UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A Amendment No. 1  þ

   

   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year endedDecember 31, 2012 OR  o

   

   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period fromto. Commission File Number: 001-16581 SANTANDER HOLDINGS USA, INC.  
 (Exact name of registrant as specified in its charter)   Virginia

   (State or other jurisdiction of

   incorporation or organization)

   

   23-2453088

   (I.R.S. Employer

   Identification No.)75 State Street, Boston, Massachusetts

   (Address of principal executive offices)

   

   02109

   (Zip Code) (617) 346-7200 Registrant’s telephone number including area code Securities registered pursuant to Section 12(b) of the Act:  Title of Class

   

   Name of Exchange on Which RegisteredDepository Shares for Series C non-cumulative preferred stock

   

   NYSE Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YesoNoþ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. YesoNoþ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YesþNoo Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation ST (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YesþNoo* *Registrant is not subject to the requirements of Rule 405 of Regulation S-T at this time.


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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):  Large accelerated filero

   

   Accelerated filero

   

   Non-accelerated filerþ

   

   Smaller reporting companyo Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) YesoNoþ APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.   Class

   

   Outstanding at February 28, 2013Common Stock (no par value)

   

   520,307,043 shares


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Explanatory Note This Amendment No. 1 to the Annual Report on Form 10-K/A (this “Amendment No. 1”) of Santander Holdings USA, Inc. (the “Company”) amends the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, which was filed with the U.S. Securities and Exchange Commission on March 15, 2013 (the “Original Filing”). The Company is filing this Amendment No. 1 solely to amend and restate Item 11 – Executive Compensation.  The amendment and restatement reflects the following changes: **·**The table presented under the heading “Summary Compensation Table – 2012,” which appears on page 216 of the Original Filing, incorrectly stated that Mr. Jorge Morán has received or will receive $7,885,432 of All Other Compensation and $13,635,089 in Total Compensation during the year ended December 31, 2012.  Mr. Morán actually has received or will receive $2,429,432 of All Other Compensation and Total Compensation of $8,179,089 during the year ended December 31, 2012.  The Summary Compensation Table and the table included in footnote 8 thereto (footnote 9 in the Original Filing) are therefore being amended to reflect such amounts.**·******The Summary Compensation Table – 2012 in the Original Filing also incorrectly stated that Mr. Juan Yanes has received or will receive $3,327,402 of All Other Compensation and $5,973,874 in Total Compensation during the year ended December 31, 2012.  Mr. Yanes actually has received or will receive $3,329,073 of All Other Compensation and $5,975,545 in Total Compensation during the year ended December 31, 2012.  The Summary Compensation Table and the table included in footnote 8 thereto (footnote 9 in the Original Filing) are therefore being amended to reflect such amounts.





**·**  The description of Mr. Morán’s and Mr. Yanes’ employment agreements on pages 224 and 227 of the Original Filing, respectively, are being amended to reflect that payments to Mr. Morán and Mr. Yanes in the event that Santander desists  (a type of termination of employment under Spanish law), after such executive reaches age 50 with 10 years of service, or if such executive terminates employment due to Santander's breach of his employment agreement, will not be net of amounts due from social security or another Santander pension plan, if any.





**·**The table included under the heading “Potential Payments upon Termination or Change in Control,” appearing on page 231 of the Original Filing, is being amended to reflect that Mr. Morán is not entitled to any severance upon voluntary termination for breach (the table in the Original Filing incorrectly stated that he was entitled to $2,522,000 in such event).  Footnote 1 to that table has also been revised to delete the statement that “severance amounts are generally reduced by any amounts payable under social security or another Santander pension plan, if any.”



In addition, as required by Rule 12b-15 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), new certifications by our principal executive officer and principal financial officer are filed as exhibits to this Amendment No. 1.  Except as described above, no other amendments are being made to the Original Filing.  This Amendment No. 1 does not reflect events after the filing of the Original Filing or modify or update any disclosures that may have been affected by subsequent events.  Pursuant to Rule 12b-15 promulgated under the Exchange Act, the complete text of Part III, Item 11, and Part IV, Item 15, as amended, are set forth in this Amendment No. 1.


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ITEM 11 - EXECUTIVE COMPENSATION Compensation Discussion and Analysis This Compensation Discussion and Analysis relates to the executive officers included in the Summary Compensation Table, which we refer to collectively as the “named executive officers.”  We are a wholly owned subsidiary of Banco Santander, S.A., which we refer to as “Santander.”  This Compensation Discussion and Analysis explains our role and the role of Santander in setting the compensation of the named executive officers. For 2012, our named executive officers were: •Jorge Morán, our President and Chief Executive Officer; •Guillermo Sabater, our Chief Financial Officer; •Nuno Matos, our Managing Director-Retail Banking; •Juan Yanes, our Chief Executive of Compliance and Internal Control; and •Edvaldo Morata, our Managing Director-Corporate Banking  General Philosophy and Objectives The fundamental principles that Santander and we follow in designing and implementing compensation programs for the named executive officers are to: •attract, motivate, and retain highly skilled executives with the business experience and acumen necessary for achieving our long-term business objectives; •link pay to performance; •align, to an appropriate extent, the interests of management with those of Santander and its shareholders; and •use our compensation practices to support our core values and strategic mission and vision.  Santander aims to provide a total compensation package that is comparable to that of similar financial institutions in the country in which the executive officer is located.  Within this framework, Santander considers each component of each named executive officer's compensation package independently, that is, Santander does not evaluate what percentage each component equals with respect to the total compensation package. In general, Santander took into account individual performance, level of responsibility, and track record within the organization in setting each of the named executive officer's compensation for 2012. In general, we seek to maximize deductibility for tax purposes of all elements of the compensation of the named executive officers.  We review compensation plans in light of applicable tax provisions and revise compensation plans and arrangements from time to time to maximize deductibility.  We, however, may approve compensation or compensation arrangements for the named executive officers that do not qualify for maximum deductibility when we deem it to be in our best interest.


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This section of the Compensation Discussion and Analysis provides information with respect to our named executive officers: •the general philosophy and objectives behind their compensation, •the role and involvement of the several parties in the analysis and decisions regarding their compensation, •the general process of determining their compensation, •each component of their compensation, and •the rationale behind the components of their compensation.  Since we are a wholly owned subsidiary of Santander and do not hold public shareholder meetings, we do not conduct shareholder advisory votes.  The Parties Involved in Determining Executive Compensation The Role of Our Compensation Committee As of the date of the filing of this Annual Report on Form10-K, our Compensation Committee included Messrs.Morán and Schoellkopf and Ms.Heard, who is the Committee chair.  Our Compensation Committee has the responsibility of, among other things: •reviewing the terms of our incentive compensation programs, including the Executive Bonus Program in which our named executive officers participate; •reviewing and approving the risk assessment process to be utilized by our Compensation Risk Mitigation Committee (which we describe below) in connection with our incentive compensation programs, including the Executive Bonus Program; •monitoring the performance and regularly reviewing the design and function of the incentive compensation programs, including the Executive Bonus Program, to assess whether the overall design and performance of such programs are consistent with the Company's safety and soundness and do not encourage employees, including our named executive officers, to take excessive risk; •reviewing amounts paid under the incentive compensation programs, including the Executive Bonus Program; •overseeing the administration of our qualified retirement plan under which all eligible employees can participate, including the named executive officers, as well as certain deferred compensation plans; and •approving our affirmative action plan and reviewing, at least annually, the Company's hiring, termination, compensation, and other employment practices as they relate to the Company's affirmative action plan.  The fundamental authority and responsibilities of our Compensation Committee in 2012 with respect to compensation matters related to the named executive officers was to: •evaluate the standards of the Executive Bonus Program against the guidance issued by the regulatory authorities applicable to us; •review the incentive compensation proposed to be granted to our named executive officers; and •approve any required reports on executive compensation for inclusion in our filings with the SEC, including this Annual Report on Form 10-K.  Our Compensation Committee met six times in 2012.


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The Role of Santander's Evaluation and Bonus Committee Santander's Evaluation and Bonus Committee has the authority and responsibility to oversee the performance management reviews, and to prepare the bonus pools for management to present to Santander's Appointments and Remuneration Committee.  Santander's Evaluation and Bonus Committee also approves individual bonus awards that Santander's Board does not ultimately approve.  The Role of Santander's Appointments and Remuneration Committee Santander's Appointments and Remuneration Committee has the authority and responsibility to, among other things, present to Santander's Board the compensation of Santander's senior executives, which group includes each of the named executive officers. The Role of Santander's Board of Directors Santander's Board of Directors approves the compensation of certain of Santander's management, including our named executive officers.  Santander's Board has delegated certain of its powers and responsibilities to its Executive Committee.  The Role of our Management In 2010, we established a management advisory and consultation committee, which we call the Compensation Risk Mitigation Committee, to among other purposes, oversee our incentive compensation programs and make presentations to our Compensation Committee with respect to our incentive compensation programs.  A key responsibility of our Compensation Risk Mitigation Committee is to review our incentive compensation programs to ensure the programs do not incentivize excessive risk and make recommendations to our Compensation Committee in accordance with applicable law.  The Compensation Risk Mitigation Committee is chaired by our Chief Human Resources Officer and met six times in 2012. Our management also played a role in other parts of the compensation process with respect to the named executive officers in 2012.  Mr.Morán generally performed (or delegated to our human resources department) management's responsibilities (except with respect to his own compensation) in accordance with the rules set forth by Santander.  The most significant aspects of management's role in the compensation process were presenting, and recommending for approval, salary and bonus recommendations for the named executive officers to Santander's Evaluation and Bonus Committee and, with respect to Messrs.Morán and Yanes, Santander's Appointments and Remuneration Committee and presented the proposed bonus recommendations to our Compensation Committee for its review. None of the named executive officers determined or approved any portion of their compensation for 2012. The Role of Outside Independent Compensation Advisors Santander's Appointments and Remuneration Committee engaged Towers Watson to assist in setting fixed and variable compensation for Santander's worldwide employees.  In addition, Santander's human resource department engaged ORC Worldwide to assist it in determining possible salary adjustments for expatriate employees, including the named executive officers, as we describe below.  ORC Worldwide provided data on the compensation of expatriate employees of other global financial institutions. We did not separately engage a compensation consultant for 2012.


