "Gross Production" means gross commission and fee revenues
                  ------------------
generated from sales of all products and services in the capacity of a Financial
Advisor of the Company.

              (l) "Interest Credits" shall have the meaning set forth in
                  ------------------
Section 5 of this Plan.
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              (m) "LMI" shall have the meaning set forth in Section 4(b) of
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this Plan.

              (n) "Phantom Stock Account" means a deferred compensation account
                  -----------------------
established pursuant to Section 4(b) of this Plan.
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              (o) "Payment Date" shall have the meaning set forth in Section
                  --------------                                     -------
4(b)(ii) of this Plan.

              (p) "Plan Year" means the calendar year.
                  -----------

              (q) "Retirement" shall have the meaning set forth in Section 9(b)
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of the Plan.

              (r) "Share Units" shall have the meaning set forth in Section
                  -------------                                     -------
4(b) of this Plan.

          3.  ELIGIBILITY.  All FA's are eligible to participate in the Plan
              -----------
commencing on their date of employment and remain eligible to participate in the
Plan until the calendar year during which their 60th birthday occurs.  For the
calendar year during which an FA's 60th birthday occurs and each subsequent
calendar year during which the FA is employed as an FA, the FA may elect
annually, on a form prescribed by the Company and attached hereto as Exhibit D,
                                                                     -------
whether or not to participate in the Plan, provided,  however, that once an FA
elects to not participate in the Plan, the FA shall not thereafter be eligible
to participate in the Plan in any subsequent calendar year.  In order to receive
a Compensation Credit for any Plan Year during which the FA was employed, the FA
must have been

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<PAGE>

employed for the entire Plan Year, except, however, that if the employment of an
FA terminates during a Plan Year by reason of the FA's death or Disability, the
FA shall, for purposes of receiving a Compensation Credit for such Plan Year, be
deemed to have been employed for the entire Plan Year during which such death of
Disability occurred.

          4.  DEFERRED COMPENSATION.  As of the end of each Plan Year commencing
              ---------------------
with the year 1994, the Company will defer the payment of, and will credit or
allocate to the Account of each FA who is eligible to participate in the Plan,
an amount determined by applying the rate schedule for Gross Production
applicable for such year to the FA's Eligible Gross Production for the Plan
Year.  The FA shall elect annually on a form prescribed by  the Company and
attached as Exhibit A hereto prior to the beginning of each Plan Year whether
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such deferred compensation amount for any such Plan Year shall be allocated to,
and accrue in, a Credit Interest Account or a Phantom Stock Account, as set
forth below.  For the 1999 Plan Year, each FA shall have the ability to make a
special election prior to the end of the 1999 Plan Year, in the form attached
hereto as Exhibit A (1999), for the purposes (i) of selecting whether deferred
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compensation for the 1999 Plan Year shall be allocated to, and accrue in, a
Credit Interest Account or a Phantom Stock Account, and (ii) described in

Section 4(c).
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              (a) Credit Interest Account.  As of the last day of each Plan
                  -----------------------
Year, all deferred bonus amounts allocated to a Credit Interest Account for
prior Plan Years shall be credited with an amount equal to one year's interest
based on the Credit Interest Rate; and

              (b) Phantom Stock Account.  As of the last day of each Plan
                  ---------------------
Year, all deferred bonus amounts allocated to a Phantom Stock Account for prior
Plan Years shall be deemed converted into units that are economically equivalent
to, but are not actual, shares of Legg Mason, Inc. ("LMI") Common Stock (but
only to the extent not previously converted into Share Units or credited with
Interest Credits, except as set forth in Section 4(c) below). These "phantom"
                                         -------
shares of LMI Common Stock are referred to as "Share Units." The Company will
establish a Phantom Stock Account on its books and records for the benefit of
the FA wherein the Company will credit to such Phantom Stock Account Share Units
based on the conversion of the compensation deferred by the FA under this Plan
(hereafter the "Compensation Credit"). Each Compensation Credit will be made by
the Committee as soon as practicable after the last day of the Plan Year during
which the Compensation Credit was deferred. The number of Share Units into which
such Compensation Credit shall be converted (calculated to four decimal places)
will be determined as of the fifth trading day after the date the Compensation
Credit is made and will be equal to the amount of the Compensation Credit
divided by the fair market value of a share of LMI Common Stock, determined as
set forth below.

