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                                                                   EXHIBIT 10.26

                               SEVERANCE AGREEMENT

      THIS AGREEMENT is entered into as of January 5, 2005 (the "Effective
Date"), by and between WM. BRITTON GREENE (the "Employee") and THE ST. JOE
COMPANY, a Florida corporation (the "Company").

1.    TERM OF AGREEMENT

      This Agreement shall become effective on the Effective Date and, except to
      the extent provided in Section 9.5, shall terminate five (5) years after
      the Effective Date; provided, however, that if a Qualifying Termination of
      Employment occurs prior to the expiration of such five (5) year period,
      this Agreement shall remain in effect until the Company has met all of its
      obligations hereunder.

2.    DEFINITIONS

      2.1.  Cause means any of the following: the willful commission of, or the
            willful omission to take, an action in bad faith and to the material
            detriment of the Company; commission of an act of active and
            deliberate dishonesty or fraud against the Company; a material
            breach of this Agreement or the Company's policies; conviction
            following final disposition of any available appeal of a felony; or
            pleading guilty or no contest to a felony.

      2.2   Change in Control means the occurrence of any of the following
            events after the date of this Agreement:

            a)    The consummation of a merger or other transaction as a result
                  of which the Company's shareholders own 50% or less of the
                  combined voting power, directly or indirectly, of the
                  continuing or surviving entity's securities outstanding
                  immediately after such merger or other transaction;

            b)    The sale, transfer, exchange or other disposition of all or
                  substantially all of the Company's assets;

            c)    The liquidation or dissolution of the Company; or

            d)    Any transaction as a result of which any person is the
                  "beneficial owner" (as defined in Rule 13d-3 under the
                  Securities Exchange Act of 1934, as amended), directly or
                  indirectly, of securities of the Company representing 25% or
                  more of the total voting power represented by the Company's
                  then outstanding voting securities. For purposes of this
                  Paragraph, the term "person" shall have the same meaning as
                  when used in sections 13(d) and 14(d) of the Securities
                  Exchange Act of 1934, but shall exclude (1) a trustee or other
                  fiduciary holding securities under an employee benefit plan

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                  of the Company or a parent or subsidiary of the Company, and
                  (2) a corporation owned directly or indirectly by the
                  stockholders of the Company in substantially the same
                  proportions as their ownership of the common stock of the
                  Company.

            A transaction shall not constitute a Change in Control if its sole
            purpose is to change the state of the Company's incorporation or to
            create a holding company that will be owned in substantially the
            same proportions by the persons who held the Company's securities
            immediately before such transaction. Furthermore, the Company's
            purchase of Company stock from the Alfred I. duPont Testamentary
            Trust and/or the Nemours Foundation shall in no event be deemed to
            result in a Change in Control.

      2.3   Continuation Period means the period commencing on the date of the
            Employee's Qualifying Termination of Employment and ending on the
            earlier of:

            a)    The date thirty-six (36) months after the Qualifying
                  Termination of Employment; or

            b)    The date of the Employee's death.

      2.4   Disability means the Employee's disability which constitutes a
            long-term disability under the Company's long-term disability plan
            then in effect.

      2.5   Good Reason means any of the following:

            a)    The Employee has experienced a demotion with the Company that
                  results in a substantial and material reduction in duties or
                  responsibilities with the Company from that in effect
                  immediately prior to a Change in Control;

            b)    The Employee has incurred a 10% or more reduction in total
                  compensation as an employee of the Company (consisting of
                  annual base salary and target bonus percentage);

            c)    The Employee has been notified that his principal place of
                  work as an employee of the Company will be relocated, without
                  his permission, by more than fifty (50) miles; or

            d)    A successor to the Company fails to comply with Section 10.1.

            The Company and the Employee, upon mutual written agreement, may
            waive any of the foregoing provisions with respect to an event that
            otherwise would constitute Good Reason.

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      2.6.  Qualifying Termination of Employment means a termination of the
            Employee's employment under any of the following circumstances:

            a)    The Employee resigns for Good Reason; or

            b)    The Company terminates the Employee's employment for any
                  reason other than Cause, death or Disability.