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Components of Executive Compensation For 2012, the compensation that we paid to our named executive officers consisted primarily of base salary and short‐and long-term incentive opportunities, as we describe more fully below.  In addition, the named executive officers are eligible for participation in company-wide benefits plans, and we provide the named executive officers with certain benefits and perquisites not available to the general team member population but that are, in accordance with Santander's International Mobility policy.  In general, Santander's objective in establishing its International Mobility Policy is to permit all expatriate employees, which include the named executive officers, to maintain on an equal basis the same standard of living that they were accustomed to in the employee's originating country. Base Salary Base salary represents the fixed portion of the named executive officers' compensation and we intend it to provide compensation for expected day-to-day performance.  The base salaries of the named executive officers were generally set in accordance with each named executive officer's employment or letter agreement and Santander's International Mobility policy for expatriate executives of similar levels.  While each of the named executive officer's employment or letter agreements provide for the possibility of increases in base salary, annual increases are not guaranteed.  Our Chief Human Resources Officer consulted with Santander's Appointments and Remuneration Committee and Santander's Board of Directors in setting the base salary of Messrs.Morán and Yanes.  Santander's Evaluation and Bonus Committee issued recommendations with respect to Santander's overall salary policy for 2012 for Santander's“Top Red”executives, including Messrs.Sabater, Matos, and Morata.  Mr.Morán recommends for approval to Santander's Head of Corporate Human Resources, the base salaries for these executives, based, in part, on these recommendations. Annual Discretionary Bonuses In certain cases, we award annual discretionary bonuses to the named executive officers to motivate and reward outstanding performance.  These awards permit us to apply discretion in determining awards rather than applying a formulaic approach that may inadvertently reward inappropriate risk-taking.  None of the named executive officers received discretionary bonuses for 2012. Retention Bonuses In certain limited cases, we will provide retention bonuses to certain of our executive officers as an inducement for them to stay in active service with us.  Applicable European regulations limit Santander's ability to award such guaranteed bonuses.  We made no retention bonus payments to the named executive officers in 2012. Short-Term Incentive Compensation We provide annual short-term incentive opportunities for the named executive officers to reward achievement of both corporate and individual performance objectives, as well as to reinforce key cultural behaviors used to achieve short-term and long-term success.  Our short-term incentive programs are intended to motivate participants to achieve these objectives by providing an opportunity to receive higher compensation if these objectives are met. Our short-term incentive compensation program generally establishes both financial and non-financial measures for each executive officer, including threshold performance expectations for triggering incentive payout eligibility as well as target and maximum performance benchmarks for determining ongoing incentive awards and final incentive payouts.  We refer to this bonus award program on the “Executive Bonus Program.” On May 30, 2012, our Compensation Committee reviewed the 2012 Sovereign Bank Executive Bonus Program for the named executive officers as presented by our Executive Committee and the Compensation Risk Mitigation Committee.  We refer to this bonus program as the “Executive Bonus Program.”  The Executive Bonus Program is aligned directly with Santander's corporate bonus program for executives of similar levels across the Santander platform.  The program provides for significant variance in the amount of potential awards, higher or lower, in order to reinforce our pay for performance philosophy.  Each of the named executive officers participated in the Executive Bonus Program for 2012.


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The Executive Bonus Program incorporates both Santander and subsidiary metrics to ensure that the plan award pool links the pay of its executives to the pay of other executives of similar levels within the Santander platform.  Santander's financial control division worked with Mr. Morán to validate that the proposed performance metrics aligned with Santander's overall business goals.  We reviewed the appropriateness of the financial measures used in the Executive Bonus Program with respect to the named executive officers and the degree of difficulty in achieving specific performance targets and determined that there was a sufficient balance. The quantitative metrics for determining the funding scheme for 2012 for the named executive officers included net profit and return on risk-adjusted capital targets as follows: •55% determined based upon Sovereign Bank's net profit for 2012 versus our target for 2012 •15% determined based upon Sovereign Bank's return on risk-adjusted capital for 2012 versus our target for 2012 •20% determined based upon Santander's net attributable profit for 2012 versus its target for 2012 •10% determined based upon Santander's return on risk-adjusted capital for 2012 versus its target for 2012  Santander's Evaluation and Bonus Committee may also adjust the funding scheme based on circumstances, including our risk and liquidity profile, the relevant entity's degree of compliance with local regulations and Santander policies, and, in general, the quality of results.  For 2012, there was no such adjustment for SHUSA's portion of the funding scheme but there was a downward adjustment for Santander's portion based on Santander's performance in 2012 versus its peers. We assigned Messrs. Sabater, Matos, and Morata a base bonus amount at the beginning of 2012, based on grade level, market benchmark for the position, authority, duties, responsibilities, and job type.  We determine these base bonus amounts, subject to Santander Corporate Human Resources review and approval.  Messrs. Morán's and Yanes's base bonus amounts are set forth in their respective employment agreements.  If the relevant entity achieves a certain level of net profit or return on risk-adjusted capital target, the plan award pool is funded by a specific percentage of the aggregate base bonus amounts of the participants as set forth below: **Achievement of Target**

   

   Percentage Payout

   of Target Bonus Amount130%

   

   120%120%

   

   110%110%

   

   100%100%

   

   90%90%

   

   80%80%

   

   70%70%

   

   60%60%

   

   50%<60%

   

   —%
  If the actual quantitative metric falls between the above achievement points, the percentage payout will be interpolated. For purposes of the Executive Bonus Program, Sovereign Bank's net profit for 2012, after group consolidation and one-time charges, was $750.5 million. This amount resulted in the achievement of 100% of the internal net profit target under the Executive Bonus Program.  In addition, Sovereign Bank's return on risk-adjusted capital, after the same adjustments, was 13.6%, which resulted in achievement of 93.8% of the return on risk-adjusted capital target. Santander's ordinary attributable profit for 2012 was €5.251 billion. As determined by Santander's Bonus and Evaluation Committee, Santander achieved 80.8% of the net profit target.  In addition, Santander's return on risk-adjusted capital was 9.6%, which resulted in achievement of 80.2% of the internal return on risk-adjusted capital target.


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Based on these results, the Appointments and Remuneration Committee approved a percentage payout under the Executive Bonus Program for the named executive officers of 82.8%. We multiply this percentage by each named executive officer's target bonus amount to establish a proposed bonus amount for the executive.  We disclose the named executive officers' threshold, target, and maximum bonus amounts in the “Grants of Plan-Based Awards-2012” table.  Each named executive officer's proposed bonus amount is subject to upward or downward adjustment based on the executive's individual performance evaluation, but in no event will the aggregate total of the actual bonus amounts exceed the aggregate total of the proposed bonus amounts.  Santander intends that the results of such individual performance evaluations be distributed normally as follows: 10% of executives will receive a score of “significantly exceeds expectations,” 15% of executives will receive a score of “exceeds expectations,” 50% of executives will receive a score of “totally meets expectations,” 15% of executives will receive a score of “partially meets expectations,” and 10% of executives will receive a score of “improvable.” We set forth the bonus opportunities for the named executive officers for 2012 for the named executive officers in the table captioned “Grant of Plan-Based Awards-2012.” We conducted a detailed assessment of each named executive officer's accomplishments versus pre-established goals for the year with respect to the individual performance evaluation results.  These goals included specific goals directly related to the named executive officer's job responsibilities.  These goals are generally not objective, formulaic, or quantifiable. On January 23, 2013, Mr.Morán recommended to our Compensation Committee and the Compensation Committee reviewed, the bonus amounts, if any, awarded under the enhanced Executive Bonus Program for 2012 to Messrs.Sabater, Matos, and Morata.  Santander's Evaluation and Bonus Committee, in consultation with Mr.Morán, approved the final bonus amounts for these named executive officers, subject to the approval of Santander's Appointments and Remuneration Committee and the ultimate approval of Santander's Board of Directors. Santander's Board of Directors approved Messrs.Morán's and Yanes's bonus for 2012 in consultation with Santander's Appointments and Remuneration Committee. We made current awards to the named executive officers under the Executive Bonus Program as short-term incentive awards for 2012 in the amounts that we set forth in the Summary Compensation Table under the caption “Non-Equity Incentive Plan Compensation.” These amounts include payments made with respect to each of the named executive officer's individual performance and the performance of Santander and SHUSA, as applicable.  Participants are required to defer a portion of the bonus as we describe below under the caption “Long-Term Incentive Compensation.” Any award made in shares of Santander common stock under the Executive Bonus Program is subject to a one-year holding requirement from the payment date of the award.  For 2013, we anticipate that the structure of our short-term incentive compensation program will be substantially the same as it was in 2012 although no final decision has been made as of the date of the filing of this Annual Report on Form 10-K.  As of the date of the filing of this Annual Report on Form 10-K, we have not set the target amounts for 2013, nor have we determined the bonus opportunities for the named executive officers for 2013. Long-Term Incentive Compensation For years prior to 2011, each of our named executive officers was eligible to participate in the Performance Shares Plan.  The Performance Shares Plan was the main instrument that Santander uses for providing medium- and long-term incentive compensation for selected executives across its global platform.  Santander developed the Performance Shares Plan to align the interests of Santander's executives with those of its shareholders.  The named executive officers did not receive any awards under the Performance Shares Plan for 2012, but vested in certain awards that we made in previous years.  We describe the Performance Shares Plan and the awards made to the named executive officers under the caption “Our Equity Compensation Plans” in the discussion following the Summary Compensation Table. Under the Executive Bonus Program, certain Santander executives, including the named executive officers, are required to defer a portion of their bonus.  Messrs.Morán and Yanes must each defer 50% of their awards and Messrs.Sabater, Matos, and Morata each must defer 40% of their awards.  The deferred bonus (whether payable in cash or Santander common stock) is payable in three annual installments if the executive officer remains employed at Santander through the applicable payment date and the executive officer meets certain performance conditions.  We describe the deferral portion of the Executive Bonus Program more fully under the section entitled“Our Equity Compensation Plans.”