                  (i) Fair Market Value.  Fair market value of a share of LMI
                      -----------------
Common Stock will equal the five day average of the closing prices on the
principal exchange on which LMI Common Stock is traded for the four trading days
immediately preceding the applicable valuation date and the valuation date
(where the valuation date is the fifth trading day after the date on which the
Phantom Stock Account is credited), or, if LMI Common

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Stock is not then traded on an exchange, such amount as is determined by the
Company using any reasonable method of valuation ("Fair Market Value").

                  (ii) Adjustment to Phantom Stock Account upon Dividend by
                       ----------------------------------------------------
LMI. If, prior to the date an FA receives a payment from the Company pursuant
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to this Plan (a "Payment Date"), LMI pays any dividend (other than in LMI Common
Stock) upon its Common Stock, or makes any distribution (other than in LMI
Common Stock) with respect thereto, the FA's Phantom Stock Account will be
credited with additional Share Units equivalent to that number of phantom shares
of LMI Common Stock determined by dividing the amount of the dividend or other
distribution allocable to the Share Units already credited to the Phantom Stock
Account as of the record date for the dividend or distribution, by 95% of the
Fair Market Value of a share of LMI Common Stock on the fifth business day after
the payment date for the dividend or distribution.

                  (iii)  Adjustment to Phantom Stock Account upon Certain
                         ------------------------------------------------
Events. In the event that, prior to a Payment Date, the number of outstanding
------
shares of LMI Common Stock is changed by reason of a stock split, stock
dividend, combination of shares or recapitalization, or LMI Common Stock is
converted into or exchanged for other shares as a result of a merger,
consolidation, sale of assets or other reorganization or recapitalization, the
number of Share Units then credited to an FA's Phantom Stock Account will be
appropriately adjusted so as to reflect such change (based upon the best
estimate of the Company as to relative values).

                  (iv) Rights as LMI Stockholder.  Nothing contained in this
                       -------------------------
Plan shall confer or be construed as conferring upon Employee any rights as a
stockholder of LMI or any right to have access to the books and records of LMI
or any subsidiary.

              (c) Elective Transfer to Phantom Stock.  Prior to the conclusion
                  ----------------------------------
of Plan Year 1999, an FA may make a one time election, on a form prescribed by
the Company and attached as Exhibit A (1999), to transfer (i) his entire Credit
                            -------
Interest Account, or (ii) that portion of his entire Credit Interest Account
representing Interest Credits accrued during an entire Plan Year, to a Phantom
Stock Account in accordance with Section 4(b) hereof
                                 -------

          5.  INTEREST CREDITS.  In the event that an FA elects to have his or
              ----------------
her Account accrue income based on the Credit Interest Rate pursuant to Section
                                                                        -------
4(a) of this Plan, any such accrued credits (hereinafter "Interest Credits")
that are based on the Credit Interest Rate will be computed and compounded
annually and immediately prior to distribution to the FA or his or her
beneficiary.  Interest Credits shall be distributed to an FA at the same time as
the deferred bonus amount to which it relates.  The aggregate total of deferred
bonus amounts and Interest Credits accrued thereon shall be referred to herein
as "Interest Units".

          6.  ASSIGNMENT OF BENEFITS.  No amount payable, or other right or
              ----------------------
benefit, under this Plan will, except as otherwise specifically provided by this
Plan or by applicable law, be subject to sale, assignment, transfer, pledge,
encumbrance. attachment, garnishment or levy prior to distribution to an FA.
Since this Plan is intended to be a non-

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<PAGE>

qualified, unfunded plan not subject to the Employment Retirement Income
Security Act of 1974, as amended, payments under this Plan will not be subject
to the provisions of any qualified domestic relations order (as defined under
the Internal Revenue Code of 1986, as amended) applicable to an FA's deferred
compensation benefit.