            The determination of whether the Employee's employment has
            terminated shall be made without regard to whether the Employee
            continues to provide services to the Company as a member of its
            Board of Directors or otherwise in the capacity of an independent
            contractor. A transfer of the Employee's employment from the Company
            to a successor of the Company shall not be considered a termination
            of employment if such successor complies with the requirements of
            Section 10.1.

3.    AMOUNT OF SEVERANCE PAY

      Within thirty (30) business days after a Qualifying Termination of
      Employment, the Company shall pay the Employee as follows:

      3.1   If the Qualifying Termination of Employment occurs within the first
            twenty-four (24) months after the occurrence of a Change in Control,
            a lump sum equal to the product of two (2) times the sum of:

            a)    The Employee's base salary at the greater of (1) the annual
                  rate in effect on the date when the Qualifying Termination of
                  Employment is effective, or (2) the annual rate in effect on
                  the date of the Change in Control; plus

            b)    The Employee's annual bonus based on the target percentage
                  amount for the most recent year completed prior to the date
                  when the Qualifying Termination of Employment is effective.

      3.2   If the Qualifying Termination of Employment does not meet the
            requirements of Section 3.1 above, a lump sum equal to the product
            of one (1) times the sum of:

            a)    The Employee's base salary at the annual rate in effect on the
                  date when the Qualifying Termination of Employment is
                  effective; plus

            b)    The Employee's annual bonus based on the target percentage
                  amount for the most recent year completed prior to the date
                  when the Qualifying Termination of Employment is effective.

            For purposes of determining the Employee's annual base salary and
            annual bonus percentage under Sections 3.1 and 3.2 above, any
            reduction in annual base salary

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            or annual target bonus that would constitute Good Reason under this
            Agreement shall be deemed not to have occurred.

4.    GROUP INSURANCE AND OUTPLACEMENT SERVICES

      4.1   Group Insurance. In the event of a Qualifying Termination of
            Employment, during the Continuation Period the Employee (and, where
            applicable, the Employee's dependents) shall be entitled to medical
            and dental benefits under the Company's welfare benefit plans (as
            that term is defined in Subsection 3(1) of the Employee Retirement
            Income Security Act of 1974, as amended), as if the Employee were
            still employed during such period. Such medical and dental benefits
            shall be provided at the same level and at the same after-tax cost
            to the Employee as is generally available to similar Company
            executives. The Employee's salary, for purposes of such plans, shall
            be determined using the method set forth in Section 3.1 or 3.2,
            whichever is applicable. To the extent the Company is unable or does
            not wish to cover the Employee under its plans during the
            Continuation Period, the Company shall provide the Employee with
            substantially equivalent benefits on an individual basis at no
            additional after-tax cost to the Employee. The foregoing
            notwithstanding, in the event the Employee becomes eligible for
            comparable insurance coverage in connection with new employment, the
            coverage provided by the Company under this Section shall terminate
            immediately. Any medical or dental coverage provided pursuant to
            this Section shall be applied, to the extent permitted by law, to
            reduce the Company's group health continuation coverage
            responsibilities under the Consolidated Omnibus Budget
            Reconciliation Act of 1985.

      4.2   Outplacement Services. In the event of a Qualifying Termination of
            Employment, the Employee shall be entitled to senior executive level
            outplacement services at the Company's expense for up to three (3)
            months. The Company reserves the right to select the outplacement
            firm.

5.    EXCISE TAXES

      5.1   No Gross-Up Payment. In the event it shall be determined by an
            Accounting Firm (within the meaning of Section 5.2 below) that any
            payment or distribution by the Company to or for the benefit of the
            Employee, whether paid or payable or distributed or distributable
            pursuant to the terms of this Agreement or otherwise (a "Payment"),
            would be subject to the excise tax imposed by Section 4999 of the
            Internal Revenue Code of 1986, as amended (or any successor thereto)
            or comparable state or local tax or any interest or penalties with
            respect to such excise tax or comparable state or local tax (such
            excise tax, together with any such interest and penalties, are
            hereinafter collectively referred to as the "Excise Tax"), then the
            amount of the Payment due to the Employee shall be reduced (but not
            below zero) to the extent necessary that no portion thereof shall be
            subject to the Excise Tax and no gross-up payment shall be made. If
            the Accounting Firm