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Certain of Santander's executive management team, including Mr.Morán, participated in the Obligatory Investment Plan.  Under the Obligatory Investment Plan, participants were required to dedicate 10% of their annual bonus compensation to the purchase of Santander common stock.  If the participant held such shares for three years, Santander will provide a 100% match on the shares that the executive purchased.  Messrs.Sabater, Yanes, Matos, and Morata do not participate in the Obligatory Investment Plan.  The Obligatory Investment Plan terminated by its terms in 2010 for bonuses earned for 2009 performance.  We describe the Obligatory Investment Plan in more detail under the caption“Our Equity Compensation Plans”in the discussion following the Summary Compensation Table. Other Compensation We model the compensation packages for the named executive officers to be competitive globally and within the country of assignment, and attractive to each executive in relation to the significant commitment he must make in connection with a global posting.  In addition to the benefits that all our team members are eligible to participate in, these named executive officers are eligible for certain other benefits and perquisites.  The additional benefits and perquisites that were significant when compared to other compensation received by our other executive officers include housing expenses, children's education costs, travel expenses, and tax equalization payments.  These benefits and perquisites are, however, consistent with those paid to similarly placed Santander executives who are subject to appointment to Santander locations globally as deemed appropriate by Santander senior management.  Additionally, Santander reviewed compensation surveys of human resources advisory firms, which have shown that these types of benefits and perquisites are common elements of expatriate programs of global companies. We describe the additional perquisites and benefits that we paid to the named executive officers below in the notes to the Summary Compensation Table. Retirement Benefits Each of the named executive officers is eligible to participate in our qualified retirement plan under the same terms as our other eligible employees.  In addition, certain of Santander's executive officers, including Messrs.Sabater are eligible to participant in a defined contribution retirement plan.  In addition, Messrs.Morán and Yanes are entitled to certain payments under their employment agreements with Santander upon their retirement, including a defined contribution benefit, under certain circumstances.  Santander provides these benefits in order to foster the development of these executives' long-term careers with Santander.  We describe these executive officers' retirement benefits below under the captions“Other Arrangements,”and in the case of Mr. Yanes, under the description of his employment agreement. Employment and Letter Agreements We have entered into letter agreements with our named executive officers to establish key elements of compensation that differ from our standard plans and programs.  Santander has also entered into employment agreements with Messrs.Morán and Yanes.  Messrs.Morán's and Yanes's agreements with Santander facilitates the creation of covenants, such as those prohibiting post-employment competition or solicitation by the executives.  We and Santander believe these agreements provide stability to the organization and further our overarching compensation objective of attracting and retaining the highest quality executives to manage and lead us.  We discuss these agreements below under the caption“Description of Employment and Related Agreements.”


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Benchmarking In 2012, we did not undertake any benchmarking with respect to our named executive officers' compensation.  Santander has periodically used compensation surveys and databases to assist it in setting certain of its executive officers' overall compensation.  The following was the benchmarking that Santander undertook applicable to our named executive officers' 2012 compensation and the applicable peer groups: •In 2012, Towers Watson assisted Santander in benchmarking Mr.Morán's compensation.  The peer group that Santander used was Capital One Financial Corp., CNA Financial Corporation, KeyCorp, M&T Bank Corporation, Northern Trust Corporation, People's United Financial, Inc., PNC Financial Services, Inc., State Street Corporation, TD Bank, United Services Automobile Association, U.S. Bancorp, and Webster Financial Corp. •For Messrs. Sabater and Matos, Santander performed an analysis in 2009 using information from Towers Perrin's CDB U.S. Commercial Banks Database.  The peer group that the Company used was Citizens Financial Group, Inc., HSBC North American Holdings, Inc., Huntington Bancshares, Inc., M&T Bank Corporation, People's United Financial, Inc., PNC Financial Services, Inc., TD Bank, U.S. Bancorp, Wachovia, and Webster Financial Corp. •Santander did not benchmark either Mr. Yanes's or Mr. Morata's compensation.


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Matters Relating to the Compensation Committee of the Board Compensation Committee Report For purposes of Item 407(e)(5) of Regulation S-K, the Compensation Committee furnishes the following information.  The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis included in Part III-Item 11 of the Form 10-K with management.  Based upon the Compensation Committee's review and discussion with management, the Compensation Committee has recommended that the Compensation Discussion and Analysis be included in the Form 10-K for the fiscal year ended December 31, 2012. Submitted by: Marian L. Heard, Chair Jorge Morán Wolfgang Schoellkopf The foregoing “Compensation Committee Report” shall not be deemed to be “filed” with the SEC or subject to the liabilities of Section 18 of the Exchange Act, and notwithstanding anything to the contrary set forth in any of SHUSA's previous filings under the Securities Act or the Exchange Act, that incorporate future filings, including this Form 10-K, in whole or in part, the foregoing “Compensation Committee Report” shall not be incorporated by reference into any such filings. Compensation Committee Interlocks and Insider Participation The following directors served as members of our Compensation Committee in 2011: Marian Heard (Chair), Wolfgang Schoellkopf, and Jorge Morán. Jorge Morán had a lending relationship with Sovereign Bank that was made and remained in compliance with Regulation O of the Board of Governors of the Federal Reserve System.  Such loans (i)were made in the ordinary course of business, (ii)were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to Sovereign Bank, and (iii)did not involve more than the normal risk of collectability or present other unfavorable features.  As detailed in Item13 of this Form10‐K, during the 2012 fiscal year, Mr.Morán also served as an executive officer of Santander and an affiliated entity, and certain relationships existed between SHUSA and its affiliates, on one hand, and Santander and its affiliates, on the other hand.  With these exceptions, no member of the Compensation Committee (i)was, during the 2012 fiscal year, or had previously been, an officer or employee of SHUSA or its subsidiaries nor (ii)had any direct or indirect material interest in a transaction of SHUSA or a business relationship with SHUSA, in each case that would require disclosure under the applicable rules of the SEC.  Except as described above, no other interlocking relationship existed between any member of our Compensation Committee or an executive officer of SHUSA, on the one hand, and any member of the Compensation Committee (or committee performing equivalent functions, or the full Board of Directors) or an executive officer of any other entity, on the other hand, requiring disclosure pursuant to the applicable rules of the SEC.


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Summary Compensation Table-2012   Name and

   Principal Position

   

   Year

   

   Salary

   ($) (4)

   

   Bonus ($)

   

   Stock

   Awards

   ($) (5)

   

   Option

   Awards

   ($)

   

   Non-Equity

   Incentive

   Plan

   Compensation

   ($) (6)

   

   Change in

   Pension

   Value and

   Nonqualified

   Deferred

   Compensation

   Earnings

   ($) (7)

   

   All Other

   Compensation

   ($) (8)

   

   Total ($)Jorge Morán(1)

   

   2012

   

   $

   2,522,000

   

   

   $

   —

   

   

   $

   1,766,077

   

   

   $

   —

   

   

   $

   1,461,580

   

   

   $

   —

   

   

   $

   2,429,432

   

   

   $

   8,179,089President and Chief Executive Officer

   

   2011

   

   $

   1,888,398

   

   

   $

   —

   

   

   $

   727,481

   

   

   $

   —

   

   

   $

   1,766,076

   

   

   $

   7,169,290

   

   

   $

   771,850

   

   

   $

   12,323,095Guillermo Sabater

   

   2012

   

   $

   334,582

   

   

   $

   —

   

   

   $

   330,000

   

   

   $

   —

   

   

   $

   305,000

   

   

   $

   —

   

   

   $

   458,307

   

   

   $

   1,427,889Chief Financial Officer

   

   2011

   

   $

   284,222

   

   

   $

   —

   

   

   $

   331,791

   