          7.  RIGHT TO OFFSET.  Notwithstanding any provision herein to the
              ---------------
contrary, any distribution payable under this Plan may be used, at the
discretion of the Committee and subject to compliance with applicable law, to
offset any debt owed by an FA to the Company at the date such distribution would
otherwise be paid.  The Company may withhold distributions payable under this
Plan to offset any debts or other liabilities owed by an FA to the Company.  If
the Company is aware of any errors, loans outstanding, or outstanding or pending
liabilities of an FA, the Company may withhold distributions under this Plan
until such time as the liabilities are satisfied or the Company has determined
that an outstanding or pending liability no longer exists,

          8.  UNFUNDED NATURE OF THE PLAN.  The Company will not be required to
              ---------------------------
purchase, hold or dispose of any investments with respect to amounts credited to
the Account of any FA participating in the Plan.  An FA has no interest in the
Account or in any investments the Company may purchase with such amounts, except
as a general, unsecured creditor of the Company.

              The Plan at all times shall be entirely unfunded. The FA's Account
is merely a record for measuring and determining the amount of deferred
compensation benefits to be paid by the Company to, or with respect to, the FA
under this Plan, and such Account shall be established solely for such
bookkeeping purposes. The Company shall not be required to segregate any funds
or other assets to be used for payment of benefits under this Plan. The FA's
Account shall not be, or be considered as evidence of the creation of, a trust
fund, an escrow or any other segregation of assets for the benefit of the FA or
any beneficiary of the FA. There is no guaranty of benefit payments to the FA.

              The obligation of the Company to make the payments described in
the Plan is an unsecured contractual obligation only, and neither the FA nor any
beneficiary of the FA shall have any beneficial or preferred interest by way of
trust, escrow, lien or otherwise in and to any specific assets or funds. The FA
and each beneficiary of the FA shall look solely to the general credit of the
Company for satisfaction of any obligations due or to become due under this
Plan.

              Should the Company elect to make contributions to a trust
(hereinafter referred to as the "Trust") to assist the Company in paying the
benefits which may accrue hereunder, the amounts contributed shall be used to
purchase the deemed investments under Section 4(b), subject to application of
the provisions of this Section 8 to the actual investments. However,
contributions to the Trust shall not reduce or otherwise affect the Company's
liability to pay benefits under this Plan (which benefits may be paid from the
Trust or from the Company's general assets, in the discretion of the Company),
except that the Company's liability shall be reduced by actual benefit payments
from the Trust (and the Account shall be

                                       5
<PAGE>

appropriately adjusted to reflect such payments). If any such investments, or
any contributions to the Trust, are made by the Company, such investments shall
have been made solely for the purpose of aiding the Company in meeting its
obligations under the Plan, and, except for actual contributions to the Trust,
no trust or trust fund is intended. To the extent that the Company does, in its
discretion, purchase or hold any such investments (other than through
contributions to the Trust), the Company will be named sole owner of all such
investments and of all rights and privileges conferred by the terms of the
instruments or certificates evidencing such investments. Nothing stated herein
will cause such investments, or the Trust, to form part of the Account, or to be
treated as anything but the general assets of the Company, subject to the claims
of its general creditors, nor will anything stated herein cause such
investments, or the Trust, to represent the vested, secured or preferred
interest of the FA. The Company shall have the right at any time to use such
investments not held in the Trust in the ordinary course of its business.
Neither the FA nor any of his beneficiaries shall at any time have any interest
in the Account or the Trust or in any such investments, except as a general,
unsecured creditor of the Company to the extent of the deferred compensation
arrangement which is the subject of the Plan.