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            determines that the total Payments are to be reduced under the
            preceding sentence, then the Company shall promptly give the
            Employee notice to that effect and a copy of the detailed
            calculation thereof. The Employee may then elect, in the Employee's
            sole discretion, which and how much of the total Payments are to be
            eliminated or reduced (as long as after such election no Excise Tax
            will be payable) and shall advise the Company in writing of the
            Employee's election within ten (10) days of receipt of notice. If no
            such election is made by the Employee within such ten (10) day
            period, then the Company may elect which and how much of the total
            Payments are to be eliminated or reduced (as long as after such
            election, no Excise Tax will be payable) and shall notify the
            Employee promptly of such election. No additional payments by the
            Company or return of payments by the Employee shall be required or
            made if a late determination based on case law, an IRS holding, or
            otherwise, would result in a recalculation of the Excise Tax
            implications.

      5.2   Determination by Accountant. All determinations and calculations
            required to be made under this Section shall be made by an
            independent accounting firm selected by the Company from among the
            largest four accounting firms in the United States (the "Accounting
            Firm"), which shall provide its determination (the "Determination"),
            together with detailed supporting calculations both to the Company
            and the Employee within fourteen (14) days of the Qualifying
            Termination of Employment. Any Determination by the Accounting Firm
            shall be binding upon the Company and the Employee, absent manifest
            error.

6.    TERMINATION UPON DEATH

      In the event of the Employee's death prior to termination of employment,
      this Agreement shall terminate and the Company shall only be obligated to
      (a) pay to the Employee's estate or legal representative the annual base
      salary to the extent earned by the Employee prior to the Employee's death,
      and (b) pay any other benefits to the extent required by the Company's
      retirement and benefits plans. The Company may, however, pay the estate or
      legal representative a bonus that the Employee has earned prior to his
      death. After making such payment(s) and providing such benefits, the
      Company shall have no further obligations under this Agreement. If the
      Employee dies after termination of employment but before receiving all
      payments to which he has become entitled hereunder, payment shall be made
      to the estate of Employee.

7.    DISABILITY

      In the event of the Employee's Disability, the Company shall have the
      right, at its option, to terminate the Employee's employment. Unless and
      until so terminated, during any period of Disability during which the
      Employee is unable to perform the services required of him, the Employee's
      salary shall be payable to the extent of, and subject to, the Company's
      policies and practices then in effect with regard to sick leave and
      disability benefits. In the event of the Employee's termination due to the
      Employee's Disability,

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      the Company shall only be obligated to (a) pay to the Employee or his
      personal representative the Employee's annual base salary to the extent
      earned by the Employee prior to the termination of employment, (b) pay any
      disability benefits as provided under the Company's long-term disability
      plan then in effect, and (c) pay any other benefits to the extent required
      by the Company's retirement and benefits plans. After making such
      payment(s) and providing such benefits, the Company shall have no further
      obligations under this Agreement; provided, however, that nothing
      contained in this Section shall restrict the Employee's eligibility to
      receive disability and other related benefits offered pursuant to the
      Company's plans, policies, or programs.

8.    TERMINATION FOR CAUSE OR WITHOUT GOOD REASON.

      In the event that the Company terminates the Employee's employment for
      Cause or the Employee terminates his employment without Good Reason, the
      Company shall only be obligated to pay to the Employee the Employee's
      annual base salary to the extent earned by the Employee prior to the
      termination of employment. After making such payment, the Company shall
      have no further obligations under this Agreement.

9     RESTRICTIVE COVENANTS

      9.1   Confidential Information. During the period of his employment, the
            Employee shall hold in a fiduciary capacity for the benefit of the
            Company and its affiliates all trade secrets, proprietary or
            confidential information, knowledge or data relating to the Company,
            its affiliates, and/or their respective businesses, which shall have
            been obtained by the Employee. Trade secret information includes,
            but is not limited to, customer lists, pricing information, sales
            reports, financial and marketing data, reserves estimations, or
            procedures, techniques, or processes that: (a) derive independent
            economic value, actual or potential, from not being generally known
            to the public or to persons who can obtain economic value from their
            disclosure or use, and (b) are the subject of reasonable efforts
            under the circumstances to maintain their secrecy. After termination
            of the Employee's employment with the Company, Employee shall not,
            without the prior written consent of the Company, use, communicate
            or divulge any such information, knowledge or data to anyone at any
            time.