   

   $

   —

   

   

   $

   330,000

   

   

   $

   —

   

   

   $

   362,509

   

   

   $

   1,308,5222010

   

   $

   283,944

   

   

   $

   —

   

   

   $

   202,200

   

   

   $

   —

   

   

   $

   748,000

   

   

   $

   —

   

   

   $

   351,257

   

   

   $

   1,585,401Nuno Matos(2)

   

   2012

   

   $

   413,679

   

   

   $

   —

   

   

   $

   600,000

   

   

   $

   —

   

   

   $

   550,000

   

   

   $

   —

   

   

   $

   406,695

   

   

   $

   1,970,374Managing Director-Retail Banking

   

   2011

   

   $

   395,668

   

   

   $

   —

   

   

   $

   975,668

   

   

   $

   —

   

   

   $

   600,000

   

   

   $

   —

   

   

   $

   348,235

   

   

   $

   2,319,5712010

   

   $

   364,703

   

   

   $

   —

   

   

   $

   370,700

   

   

   $

   —

   

   

   $

   1,547,238

   

   

   $

   —

   

   

   $

   403,814

   

   

   $

   2,686,455Juan Yanes(3)

   

   2012

   

   $

   872,223

   

   

   $

   —

   

   

   $

   970,815

   

   

   $

   —

   

   

   $

   803,434

   

   

   $

   —

   

   

   $

   3,329,073

   

   

   $

   5,975,545Chief Executive of Compliance and Internal Control

   

   2011

   

   $

   464,727

   

   

   $

   —

   

   

   $

   842,188

   

   

   $

   —

   

   

   $

   970,815

   

   

   $

   1,093,620

   

   

   $

   398,729

   

   

   $

   3,770,079Edvaldo Morata

   

   2012

   

   $

   425,653

   

   

   $

   —

   

   

   $

   500,000

   

   

   $

   —

   

   $

   387,500

   

   

   $

   —

   

   

   $

   343,764

   

   

   $

   1,656,917Managing Director- Corporate Banking
  Footnotes: 1.         Mr.Morán began serving as our President and Chief Executive Officer on February1, 2011.  Mr.Morán also served as a director SHUSA and Sovereign Bank for 2012.  Mr.Morán receives no compensation for his service as a director. 2.         Mr. Matos also served as a director of SHUSA from January 2, 2012, through January 25, 2012, and of Sovereign Bank for all of 2012.  Mr. Matos receives no compensation for his service as a director. 3.         In 2011, Mr. Yanes was employed by Santander's New York Branch but commenced performing services for SHUSA on July 28, 2011.  Mr. Yanes formally became an employee of SHUSA on February 1, 2012.  Amounts reflect compensation that Mr. Yanes received with respect to his service with SHUSA.  Mr. Yanes also served as a director SHUSA and Sovereign Bank for 2012.  Mr. Yanes receives no compensation for his service as a director. 4.         We base the amounts in this column on actual base compensation paid through the end of the applicable fiscal year. 5.         The amounts in these columns reflect the grant date fair value of such awards in accordance with A.S.C. Topic 718, for equity awards granted under Santander's equity compensation plans.  We include the assumptions used in the calculation of these amounts in the footnotes to our audited financial statements included in this Annual Report on Form 10-K for the fiscal year ended December 31, 2012.  We describe Santander's equity compensation programs under the caption “Our Equity Compensation Plans.” 6.         The amounts in this column for 2012 do not include amounts payable in Santander common stock that vest in future years pursuant to the terms of the Executive Bonus Program.  We describe the Executive Bonus Program under the caption “Short-Term Incentive Compensation.”  The bonuses earned by the named executive officers for 2012 before deferral were:  Named Executive Officer

   

   BonusJorge Morán

   

   $

   2,923,160Guillermo Sabater

   

   $

   610,000Nuno Matos

   

   $

   1,100,000Juan Yanes

   

   $

   1,606,866Edvaldo Morata

   

   $

   775,000


---

7.         Includes the aggregate change in the actuarial present value of the amounts that Messrs.Morán and Yanes are entitled to receive upon their retirement pursuant to the terms of their employment agreements with Santander. 8.         Includes the following amounts that we paid to or on behalf of the named executive officers:  Year

   

   Morán

   

   Sabater

   

   Matos

   

   Yanes

   

   MorataProvision of Car, Car Allowance, or Personal Use of Company Automobile (*)

   

   2012

   

   $

   7,750

   

   

   $

   10,003

   

   

   $

   11,560

   

   

   $

   15,359

   

   

   $

   8,1022011

   

   $

   8,186

   

   

   $

   12,912

   

   

   $

   12,912

   

   

   $

   3,987

   

   

   $

   —2010

   

   $

   —

   

   

   $

   12,912

   

   

   $

   12,912

   

   

   $

   —

   

   

   $

   —Santander Contribution to Defined Contribution Plan (**)

   

   2012

   

   $

   1,353,518

   

   

   $

   37,735

   

   

   $

   —

   

   

   $

   2,516,194

   

   

   $

   —2011

   

   $

   —

   

   

   $

   39,761

   

   

   $

   —

   

   

   $

   —

   

   

   $

   —2010

   

   $

   —

   

   

   $

   37,832

   

   

   $

   40,969

   

   

   $

   —

   

   

   $

   —Club Memberships

   

   2012

   

   $

   8,510

   

   

   $

   —

   

   

   $

   660

   

   

   $

   1,200

   

   

   $

   7702011

   

   $

   1,727

   

   

   $

   —

   

   

   $

   1,282

   

   

   $

   293

   

   

   $

   —2010

   

   $

   —

   

   

   $

   —

   

   

   $

   1,282

   

   

   $

   —

   

   

   $

   —Relocation Expenses and Temporary Housing

   

   2012

   

   $

   —

   

   

   $

   —

   

   

   $

   —

   

   

   $

   25,330

   

   

   $

   —2011

   

   $

   150,000

   

   

   $

   —

   

   

   $

   —

   

   

   $

   1,750

   

   

   $

   —2010

   

   $

   —

   

   

   $

   —

   

   

   $

   —

   

   

   $

   —

   

   

   $

   —Housing Allowance, Utility Payments, and Per Diem

   

   2012

   

   $

   361,921

   

   

   $

   131,759

   

   

   $

   136,074

   

   

   $

   369,349

   

   

   $

   125,0402011

   

   $

   258,856

   

   

   $

   129,199

   

   

   $

   133,184

   

   

   $

   314,454

   

   

   $

   —2010

   

   $

   —

   

   

   $

   135,157

   

   

   $

   138,557

   

   

   $

   —

   

   

   $

   —Legal, Tax, and Financial Consulting Expenses

   

   2012

   

   $

   10,750

   

   

   $

   1,500

   

   

   $

   1,968

   

   

   $

   1,671

   

   

   $

   1,5002011

   

   $

   —

   

   

   $

   6,536

   

   

   $

   49,909

   

   

   $

   —

   

   

   $

   —2010

   

   $

   —

   

   

   $

   4,390

   

   

   $

   —

   

   

   $

   —

   

   

   $

   —Life Insurance Allowance and Medical and Dental Reimbursements

   

   2012

   

   $

   —

   

   

   $

   —

   

   

   $

   —

   

   

   $

   —

   

   

   $

   —2011

   

   $

   —

   

   

   $

   —

   

   

   $

   —

   

   

   $

   6,187

   

   

   $

   —2010

   

   $

   —

   

   

   $

   —

   

   

   $

   —

   

   

   $

   —

   

   

   $

   —Tax Reimbursements (***)

   

   2012

   

   $

   607,132

   

   

   $

   162,434

   

   

   $

   191,975

   

   

   $

   335,961

   

   

   $

   147,5002011

   

   $

   294,760

   

   

   $

   100,147

   

   

   $

   130,214

   

   

   $

   31,148

   

   

   $

   —2010

   

   $

   —

   

   

   $

   82,717

   

   

   $

   129,271

   

   

   $

   —

   

   

   $

   —School Tuition and Language Classes

   

   2012

   

   $

   52,666

   

   

   $

   66,746

   

   

   $

   49,038

   

   

   $

   38,089

   

   

   $

   35,0842011

   

   $

   36,967

   

   

   $

   58,804

   

   

   $

   1,054

   

   

   $

   35,468

   

   

   $

   —2010

   

   $

   —

   

   

   $

   47,170

   

   

   $

   65,899

   

   

   $

   —

   

   

   $

   —`Paid Parking

   

   2012

   

   $

   5,880

   

   

   $

   5,880

   

   

   $

   5,880

   

   

   $

   5,180

   

   

   $

   5,8802011

   

   $

   4,758

   

   

   $

   5,880

   

   

   $

   5,880

   

   

   $

   —

   

   

   $

   —2010

   

   $

   —

   

   

   $

   5,760

   

   

   $

   5,760

   

   

   $

   —

   

   

   $

   —Airfare for Annual Trip Home

   

   2012

   

   $

   21,305

   

   

   $

   42,250

   

   

   $

   9,540

   

   

   $

   20,740

   

   

   $

   19,8892011

   

   $

   16,597

   

   

   $

   9,270

   

   

   $

   13,800

   

   

   $

   5,442

   

   

   $

   —2010

   

   $

   —

   

   

   $

   25,318

   

   

   $

   9,163

   

   

   $

   —

   

   

   $

   —Total

   

   2012

   

   2,429,432

   

   

   458,307

   

   

   406,695

   

   

   3,329,073

   

   

   343,7652011

   

   $

   771,851

   

   

   $

   362,509

   

   

   $

   348,235

   

   

   $

   398,729

   

   

   $

   —2010

   

   —

   

   

   $

   351,256

   

   

   $

   403,813

   

   

   —

   

   

   $

   —
  (*)       The value that we attribute to the personal use of SHUSA-provided automobiles (as calculated in accordance with Internal Revenue Service guidelines) is generally included as compensation on the Forms W-2 of the named executive officers who receive such benefits.  Each such named executive officer is responsible for paying income tax on such amount (generally subject to the right of each named executive officer to receive a tax gross-up payment with respect to the provision of such benefits).  We determined the aggregate incremental cost of any personal use of company automobiles in accordance with the requirements of the U.S. Treasury Regulation § 1.61-21. (**)     For 2012, includes, for Messrs. Yanes and Morán, Santander's contribution to their respective defined contribution benefit account upon the conversion of their pension benefit to a defined contribution benefit in accordance with applicable Spanish law. (***)   Includes amounts paid to gross up for tax purposes certain perquisites in accordance with an applicable letter agreement or other arrangement.