          9.  DISTRIBUTIONS.  Except as otherwise provided in Sections 9(f), 9
              -------------
(g), 9(h) and 10 below, distributions of Share Units and/or Interest Units in an
FA's Account shall be made in accordance with the FA's irrevocable election on a
form provided by the Company and attached hereto as Exhibit B (the "Payment
                                                    -------
Option Election") to receive distributions under the Plan:

              (a) as soon as practicable following the last day, but in any
event not later than sixty (60) days following the last day, of the sixth Plan
Year following the Plan Year for which such amount was credited or allocated to
the Account of the FA; or

              (b) in the event an FA's employment with the Company terminates as
a result of Retirement, unless distribution of benefits is forfeited pursuant to
Section 10 due to the FA engaging in competition, either (i) in a single lump
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sum as soon as practicable following the last day, but in any event not later
than sixty (60) days following the last day, of the Plan Year during which the
FA's Retirement occurred or (ii) in three (3) annual installment distributions
of the balance of the Account, the first of which shall occur as soon as
practicable following the last day, but in any event not later than sixty (60)
days following the last day, of the Plan year during which the FA' s Retirement
occurred; provided, however, that if the balance in the FA's Account at the time
of Retirement is less than $20,000, the FA may not elect this option (ii).  For
purposes of this Plan, "Retirement" means an FA's termination of employment with
the Company provided that such termination occurs (i) on or after the FA is age
65; (ii) on or after the FA is age 55 if the sum of the FA's age at termination
of employment and his or her years of service with the Company equals at least
75; or (iii) on or after the FA is age 60 if the FA has a minimum of ten years
of service with the Company.

              (c) Interest Unit Distributions.  In connection with an FA's
                  ---------------------------
Credit Interest Account, the Company will make all distributions in cash.

                                       6
<PAGE>

              (d) Phantom Stock Distributions.  In connection with an FA's
                  ---------------------------
Phantom Stock Account, the Company will make all distributions in shares of LMI
Common Stock. There is no limit on the total number of shares of LMI Common
Stock that may be distributed under this Section.

              (e) Market Risk.  When the Company distributes stock, an FA will
                  -----------
be subject to some market risk if the trading price of LMI Common Stock declines
during the five day period since Fair Market Value will be measured by taking
into account stock prices over a five day period preceding the date a
distribution is due.  After the date of distribution, an FA must make his or her
own decision as to whether to sell or retain the shares received under this
Section.  Any brokerage commissions or other charges incurred in the event the
FA decides to sell such shares will be the sole responsibility of the FA, not
the Company.

              (f) Termination of Employment.  Except as provided below, for
                  -------------------------
purposes of determining the amount of any distribution payable to an FA, the FA
shall not be entitled to receive any partial or pro-rated credit for amounts
allocated to the FA's Account for Plan Years ending after the date which is six
(6) years prior to the date of termination. If an FA's employment with the
Company terminates for any reason other than death, Disability or Retirement (as
such terms are defined herein), whether involuntary or voluntary and for
whatever cause or for no cause, the FA shall have no right or claim to any such
Share Units or Interest Units, and such Share Units and Interest Units shall be
forfeited in their entirety. Forfeited amounts shall revert to the Company and
will not be allocated to other FA's. In the event any FA desires a ruling as to
the potential application of this Section, he may request a ruling from the
Committee in accordance with Section 15.
                             -------

              (g)  Death of FA.
                   -----------

                   (i) In the event an FA's employment with the Company
terminates as a result of the FA's death, all Share Units and Interest Units in
his Account shall be paid, in accordance with the FA's Payment Option Election,
to the FA's estate or to the FA's beneficiary (if the FA has named a beneficiary
as described in Section 12) as soon as practicable following the last day, but
                -------
in any event not later than sixty (60) days following the last day of the Plan
Year during which the FA's death occurred.

                   (ii) In the event of an FA's death subsequent to the date of
the FA's Retirement and at a time during which the FA is receiving distributions
under the Plan, all Share Units and Interest Units then remaining in the FA's
Account shall be paid, notwithstanding the FA's Payment Option Election, in a
lump sum, to the FA's estate or to the FA's beneficiary (if the FA has named a
beneficiary as described in Section 12) as soon as practicable following the
                            -------
date of death of the FA.

