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