---

Grants of Plan-Based Awards-2012  Estimated Possible FuturePayouts Under Non‐EquityIncentive PlanAwards (1)

   EstimatedPossibleFuturePayouts UnderEquityIncentive PlanAwards

   All Other

   Stock

   Awards:

   Number

   of Shares

   of Stock

   or Units

   ____(#)____

   All Other

   Option

   Awards:

   Number of

   Securities

   Underlying

   Options (#)

   Exercise

   or Base

   Price of

   Option

   Awards

   ($/Sh)

   Grant

   Date Fair

   Value of

   Stock and

   Option

   Awards

   ($)Name

   Grant

   __Date__

   Target

   __($)___

   Target

   ___(#)__Jorge Morán

   

   $

   3,754,0542/3/2012

   

   111, 918 (2)

   

   

   

   $

   883,0382/3/2012

   

   111,918(3)

   

   

   

   $

   883,038Guillermo Sabater

   

   $

   660,0002/3/2012

   

   25,095(2)

   

   

   

   $

   198,0002/3/2012

   

   16,730(3)

   

   

   

   $

   132,000Nuno Matos

   

   $

   1,336,3782/3/2012

   

   45,627(2)

   

   

   

   $

   360,0002/3/2012

   

   30,418(3)

   

   

   

   $

   240,000Juan Yanes

   

   $

   1,941,6322/3/2012

   

   61,521(2)

   

   

   

   $

   485,4082/3/2012

   

   61,521(3)

   

   

   

   $

   485,408Edvaldo Morata

   

   $

   1,174,9812/3/2012

   

   38,022(2)

   

   

   

   $

   300,0002/3/2012

   

   25,348(3)

   

   

   

   $

   200,000
  Footnotes: (1)   This column reflect the estimated target payout for named executive officers under the applicable bonus program for fiscal year 2012 based on the performance targets that Santander set on February 17, 2012.  We report the actual awards paid out under our bonus programs in the Summary Compensation Table and describe our bonus programs in the Compensation Discussion & Analysis. (2)   Reflects the shares of vested common stock that the applicable named executive officer received under the Executive Bonus Program.  We describe the Executive Bonus Program under the caption “Our Equity Compensation Plans.” (3)   Reflects the number of bonus deferral shares that the applicable named executive officer received under the Executive Bonus Program.  Such shares vest ratably over three years on the anniversary of the grant date.


---

Outstanding Equity Awards at Fiscal 2012 Year End   Stock AwardsName

   

   Number of Shares or Units of Stock that have not Vested

   (#)

   

   Market Value of Shares or Units of Stock that have not Vested

   ($)

   

   Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that have not Vested

   (#)

   

   Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that have not Vested

   ($)Jorge Morán

   

   

   

   

   

   13,328(1)

   

   $

   101,40160,674(2)

   

   $

   461,61428,261(3)

   

   $

   215,013111,918(4)

   

   $

   883,038111,918(5)

   

   $

   883,038Guillermo Sabater

   

   

   

   

   

   20,000(1)

   

   $

   152,1626,060(3)

   

   $

   46,10525,095(4)

   

   $

   198,00016,730(5)

   

   $

   132,000Nuno Matos

   

   

   

   

   

   28,000(1)

   

   $

   213,02742,158(3)

   

   $

   320,74345,627(4)

   

   $

   360,00030,418(5)

   

   $

   240,000Juan Yanes

   

   

   

   

   

   40,970(1)

   

   $

   311,70423,118(3)

   

   $

   175,88461,521(4)

   

   $

   485,40861,521(5)

   

   $

   485,408Edvaldo Morata

   

   

   

   

   

   25,000(1)

   

   $

   299,75039,254(3)

   

   $

   298,64938,022(4)

   

   $

   300,00025,348(5)

   

   $

   200,000
  Footnotes: (1)   Santander awarded these restricted stock units on March 22, 2011, as part of the I-13 Plan.  The units vest in accordance with the terms of the I-13 Plan, which we describe under the caption “The Performance Shares Plan.” (2)   Santander awarded these shares on February 22, 2010, under the Obligatory Investment Plan.  The shares vested on February 22, 2013, in accordance with the terms of the Obligatory Investment Plan. (3)   Santander awarded these shares on February 15, 2011, under the Executive Bonus Program.  One-third of the shares vested on February 15, 2012, one-third vested on February 15, 2013, and one-third vest on February 15, 2014, in accordance with the terms of the Executive Bonus Program, which we describe in the Compensation Discussion and Analysis. (4)   Santander awarded these shares on February 3, 2012, under the Executive Bonus Program. (5)   Santander awarded these shares on February3, 2012, under the Bonus Deferral Program.  One‐third of these shares vested on February3, 2013, one‐third vest on February3, 2014, and one‐third vest on February3, 2015, in accordance with the terms of the Executive Bonus Program.


---

Option Exercises and Stock Vested-2012   Option Awards

   

   Stock AwardsName

   Number of Shares

   Acquired on

   Exercise (#)

   

   Value Realized

   on Exercise ($)

   

   Number of Shares

   Acquired on

   Vesting (#)

   

   Value Realized

   on Vesting (#)Jorge Morán

   

   

   

   

   144,251

   

   

   1,106,431Guillermo Sabater

   

   

   

   

   32,625

   

   

   249,571Nuno Matos

   

   

   

   

   74,956

   

   

   577,031Juan Yanes

   

   

   

   

   85,371

   

   

   652,169Edvaldo Morata

   

   

   

   

   62,328

   

   

   501,128
   Our Equity Compensation Plans As we describe in the Compensation Discussion and Analysis, the named executive officers receive a portion of their compensation in Santander common stock (or American Depositary Shares, in the case of native U.S. participants or participants who elect to have their shares delivered in the U.S.).  Set forth below is a description of the equity compensation plans through which we make these common stock awards. The Performance Shares Plan As we describe above in the Compensation Discussion & Analysis, in 2012, each of our named executive officers vested in shares that Santander awarded under the Performance Shares Plan.  The Performance Shares Plan, which Santander sponsors for all of its eligible employees, generally consists of a multi-year bonus plan under which Santander may award a participant a maximum number of shares of Santander common stock.  The shares are subject to certain pre-established service and performance requirements.  As described above, the named executive officers no longer participate in the Performance Shares Plan. Santander makes awards under the Performance Shares Plan in cycles, with one cycle ending each year.  Santander's shareholders approve each of these plans at annual meetings of shareholders.  Santander makes awards under the Performance Shares Plan in cycles, with one cycle ending each year.  We describe the two cycles (which we refer to as the“I‐12Plan”and the“I‐13Plan”respectively) for which the named executive officers vested in shares in 2012 or held unvested shares at the end of 2012.  Santander shareholders approved each of these plans at annual meetings of shareholders.  Each plan is similarly structured and has the following features: •Each cycle is for a three-year period, with payout of shares no later than July 31 of the year following the end of the cycle, as follows:   Plan

   

   Cycle

   

   Date of PayoutI-12 Plan

   

   2009 through 2011

   

   No later than July 31, 2012I-13 Plan

   

   2010 through 2012

   

   No later than July 31, 2013
  •The maximum number of shares that each participant is eligible to receive under each cycle was entirely discretionary as Santander determined based on the each participant's level within the Santander organization. •Each plan provides that a percentage of the maximum number of shares will vest in accordance with pre-established Santander TSR goals compared to a peer group. •Each plan defines TSR as the difference (expressed as a percentage) between the value of a hypothetical investment in ordinary shares of each of the members of a peer group and Santander at the end of the cycle and the value of the same investment at the beginning of the cycle.  Santander will consider dividends or similar amounts received by shareholders as if such amounts were invested in more shares.  Santander uses the trading price on the exchange with the highest trading volume to calculate the initial and final share prices.