              (h) Disability of FA.  In the event an FA's employment with the
                  ----------------
Company terminates as a result of the FA's Disability, all Share Units and
Interest Units in his Account shall be paid , in accordance with the FA's
Payment Option Election, as soon as practicable following the last day, but in
any event not later than sixty (60) days following the

                                       7
<PAGE>

last day, of the Plan Year during which the FA's Disability occurred. For
purposes of this Plan, "Disability" shall mean a medically determinable physical
or mental impairment which, as determined by the Committee using such criteria
as it establishes in its sole and absolute discretion, will prevent the FA from
performing his usual duties or any other similar duties available in the
Company's employ.

          10. NON-COMPETE.  If a Retired FA engages in competition with the
              -----------
Company prior to the date of a distribution, the FA's Account shall be forfeited
in its entirety.  Forfeited amounts shall revert to the Company and will not be
allocated to other FAs.

              (a) For purpose of this Section, an FA shall be deemed to have
"engaged in competition" with the Company if he or she:

                  (i) discloses the names of or otherwise identifies any of the
Company's customers to any person, firm, corporation, association, or other
entity for any reason or purpose whatsoever;

                  (ii) discloses to any person, firm, corporation, association,
or other entity any information regarding the Company's general business
practices or procedures, methods of sale, list of products, personnel
information or any other information concerning the Company's business;

                  (iii) owns, manages, operates, controls, is employed by, acts
as an agent for, participates in or is connected in any manner with the
ownership, management, operation or control of any firm, corporation,
association or other entity which is engaged in businesses which are or may be
competitive to the business of the Company; provided further that this
restrictive covenant shall encompass the State of Maryland and any other states
where the Company is engaged in business, and every city, county, and other
political subdivision of such states; or

                  (iv) solicits or calls, either by himself or at his direction
has any other person or firm solicit or call, any of the customers of the
Company on whom the FA called, with whom the FA became acquainted, or of whom
the FA learned of during his employment by the Company.

              (b) It is the intention of the Company that this Section be given
the broadest protection allowed by law with regard to the restrictions herein
contained. Each restriction set forth in this Section shall be construed as a
condition separate and apart from any other restriction or condition. To the
extent that any restriction contained in this Section is determined by any court
of competent jurisdiction to be unenforceable by reason of it being extended for
too great a period of time, or as encompassing too large a geographic area, or
over too great a range of activity, or any combination of these elements, then
such restriction-shall be interpreted to extend only over the maximum period of
time, geographic area, and range of activities which the court deems reasonable
and enforceable.

                                       8
<PAGE>

              (c) In the event any FA desires a ruling as to the potential
application of this Section, he may request a ruling from the Committee in
accordance with Section 15.
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              (d) If the Committee in its discretion determines that an activity
otherwise described herein would not be injurious to the Company, it may waive
the application of this Section to such activity, which waiver shall be binding
upon the FA and the Company.  The Company shall exercise such discretion in a
uniform, nondiscriminatory manner.

          11. REPORTS.  After the close of each Plan Year, the Committee shall
              -------
provide reports to the FA (or, in the event of the FA's death, to the FA's
beneficiary) showing the status of the FA's Accounts as of the end of the Plan
Year.

          12. BENEFICIARY.  The FA may designate, upon the form attached as
               -----------
Exhibit C hereto and to be filed with the Committee, one or more primary
-------
beneficiaries or contingent beneficiaries under the Plan to receive all or a
specified part of any deferred compensation benefits which at the time of the
FA's death remain unpaid under this Plan.  An FA may change or revoke any such
designation from time to time.  No such designation, change or revocation shall
be effective unless executed by the FA and received by the Committee during the
FA's lifetime.  Each such designation, change or revocation shall be applicable
to all balances in the FA's Account, specifically including all such amounts
subsequently credited, and any such beneficiary designation under the Plan
presently on file with the Committee shall be effective under this Plan until
changed or revoked in the manner specified herein.  No such change or revocation
shall require the consent of any beneficiary theretofore designated by the FA.
If the FA fails to designate a beneficiary, or subsequent facts render a
designation invalid or inoperative, then the benefits shall be payable to a
personal representative of the FA's estate.  Unless the FA has otherwise
specified in the beneficiary designation, the beneficiary or beneficiaries
designated by the FA shall become fixed as of the FA's death so that if a
beneficiary survives the FA but dies before the receipt of all payments due such
beneficiary such remaining payments shall be payable to the representative of
such beneficiary's estate.  In the event of the death of an FA who has an
undistributed balance in his or her Account, then the FA's Beneficiary will be
entitled to receive the balance of the Account in accordance with the FA's
Payment Option Election.