      9.2   Return of Property. Upon termination of the employment period, the
            Employee will surrender to the Company all property belonging to the
            Company or its affiliates.

      9.3   Compliance with Business Ethics and Conflict of Interest Policy.
            During the Employee's employment with the Company, the Employee
            shall comply in all respects with the Company's Code of Conduct as
            amended from time to time.

      9.4   Survival; Injunctive Relief. The Employee agrees that Sections 9.1
            through 9.4 shall survive the termination of this Agreement and the
            period of his employment

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            hereunder. The Employee acknowledges that the Company and its
            affiliates have no adequate remedy at law and would be irreparably
            harmed if Employee breaches or threatens to breach any of the
            provisions of this Section and, therefore, agrees that the Company
            and its affiliates shall be entitled to injunctive relief to prevent
            any such breach or threatened breach thereof and to specific
            performance of the terms of this Section (in addition to any other
            legal or equitable remedy the Company or the affiliate may have).
            The Employee further agrees that the Employee shall not, in any
            equity proceeding relating to the enforcement of this Section, raise
            the defense that the Company or the affiliate has an adequate remedy
            at law. Nothing in this Agreement shall be construed as prohibiting
            the Company or any affiliate from pursuing any other remedies at law
            or in equity that it may have under and in respect of this Agreement
            or any other agreement.

10.   SUCCESSORS

      10.1  Company's Successors. The Company shall require any successor
            (whether direct or indirect by purchase, lease, merger,
            consolidation, liquidation or otherwise) to all or substantially all
            of the Company's business or assets, by an agreement in substance
            and form satisfactory to the Employee, to assume this Agreement and
            to agree expressly to perform this Agreement in the same manner and
            to the same extent as the Company would be required to perform it in
            the absence of a succession. For all purposes under this Agreement,
            the term "Company" shall include any successor to the business or
            assets of the Company which executes and delivers the assumption
            agreement described in this Section 10.1 or which becomes bound by
            this Agreement by operation of law.

      10.2  Employee's Successors. This Agreement and all rights of the Employee
            hereunder shall inure to the benefit of, and be enforceable by, the
            Employee's personal or legal representatives, executors,
            administrators, successors, heirs, distributees, devisees and
            legatees.

11.   LIQUIDATED DAMAGES

      The payments and benefits provided in this Agreement are intended to be
      liquidated damages for a termination of the Employee's employment by the
      Company or for the actions of the Company and its affiliates leading to a
      termination of the Employee's employment by the Employee for Good Reason,
      and shall be the sole and exclusive remedy therefor.

12.   RELEASE

      Notwithstanding any provision herein to the contrary, the Company may
      require that, prior to payment of any amount or provision of any benefit
      under this Agreement, the Employee shall have executed a complete release
      of the Company and its successors,

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      affiliates and related parties in such form as is reasonably acceptable to
      both parties and any waiting periods contained in such release shall have
      expired.

13.   MISCELLANEOUS PROVISIONS

      13.1  Notice. Notices and all other communications contemplated by this
            Agreement shall be in writing and shall be deemed to have been duly
            given when personally delivered or when mailed by U.S. registered or
            certified mail, return receipt requested and postage prepaid. In the
            case of the Employee, mailed notices shall be addressed to the
            Employee at the home address that the Employee most recently
            communicated to the Company in writing. In the case of the Company,
            mailed notices shall be addressed to its corporate headquarters, and
            all notices shall be directed to the attention of its Secretary.

      13.2  Waiver. No provision of this Agreement shall be modified, waived or
            discharged unless the modification, waiver or discharge is agreed to
            in writing and signed by the Employee and by an authorized officer
            of the Company (other than the Employee). No waiver by either party
            of any breach of, or of compliance with, any condition or provision
            of this Agreement by the other party shall be considered a waiver of
            any other condition or provision or of the same condition or
            provision at another time.

      13.3  Other Agreements; Amendment. This Agreement does not supersede any
            stock option, restricted stock or other equity-based incentive
            compensation agreement between the Employee and the Company, except
            to the extent that the benefits provided by this Agreement are
            greater than the severance pay and similar benefits provided by such
            agreements. In no event shall the Employee be entitled to severance
            pay both under this Agreement and under any employment agreement
            following a termination of employment. This Agreement may be amended
            only in writing, by an instrument executed by both parties.