---

•Santander chooses the peer group from among the world's largest financial institutions, based on their market capitalization, geographic location, and the nature of their businesses.  The peer group may vary slightly from plan to plan.  Santander may remove a member of the peer group from the calculations in the event the member is acquired by another company, is delisted, or otherwise is otherwise ceases to be in existence.  In such a case, Santander will equitably adjust the maximum number of shares that a participant earns to reflect such removal. •In order for a participant to receive the shares under each plan, the plan requires the participant to remain continuously employed at Santander or a subsidiary through the June 30 of the year following the end of the cycle, except in the cases of retirement, involuntary termination, unilateral waiver by the participant for good cause (as provided under Spanish law), unfair dismissal, forced leave of absence, permanent disability, or death, in which case, the participant (or his or her beneficiary, in the case of death), will receive a pro-rated portion of the participant's award that he or she would otherwise be entitled to if the participant had remain employed based on the number of days that the participant was employed.  The maximum number of shares payable under the I-13 Plan as of the end of 2012 to the named executive officers is as follows:  Named Executive Officer

   I-13 PlanJorge Morán *

   60,674Guillermo Sabater

   20,000Nuno Matos

   28,000Juan Yanes

   40,970Edvaldo Morata

   25,000
  *        Shares were awarded to Mr.Morán prior to becoming our President and Chief Executive Officer.  The TSR goals are as follows and the associated possible percentages that participants may earn under each Plan are as follows:  Santander's position in the TSR ranking

   

   Percentage of  shares

   earned of maximum1st to 5th

   

   100

   %6th

   

   82.5

   %7th

   

   65

   %8th

   

   47.5

   %9th

   

   30

   %10th or below

   

   —

   %


---

Bonus Deferral under the 2012 Executive Bonus Program Under the Executive Bonus Program, certain executive officers, including the named executive officers, are required to defer a portion of their annual bonuses for 2012.  The deferral requirement applies to all bonuses and other variable cash compensation.  The portion that the executive officer must defer is based the executive's classification.  Classification

   

   Percentage of Award DeferredExecutive Director

   

   60

   %Senior Management

   

   50

   %Other Executives

   

   40

   %
  Santander classifies Messrs.Morán and Yanes as“Senior Management”and therefore they each must defer 50% of his award. Santander classifies Messrs.Sabater, Matos, and Morata as“Other Executives”and therefore they each must defer 40% of their respective awards. All amounts that a participant defers under the Executive Bonus Program are deferred 50% in cash and 50% in Santander common stock.  The deferred amounts are paid out in three equal parts over three years provided that the participant remains employed through the applicable payment date (except as described below) and none of the following occurs: •Santander's deficient financial performance; •the participant's breach of internal rules, including those any related to risk; •material restatement of Santander's financial statements, except when modified accounting rules require such restatement; or •significant variation in the economic capital or in Sovereign Bank's risk profile.  Any deferred award made in shares of Santander common stock under the Executive Bonus Program is subject to a one-year holding requirement from the vesting date of the award. Our named executive officers deferred the following amounts into the Executive Bonus Program and will be entitled to the following number of shares if the above conditions are satisfied:  Named Executive Officer

   Total Amount Deferred

   

   Cash Deferred

   

   Shares DeferredJorge Morán

   $

   1,766,077

   

   

   $

   730,790

   

   

   88,544Guillermo Sabater

   $

   244,000

   

   

   $

   122,000

   

   

   14,782Nuno Matos

   $

   440,000

   

   

   $

   220,000

   

   

   26,656Juan Yanes

   $

   970,815

   

   

   $

   401,717

   

   

   48,673Edvaldo Morata

   $

   310,000

   

   

   $

   155,000

   

   

   18,780
  *      Number of shares based on an exchange rate of €1.284177 to $1 and an €6.427 per share price on the deferral date.  Amounts deferred by and shares awarded are estimates subject to the tax-equalization provisions of their respective employment or letter agreement. Santander's Remuneration Risk Evaluation Committee will determine whether the conditions for payment are satisfied.  Santander's Appointments and Remuneration Committee will recommend to Santander's Board whether to approve final payment of amounts under the Executive Bonus Program.


---

The Obligatory Investment Plan As we note above in the Compensation Discussion& Analysis, Santander required Mr.Morán to participate in the Obligatory Investment Plan.  Santander terminated the Obligatory Investment Plan in 2010 and replaced it with the deferral feature of Executive Bonus Program, which we describe above. The Obligatory Investment Plan generally required participants to dedicate 10% (subject to shareholder limitations) of their gross annual bonus to acquire shares of Santander common stock.  Participants in the Obligatory Investment Plan were required to purchase the required number shares of Santander common stock on the open market and deposit those shares into a designated account.  If the participant holds the shares and remains employed with Santander for three years, Santander will provide at the end of the three-year period a 100% matching contribution of the number of shares that the participant purchased.  Santander pays the matching contribution in additional shares of Santander common stock.  Participants do not receive dividends on the shares prior to vesting.  If a participant terminates employment for any reason before the end of the applicable three-year period, the participant will forfeit Santander's matching contribution. A participant's receipt of Santander's matching contribution under the Obligatory Investment Plan is subject to there being no: •deficient financial performance by Santander during the three-year period, •poor conduct by the participant, •breach or falsification by the participant in violation of the internal risk rules, and •material restatement of the entity's financial statements.


---

Description of Employment and Related Agreements We and/or Santander have entered into employment agreements and letter agreements with certain of our executive officers that were in effect at the end of fiscal year 2012.  We describe each of the agreements below. Jorge Morán Mr.Morán was a party to an agreement with Santander dated June15, 2002, as amended, which he was entitled to certain compensation and benefits.  Effective December 26, 2012, Santander and Mr. Morán agreed to a revised employment agreement.  The new agreement is similar to Mr. Morán's original agreement, except: •the payments that Mr. Morán is entitled to receive upon his termination of employment has been revised, as described below; •the defined benefit pension plan that Mr. Morán was entitled to has been changed to be a defined contribution plan.  Santander has agreed to contribute an initial amount to this new plan in the amount of the value of the pension benefit on the conversion date and to annual contributions equal to 75.97% of his annual base salary; and •Mr. Morán is entitled to a retirement benefit upon his termination by Santander under any circumstances, as described below.  Mr.Morán is entitled to a gross base salary of $2,522,000 and an annual bonus contingent on the achievement of certain performance objectives. Under both his original and revised employment agreements, Mr.Morán is entitled to receive certain payments in the event his employment with Santander is terminated under certain circumstances.  Under Mr. Morán's original agreement, if Santander terminated Mr.Morán's employment at a time when he had from five to 10years of service with Santander, he was entitled to receive three annual payments of the annual salary he was receiving at the time of his termination.  If Santander terminated Mr.Morán's employment at a time at a time when he had over 10years of service with Santander he was entitled to receive five annual payments of the annual salary he was receiving at the time of his termination.  Under his revised agreement, if Santander desists (a type of termination of employment under Spanish law), after Mr. Morán reaches age50 with 10years of service, or if Mr. Morán terminates employment due to Santander's breach of his employment agreement, he is entitled to receive annual payments through age 65 equal to 100% of his annual base salary at the time of termination.  In the event of any other termination (other than Mr. Morán's death or disability, as we describe below, or due to gross misconduct), Mr. Morán is entitled to receive a lump sum legal indemnity payment under Spanish law. If Mr.Morán dies: •while employed by Santander, his surviving spouse is entitled to receive lifetime payments equal to 70% of his annual base salary at the time of death less any amounts due from social security or another Santander pension plan, if any; •during pre-retirement or after termination of employment due to permanent disability, his surviving spouse is entitled to receive lifetime payments equal to 60% of his annual base salary at the time of death less any amounts due from social security or another Santander pension plan, if any; •his surviving children are entitled to each receive payments until they reach age 25 equal to 20% of his annual base salary at the time of death less any amounts due from social security or another Santander pension plan, if any; and •the total annual amounts due to Mr.Morán's surviving spouse and children may not exceed 100% of Mr.Morán's base annual salary at the time of death.  If Mr.Morán becomes permanently disabled, he is entitled to receive lifetime annual payments that, when added to any amounts Mr.Morán is entitled to under social security and any other Santander retirement plan, if any, enables Mr.Morán to receive the retirement benefit on the date when he reaches retirement age. Upon the occurrence of one of the events listed above, Mr.Morán, or his spouse or children, as applicable, has the option of receiving a lump sum payment in lieu of the periodic payments described above.