          13. WITHHOLDING TAXES.  Amounts payable under the Plan shall be
              -----------------
subject to such deductions or withholding as may be required by law.  In the
event a deduction or withholding is required prior to distribution of benefits
hereunder, the Company shall have the right to deduct any required withholding
from any other compensation or amount otherwise payable by the Company to the
FA.

          14. EFFECT ON EMPLOYMENT RIGHTS AND OTHER BENEFIT PROGRAMS.  Neither
              ------------------------------------------------------
participation in nor any of the provisions of the Plan shall give the FA any
right to be retained in the employment of the Company.  This Plan shall not be
construed as a contract of employment.  The Company maintains an employment-at-
will policy.  As an

                                       9
<PAGE>

FA is free to end his or her employment with the Company at any time for any
reason or no reason, the Company is free to end the employment with an FA at any
time for any reason or no reason. Furthermore, the Company may end at any time
an FA's employment as a Financial Advisor. In the event an FA is no longer
employed as a Financial Advisor, the FA will no longer be entitled to defer
compensation pursuant to this Agreement. However, as long as an FA continues to
be employed in good standing by the Company, the FA shall continue to be
entitled to the benefits due the FA under this Agreement. This Plan is in
addition to, and not in lieu of, any other employee benefit plan or program in
which the FA may be or become eligible to participate by reason of employment
with the Company, and the timing of receipt of benefits hereunder shall have no
effect on contributions to or benefits under such other plans or programs except
as the provisions hereof and of each such plan or program may specify.

          15. ADMINISTRATION.  The Committee, as constituted from time to time,
              --------------
shall have full power to interpret, construe and administer this Plan, including
authority to determine any dispute or claim with respect thereto.  The
determination of the Committee in any matter within the powers and discretion
granted to it under this Plan, made in good faith, shall be binding and
conclusive upon the Company, the FA and all other persons having any right or
benefit hereunder.  If the FA is a member of the Committee at any time, the FA
shall have no authority as such member with respect to any matter specifically
affecting the FA's interest hereunder (such as determination of the amount, form
or time of benefit payments to the FA), all such authority being reserved to the
other Committee members, to the exclusion of the FA, and the FA shall act only
in his or her individual capacity in connection with any such matter.

          16. ARBITRATION  FA agrees that any controversy or dispute arising
              -----------
under this Plan which cannot be resolved by the Committee, or out of FA's
employment by the Company (including, but not limited to, claims arising under
the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age
Discrimination in Employment Act of 1967, and analogous state statutes), shall
be submitted for arbitration upon demand of either party in accordance with the
rules of the National Association of Securities Dealers, Inc. or the New York
Stock Exchange, Inc., provided, however, that in the event of termination of
FA's employment, the Company shall be entitled to seek injunctive relief or
confess judgment against FA pursuant to the terms of any other applicable
agreement and that the Company shall be entitled to apply for and obtain from
any state or federal court such relief before or after the commencement of any
arbitration proceeding, such relief to be afforded to the Company pending the
decision of the arbitrators.

          17. CONTROLLING LAW.  This Plan shall be construed, and the legal
              ---------------
relations between the parties in connection with any dispute relating to the
Plan shall be determined, in accordance with the laws of the State of Maryland.

          18. AMENDMENT OR TERMINATION.  The Company reserves the right to
              ------------------------
amend or terminate the Plan at any time.  Any such amendment or termination
shall be by action of the Board of Directors of the Company or the Executive
Committee thereof.

                                       10
<PAGE>

          19. EFFECT OF AMENDMENT OR TERMINATION.  No amendment or termination
              ----------------------------------
of the Plan shall directly or indirectly affect the rights of any FA (or the
FA's designated beneficiary) to payment of the amount in his Account, to the
extent that such amount was payable under the terms of the Plan prior to the
effective date of such amendment or termination.