      13.4  No Setoff; Withholding Taxes. There shall be no right of setoff or
            counterclaim, with respect to any claim, debt or obligation, against
            payments to the Employee under this Agreement. All payments made or
            benefits provided under this Agreement shall be subject to reduction
            to reflect taxes required to be withheld by law. The payments
            received under this Agreement shall be in lieu of, and not in
            addition to, any payments or benefits received in connection with
            the Company's general severance policy then in effect. Should any
            payment be made or benefits be provided under any such severance
            policy, the payments and benefits provided hereunder shall be
            correspondingly reduced by such payments and/or benefits.

      13.5  Choice of Law. The validity, interpretation, construction and
            performance of this Agreement shall be governed by the laws of the
            State of Florida, except its choice-of-law provisions.

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      13.6  Severability. The invalidity or unenforceability of any provision or
            provisions of this Agreement shall not affect the validity or
            enforceability of any other provision hereof, which shall remain in
            full force and effect.

      13.7  Arbitration of Disputes and Related Claims. Any good faith dispute
            or controversy arising under or in connection with this Agreement
            shall be settled by binding arbitration, which shall be the sole and
            exclusive method of resolving any questions, claims or other matters
            arising under this Agreement or, to the extent permitted by
            applicable law, any claim that the Company has in any way violated
            the non-discrimination and/or other provisions of Title VII of the
            Civil Rights Act of 1964, as amended; the Age Discrimination in
            Employment Act of 1967, as amended; the Americans with Disabilities
            Act; the Family and Medical Leave Act, as amended; the Employee
            Retirement Income Security Act of 1974, as amended; and, in general,
            any federal law or state laws. Such proceeding shall be conducted in
            Jacksonville, Florida, by final and binding arbitration before a
            panel of one or more arbitrators in accordance with the laws and
            rules of the American Arbitration Association in effect at the time
            the arbitration is commenced, and as subsequently amended while the
            arbitration is pending, and under the administration of the American
            Arbitration Association. The Federal and state courts located in the
            United States of America are hereby given jurisdiction to render
            judgment upon, and to enforce, each arbitration award, and the
            parties hereby expressly consent and submit to the jurisdiction of
            such courts. Notwithstanding the foregoing, in the event that a
            violation of this Agreement would cause irreparable injury, the
            Company and the Employee agree that in addition to the other rights
            and remedies provided in this Agreement (and without waiving their
            rights to have all other matters arbitrated as provided above) the
            other party may immediately take judicial action to obtain
            injunctive relief.

      13.8  Legal Fees. In the event of any controversy or claim arising out of
            or relating to this Agreement, or the breach thereof, the Company
            shall pay (on an as-incurred basis) the reasonable fees and costs of
            the Employee's attorneys attributable to such controversy or claim
            (the "Legal Fees"); provided, that the Employee shall reimburse the
            Company for all such Legal Fees if the Employee does not prevail on
            at least one material issue arising in such controversy or claim.

      13.9  Not Compensation for Other Plans. The amounts paid and benefits
            provided hereunder are not to be considered compensation, earnings
            or wages for purposes of any employee benefit plan of the Company or
            its successors, affiliates, or related parties, including but not
            limited to the SERP, DCAP, and qualified retirement plans.

      13.10 No Assignment. Except to the extent provided in Section 10, the
            rights of any person to payments or benefits under this Agreement
            shall not be made subject to option or assignment, either by
            voluntary or involuntary assignment or by operation of law,
            including (without limitation) bankruptcy, garnishment,

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            attachment or other creditor's process, and any action in violation
            of this Section shall be void.

PLEASE READ CAREFULLY. BY SIGNING BELOW, EMPLOYEE ACKNOWLEDGES THAT EMPLOYEE HAS
READ, AND HAS HAD THE OPPORTUNITY TO CONSULT WITH AN ATTORNEY BEFORE SIGNING,
THIS AGREEMENT.

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Company by its duly authorized officer, as of the day and year first
above written.

EMPLOYEE: Wm. BRITTON GREENE                    THE ST. JOE COMPANY

By /s/ Wm. Britton Greene                       By /s/ Kevin M. Twomey
   --------------------------------------          --------------------------

Title  President - St. Joe Towns & Resorts      Title  President, COO and CFO

Date   1/6/2005                                 Date   1/6/2005


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