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Mr.Morán's original and new agreements both provide that, in the event of Mr.Morán's termination of employment with Santander for any reason other than wrongful or dismissal with no reinstatement, Mr.Morán may not work for another financial institution for two years (in the case of pre-retirement, until age 65) without Santander's consent.  Except in the case of pre-retirement, if Santander does not consent to Mr.Morán providing services for another financial institution during that period, it must pay Mr.Morán an amount in two installments equal to 80% of his base salary at the time of his termination.  In the event that Mr.Morán violates this non-compete provision, he will be required to pay Santander a penalty equal to 60% of his base salary at the time of his termination plus any amounts that he received with respect to this non-compete provision. Mr.Morán is also entitled to life and health insurance coverage and certain perquisites under his agreement in accordance with Santander's general policies. The benefits that Mr.Morán actually received in 2012 under the terms of his agreement are reflected in the“Summary Compensation Table.” Guillermo Sabater We entered into a letter agreement with Mr. Sabater, dated as of February 11, 2009. Mr. Sabater's agreement has a fixed term of three years; provided that either party may terminate the agreement by notifying the other party in writing at least 90 days prior to the termination date. The agreement provides for a base salary of $255,448, which we may increase in accordance with existing policies.  In addition, Mr. Sabater is eligible to receive an annual bonus, contingent upon the achievement of annual performance objectives.  See the discussion under the caption “Short-Term Incentive Compensation” for more information about the bonuses paid for 2012. The agreement also provides, among other things, that Mr. Sabater has a right to participate in all long-term incentive compensation programs and all other employee benefit plans and programs available to senior executives.  In addition, Mr. Sabater will be covered by the Santander Group health, life, disability, and accidental death insurance plans for expatriates. In connection with Mr. Sabater's relocation from Spain to the United States, the agreement provides for: •a monthly housing allowance of $10,000 (with the cost of utilities for such housing borne by us), on a grossed-up basis for federal, state, and local income and employment tax purposes; •relocation expenses for Mr. Sabater and his family of up to $17,396, on a grossed-up basis; •moving expenses, or €7,000 ($9,236, based on the exchange rate on December 31, 2012) in lieu thereof; •travel expenses; •reimbursement for the cost of annual visits by Mr. Sabater and his family to Spain; •payment of registration and fees associated with schooling for Mr. Sabater's dependents through high school; •language lessons for Mr. Sabater and his household family members up to a maximum of €1,500 ($1,979, based on the exchange rate on December 31, 2012) per family member; and •a one-time payment of $62,627, on a grossed-up basis, for Mr. Sabater's relocation to the United States and other benefits inherent in his previous assignment in Chile which he received in 2009.  In addition to the foregoing, we will reimburse Mr. Sabater for any tax benefits he would have been able to deduct had he remained in Spain, reimburse Mr. Sabater for tax planning and preparation services, and provide Mr. Sabater with a guaranteed exchange rate of €1 to $1.3917 for transfers from the United States to Spain, up to $68,615 per year.


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The benefits that Mr. Sabater actually received in 2012 under the terms of his agreement are reflected in the “Summary Compensation Table.” In accordance with our policy applicable to all Santander employees who relocate to the United States from abroad in connection with their employment with us, in the event that we terminate Mr. Sabater's employment without cause, we will provide for all reasonable moving and relocation expenses incurred in relocating Mr. Sabater and his family to Spain.  Nuno Matos We entered into a letter agreement with Mr. Matos, dated as of February 25, 2009. Mr. Matos's agreement has a fixed term of three years and either party may terminate the agreement by notifying the other party in writing at least 90 days prior to the termination date. The agreement provides for a base salary of $363,648, which we may increase in accordance with existing policies.  In addition, Mr. Matos is eligible to receive a base bonus contingent upon the achievement of annual performance objectives.  See the Summary Compensation table for more information about the bonuses that we paid for 2012. The agreement also provides, among other things, that Mr. Matos has a right to participate in all long-term incentive compensation programs and all other employee benefit plans and programs available to senior executives.  In addition, Mr. Matos will be covered by the Santander Group health, life, disability, and accidental death insurance plans for expatriates. In connection with Mr. Matos's relocation from Portugal to the United States, the agreement provides for: •a monthly housing allowance of $10,000 (with the cost of utilities for such housing borne by us), on a grossed-up basis for federal, state, and local income and employment tax purposes, •relocation expenses for Mr. Matos and his family of up to $26,904, on a grossed-up basis, •moving expenses, or €7,000 ($9,236, based on the exchange rate on December 31, 2012) in lieu thereof, •travel expenses, •reimbursement for the cost of annual visits by Mr. Matos and his family to Portugal, •payment of registration and fees associated with schooling for Mr. Matos's dependents through high school, •language lessons for Mr. Matos and his household family members up to a maximum of €1,500 ($1,979, based on the exchange rate on December 31, 2012) per member, and •a one-time payment of $188,880, on a grossed-up basis, for Mr. Matos's relocation to the United States, and other benefits inherent in his previous assignment in Brazil.  In addition to the foregoing •we (or Mr. Matos, as applicable) will be responsible for the difference, if any, between the taxes due on Mr. Matos's U.S. income under U.S. tax laws and Portuguese tax laws; •we will reimburse Mr. Matos for any tax benefits he would have been able to deduct had he remained in Portugal; •we will reimburse Mr. Matos for approved tax planning and preparation services; •we will provide Mr. Matos with a guaranteed exchange rate of €1 to $1.3917 for transfers from the United States to Portugal, up to $109,782 per year.  The benefits that Mr. Matos actually received in 2012 under the terms of his agreement are reflected in the “Summary Compensation Table.” In accordance with our policy applicable to all Santander employees who relocate to the United States from abroad in connection with employment with us, in the event that we terminate Mr. Matos's employment without cause, we will provide for all reasonable moving and relocation expenses incurred in relocating Mr. Matos and his family to Portugal.


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Juan Yanes Santander entered into an employment agreement with Mr. Yanes, dated January 21, 2011.  Under his agreement, Mr. Yanes is entitled to a base salary as Santander may adjust each year.  Mr. Yanes is also entitled under his agreement to an annual bonus in Santander's discretion.  Mr. Yanes is also entitled to life and health insurance coverage and certain perquisites in accordance with Santander's general policies. Effective December 26, 2012, Santander and Mr. Yanes agreed to a revised employment agreement.  The new agreement is similar to Mr. Yanes's original agreement, except: •the payments that Mr. Yanes is entitled to receive upon his termination of employment has been revised, as described below; •the defined benefit pension plan that Mr. Yanes was entitled to has been changed to be a defined contribution plan.  Santander has agreed to contribute an initial amount to this new plan in the amount of the value of the pension benefit on the conversion date and to annual contributions equal to 49.20% of his annual base salary; and •Mr. Yanes is entitled to a retirement benefit upon his termination by Santander under any circumstances, as described below.  For 2012, Mr. Yanes's base salary was $989,708. Under both his original and revised employment agreements, Mr. Yanes is entitled to receive certain payments in the event his employment with Santander is terminated under certain circumstances.  Under Mr. Yanes's original agreement, if Santander terminated Mr. Yanes's employment at a time when he had from five to 10 years of service with Santander, he was entitled to receive three annual payments of the annual salary he was receiving at the time of his termination.  If Santander terminated Mr. Yanes's employment at a time at a time when he had over 10 years of service with Santander he was entitled to receive five annual payments of the annual salary he was receiving at the time of his termination.  Under his revised agreement, if Santander desists (a type of termination of employment under Spanish law), after Mr. Yanes reaches age 50 with 10 years of service, or if Mr. Yanes terminates employment due to Santander's breach of his employment agreement, he is entitled to receive annual payments through age 65 equal to 100% of his annual base salary at the time of termination.  In the event of any other termination (other than Mr. Yanes's death or disability, as we describe below, or due to gross misconduct), Mr. Yanes is entitled to receive a lump sum legal indemnity payment under Spanish law. If Mr. Yanes dies: •while employed by Santander, his surviving spouse is entitled to receive lifetime payments equal to 70% of his annual base salary at the time of death less any amounts due from social security or another Santander pension plan, if any; •during pre-retirement or after termination of employment due to permanent disability, his surviving spouse is entitled to receive lifetime payments equal to 60% of his annual base salary at the time of death less any amounts due from social security or another Santander pension plan, if any; •his surviving children are entitled to each receive payments until they reach age 25 equal to 20% of his annual base salary at the time of death less any amounts due from social security or another Santander pension plan, if any; and •the total annual amounts due to Mr. Yanes's surviving spouse and children may not exceed 100% of Mr. Yanes's base annual salary at the time of death.  If Mr. Yanes becomes permanently disabled, he is entitled to receive lifetime annual payments that, when added to any amounts Mr. Yanes is entitled to under social security and any other Santander retirement plan, if any, enables Mr. Yanes to receive the retirement benefit on the date when he reaches retirement age.


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Upon the occurrence of one of the events listed above, Mr. Yanes, or his spouse or children, as applicable, has the option of receiving a lump sum payment in lieu of the periodic payments described above. Mr. Yanes's original and new agreements both provide that, in the event of Mr. Yanes's termination of employment with Santander for any reason other than wrongful or dismissal with no reinstatement, Mr. Yanes may not work for another financial institution for two years (in the case of pre-retirement, until age 65) without Santander's consent. Except in the case of pre-retirement, if Santander does not consent to Mr. Yanes providing services for another financial institution during that period, it must pay Mr. Yanes an amount in two installments equal to 80% of his base salary at the time of his termination.  In the event that Mr. Yanes violates this non-compete provision, he will be required to pay Santander a penalty equal to 60% of his base salary at the time of his termination plus any amounts that he received with respect to this non-compete provision. The benefits that Mr. Yanes actually received in 2012 under the terms of his agreement are reflected in the “Summary Compensation Table.”  Edvaldo Morata We entered into a letter agreement with Mr. Morata, dated as of November 23, 2009.  Mr. Morata commenced employment with us on December 31, 2009. Mr. Morata's agreement has a fixed term of three years; provided that we may terminate the agreement by notifying Mr. Morata in writing at least 90 days prior to the termination date.  In addition, the parties may mutually agree to extend the term of the agreement for an additional year. The agreement provides for a base salary of $424,678, which we may increase in accordance with existing policies.  In addition, Mr. Morata is eligible to receive a tax-equalized annual bonus, contingent upon the achievement of annual performance objectives.  See the discussion under the caption “Short-Term Incentive Compensation” for more information about the bonuses paid for 2012. The agreement also provides, among other things, that Mr. Morata has a right to participate in all long-term incentive compensation programs and all other employee benefit plans and programs available to our senior executive officers.  In addition, Mr. Morata will be covered by the Santander Group health, life, disability, and accidental death insurance plans for expatriates. In connection with Mr. Morata's relocation from Brazil to the United States, the agreement provides for: •a monthly housing allowance of $10,000 (plus an additional $420 per month for the cost of utilities for such housing), on a grossed-up basis for federal, state, and local income and employment tax purposes; •relocation payment of $18,500, on a grossed-up basis; •moving expenses, or €7,000 ($9,236, based on the exchange rate on December 31, 2012) in lieu thereof; •reimbursement for the cost of airfare for annual visits by Mr. Morata and his family to Sao Paulo; •payment of registration and fees associated with schooling for Mr. Morata's school-age children on assignment through high school; •payment of costs associated with work permits and visas, job training, and job searches for Mr. Morata's spouse, up to a maximum of $7,400 (on a grossed-up basis); •language lessons for Mr. Morata and his household family members up to a maximum of 50 school hours per family member; and •a payment of $221,357 (with 50% paid on the first payroll date following commencement of employment and 50% paid 12 months thereafter), on a grossed-up basis, for Mr. Morata's relocation to the United States and other benefits inherent in his previous assignment in Hong Kong.