                                       11
<PAGE>

                                                                EXHIBIT A (1999)
                                                                ----------------

                PRIVATE CLIENT GROUP DEFERRED COMPENSATION PLAN

                     Special Compensation Deferral Election

                        FOR PLAN YEAR 1999 ELECTION ONLY

     I.  Pursuant to the Plan, I agree to the following method of deferral of
amounts that would otherwise be payable to me as current compensation for Plan
Year 1999 (specify percentages below):

          (a)  Credit Interest                ____________%

               or
          (b)  "Phantom" Share Units of Legg
               Mason, Inc. Common Stock       ____________%
                                                       100%
                                              =============

     II.  I hereby make a one-time election to transfer my entire account
balance under the Plan from the Credit Interest option to the Phantom Share Unit
option for any one or more of the following Plan Years checked below:

     [ ]     Plan Year 1994    [ ]    Plan Year 1995    [ ]    Plan Year 1996
     [ ]     Plan Year 1997    [ ]    Plan Year 1998

     Having read and understood the Plan and prospectus provided to me by the
Company, I understand and agree that:

     1.   My deferrals will be made from compensation payable to me in the Plan
          Year 1999 and all subsequent Plan Years until I submit to the Company
          a new Compensation Deferral Election in accordance with the terms of
          the Plan and which is received by the Company prior to the first day
          of the Plan Year for which it is to be effective.

     2.   Elections may not be changed or revoked except at the end of a Plan
          Year.  Any such change or revocation shall only be effective for
          subsequent Plan Years.

     3.   Any deferral is subject to all of the terms and conditions of the
          Plan, including particularly that: (i) compensation which I defer is
          not invested directly in common stock (therefore, I have no rights as
          a stockholder by virtue of this Plan), (ii) Phantom Share Units may
          not be converted to an alternative
<PAGE>

          investment mode except as written in the Plan, and (iii) my only claim
          in the event of financial difficulty of the Company is as an unsecured
          general creditor for the benefits due to me under the Plan.

                                       Financial Advisor:



                                       ____________________________________
                                       Signature                       Date



                                       ____________________________________
                                       Print full name

Receipt Acknowledged:

LEGG MASON WOOD WALKER, INCORPORATED


By:_________________________________
   Signature



                                       2
<PAGE>

                                                                       EXHIBIT A
                                                                       ---------

                PRIVATE CLIENT GROUP DEFERRED COMPENSATION PLAN

                         Compensation Deferral Election


          Pursuant to the Plan, I agree to the following method of deferral of
amounts that would otherwise be payable to me as current compensation for Plan
Year __________ (specify percentages below):

              (i)  Credit Interest                        ____________%

                   or

              (ii) "Phantom" Share Units of Legg
                   Mason, Inc. Common Stock                ___________%
                                                                   100%
                                                           ============


     Having read and understood the Plan and prospectus provided to me by the
Company, I understand and agree that:

     1.   My deferrals will be made from compensation payable to me in the Plan
          Year specified above and all subsequent Plan Years until I submit to
          the Company a new Compensation Deferral Election in accordance with
          the terms of the Plan and which is received by the Company prior to
          the first day of the Plan Year for which it is to be effective.

     2.   Elections may not be changed or revoked except at the end of a Plan
          Year.  Any such change or revocation shall only be effective for
          subsequent Plan Years.
<PAGE>

     3.   Any deferral is subject to all of the terms and conditions of the
          Plan, including particularly that: (i) compensation which I defer is
          not invested directly in common stock (therefore, I have no rights as
          a stockholder by virtue of this Plan), (ii) Phantom Share Units may
          not be converted to an alternative investment mode except as written
          in the Plan, and (iii) my only claim in the event of financial
          difficulty of the Company is as an unsecured general creditor for the
          benefits due to me under the Plan.

                                       Financial Advisor:



                                       ____________________________________
                                       Signature                       Date



                                       ____________________________________
                                       Print full name

Receipt Acknowledged:

LEGG MASON WOOD WALKER, INCORPORATED


By:_________________________________
   Signature

                                       2
<PAGE>

                                                                       EXHIBIT B
                                                                       ---------


                PRIVATE CLIENT GROUP DEFERRED COMPENSATION PLAN

                            Payment Option Election

I hereby elect to receive Share Units and Interest Units in my Account under the
Plan in the following manner: (check one)

       a. _____  as soon as practicable following the last day, but in any
                 event not later than sixty (60) days following the last day, of
                 the sixth Plan Year following the Plan Year for which such
                 amounts were credited or allocated to my Account.

       b. _____  in a lump sum as soon as practicable following the last day,
                 but in any event not later than sixty (60) days following the
                 last day, of the Plan Year in which my employment with Legg
                 terminates as a result of my death, "Disability" or
                 "Retirement," as defined in the Plan.

       c. _____  in three annual installments with the first of such
                 installments occurring as soon as practicable following the
                 last day, but in any event not later than sixty (60) days
                 following the last day, of the Plan Year in which my employment
                 with Legg terminates as a result of my death, "Disability" or
                 "Retirement," as defined in the Plan.

     I understand that if I elect to receive distributions in installments, each
installment will be determined by dividing the then value of the amount to be
distributed by the number of installments remaining to be paid (including the
installment then due).  If the amount of the total distribution is less than
$20,000.00, I understand installment option c. above will not be available and I
will receive a single lump sum payment.  I understand that if I elect options a.
or c. above and am receiving installments as a result of my "Retirement," then
if I die before receiving all amounts to which I am entitled under the Plan, the
<PAGE>

balance in my Account at the time of my death will be distributed to my estate
or beneficiary in a lump sum as soon as practicable after my death.

                                       Financial Advisor:


                                       ____________________________________
                                       Signature                       Date



                                       ____________________________________
                                       Print full name


Receipt Acknowledged:

LEGG MASON WOOD WALKER, INCORPORATED


By:_________________________________
   Signature

                                       2
<PAGE>

                                                                       EXHIBIT C
                                                                       ---------

                PRIVATE CLIENT GROUP DEFERRED COMPENSATION PLAN

                        Designation of Beneficiary(ies)

By virtue of my right under the Agreement to designate the beneficiary(ies) of
any death benefits payable under the Agreement, and subject to any future
exercise of said right by me, I hereby direct that any and all such death
benefits shall be paid, in accordance with the terms of the Agreement, to the
person(s) named below who are living at the time of each such payment, and,
unless otherwise expressly indicated, in equal shares among them if more than
one such person shall be living at the time of each such payment:

     PRIMARY BENEFICIARY(IES)


          __________________________________________________________________
          Name/Relationship                       Address

          __________________________________________________________________
          Name/Relationship                       Address

          __________________________________________________________________
          Name/Relationship                       Address

In the event that no primary beneficiary shall be living at the time of any
death benefit payment, I hereby direct that such remaining payment(s) shall be
made to those person(s) named below who are living at the time of each such
remaining payment, and, unless otherwise expressly indicated, in equal shares
among them if more than one such person shall be living at the time of each such
remaining payment:

     CONTINGENT BENEFICIARY(IES)


          __________________________________________________________________
          Name/Relationship                       Address

          __________________________________________________________________
          Name/Relationship                       Address

          __________________________________________________________________
          Name/Relationship                       Address
<PAGE>

Private Client Group Deferred Compensation Plan
Designation of Beneficiary(ies)
Page Two



In the further event that none of the persons named above, either as primary or
contingent beneficiary(ies), shall be living at the time of any death benefit
payment, all remaining payment(s) shall be made to my estate pursuant to the
Agreement.

     NOTE:  If so specified in the above designations, "person" includes a trust
or corporation.

               Financial Advisor:  ___________________________________________
                                   Signature                              Date



                                   ___________________________________________
                                   Print full name


                                   ___________________________________________
                                   Witness

Receipt Acknowledged:

LEGG MASON WOOD WALKER, INCORPORATED


By:_______________________________
                              Date


                                       2