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In addition to the foregoing: •we (or Mr. Morata, as applicable) will be responsible for the difference, if any, between the taxes due on Mr. Morata's U.S. income under U.S. tax laws and Brazilian tax laws; •we will reimburse Mr. Morata for tax planning and preparation services; •we will provide Mr. Morata with a guaranteed exchange rate of $1 to 0.5787100 BRL for transfers from the United States to Brazil, up to $154,803 per year.  The benefits that Mr. Morata actually received in 2012 under the terms of his agreement are reflected in the “Summary Compensation Table.” In accordance with our policy applicable to all Santander employees who relocate to the United States from abroad in connection with their employment with us, in the event that we terminate Mr. Morata's employment without cause, we will provide for all reasonable moving and relocation expenses incurred in relocating Mr. Morata and his family to Brazil.


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Deferred Compensation Arrangements Deferred Compensation Plan On December 20, 2006, our Board adopted the Sovereign Bancorp, Inc. 2007 Nonqualified Deferred Compensation Plan, which we refer to as the “Deferred Compensation Plan.”  The Deferred Compensation Plan has the following features: •Participants may defer up to 100% of their cash bonus and choose among various investment options upon which the rate of return of amounts deferred will be based.  We adjust participants' accounts periodically to reflect the deemed gains and losses attributable to the deferred amounts.  The specific investment options mirror the investment options in our qualified retirement plan with some additional alternative investments available. •We distribute all account balances in cash. •Participants are always 100% vested in all amounts deferred. •Directors of SHUSA and Sovereign Bank may defer receipt of cash fees received for service as a director into the Deferred Compensation Plan. •Distribution events will be only as permitted under Code Section 409A.  Each of the named executive officers is eligible to participate in the Deferred Compensation Plan but no named executive officer deferred any salary or bonus earned in 2012 into the Deferred Compensation Plan.  Other Arrangements Mr.Sabater began participating in the Sistema de Previsión para Directivos before his commenced his employment with us.  Under this arrangement, Santander makes an annual discretionary contribution to participants' accounts based on a percentage of their respective reference salaries from their home country.  Under this arrangement, Mr.Sabater is entitled to receive amounts in his account, plus or minus investment gains and losses, upon termination of employment or death or permanent disability.  If Mr.Sabater is terminated for cause, he forfeits all amounts in his account. Messrs.Morán and Yanes were entitled under their respective employment agreements to receive a defined benefit pension benefit upon their retirement from Santander under certain circumstances.  Effective December 26, 2012, in accordance with changes in Spanish law and the executives' revised employment agreements, Santander changed the benefit to a defined contribution benefit.  In connection with this change, Santander agreed to make lump sum contributions to Messrs.Morán's and Yanes's defined contribution plan accounts in the amounts of the value of their pension benefit on the conversion date.  We describe the defined contributions benefit in detail in the description of their respective employment agreements. Nonqualified Deferred Compensation-2012  Name

   

   Executive

   Contributions

   in Last

   Fiscal Year

   ($)

   

   Employer

   Contributions

   in Last

   Fiscal Year

   ($)

   

   Aggregate

   Earnings

   in Last Fiscal

   Year

   ($)

   

   Aggregate

   Withdrawals/

   Distributions

   ($)

   

   Aggregate

   Balance

   At Last Fiscal

   Year

   End

   ($)Jorge Morán

   

   $

   —

   

   

   $

   1,353,518

   

   

   $

   261,045

   

   

   $

   —

   

   

   $

   13,066,164Guillermo Sabater

   

   $

   —

   

   

   $

   37,708

   

   

   $

   8,980

   

   

   $

   —

   

   

   $

   272,275Juan Yanes

   

   $

   —

   

   

   $

   2,516,194

   

   

   $

   146,511

   

   

   $

   —

   

   

   $

   8,455,423


Potential Payments upon Termination or Change in Control The table below sets forth the value of the benefits (other than payments that were generally available to salaried team members) that would have been due to the named executive officers if they had terminated employment on December 31, 2012, under their respective employment or letter agreement.  We describe these agreements, including the material conditions or obligations applicable to the receipt of these benefits, under the caption “Description of Employment Agreements and Related Agreements.”  Termination

   for Death or

   Disability(2)

   

   Involuntary

   Termination

   (Desist)

   

   Voluntary

   Termination

   for Breach

   

   

   Involuntary Termination for CauseJorge Morán

   

   Severance (1)

   

   $

   48,727,695

   

   

   $

   —

   

   

   $

   0

   

   

   

   $

   —Relocation expenses

   

   $

   —

   

   

   $

   25,980

   

   

   $

   25,980

   

   

   

   $

   25,980Total

   

   $

   48,727,695

   

   

   $

   25,980

   

   

   $

   25,980

   

   

   

   $

   25,980Guillermo Sabater

   

   Relocation expenses

   

   $

   —

   

   

   $

   46,861

   

   

   $

   46,861

   

   

   

   $

   46,861Total

   

   $

   —

   

   

   $

   46,861

   

   

   $

   46,861

   

   

   

   $

   46,861Nuno Matos

   

   Relocation expenses

   

   $

   —

   

   

   $

   12,720

   

   

   $

   12,720

   

   

   

   $

   12,720Total

   

   $

   —

   

   

   $

   12,720

   

   

   $

   12,720

   

   

   

   $

   12,720Juan Yanes

   

   Severance (1)

   

   $

   18,203,196

   

   

   $

   11,441,457

   

   

   $

   11,441,457

   

   

   

   $

   —Relocation expenses

   

   $

   —

   

   

   $

   12,709

   

   

   $

   12,709

   

   

   

   $

   12,709Total

   

   $

   18,203,196

   

   

   $

   11,454,166

   

   

   $

   11,454,166

   

   

   

   $

   12,709Edvaldo Morata

   

   Relocation expenses

   

   $

   —

   

   

   $

   24,861

   

   

   $

   24,861

   

   

   

   $

   24,861Total

   

   $

   —

   

   

   $

   24,861

   

   

   $

   24,861

   

   

   

   $

   24,861
  (1)For severance payment calculation, and time and form of such payments, see “Employment and Severance Agreements.”  Excludes amounts payable as legal indemnity under applicable Spanish law.  Also excludes payments payable under each executive's respective defined contribution benefit, which we describe above “Deferred Compensation Arrangements.”  (2)Amounts shown are amounts payable upon disability for Messrs. Morán and Yanes (equal to the present value of annual base salary payable for life).  Upon death of the executive while employed, the amount payable to the surviving spouse of either is equal to 70% of annual base salary for the spouse's life.  These payments are generally reduced by any amounts payable under social security or another Santander pension plan, if any.


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Director Compensation in Fiscal Year 2012 We believed that the amount, form, and methods used to determine compensation of our non-executive directors were important factors in: •attracting and retaining directors who were independent, interested, diligent, and actively involved in our affairs and who satisfy the standards of Santander, the sole shareholder of our common stock; and •providing a simple straight-forward package that compensates our directors for the responsibilities and demands of the role of director.  The following table sets forth a summary of the compensation that we paid to each SHUSA director for service as a director of SHUSA and Sovereign Bank in 2012.  Name

   

   Fees Earned or

   Paid  in Cash(1)

   ($)

   

   Other

   Compensation(2)

   ($)

   

   Total

   ($)Juan Antonio Alvarez

   

   $

   —

   

   

   $

   —

   

   

   $

   —Thomas Dundon

   

   $

   —

   

   

   $

   —

   

   

   $

   —Stephen Ferriss

   

   $

   131,250

   

   

   $

   5,115

   

   

   $

   136,365JoséMaria Fuster

   

   $

   —

   

   

   $

   —

   

   

   $

   —Carlos Garcia

   

   $

   —

   

   

   $

   —

   

   

   $

   —Jerry Grundhofer

   

   $

   1,100,000

   

   

   $

   6,665

   

   

   $

   1,106,665John P. Hamill

   

   $

   180,000

   

   

   $

   5,404

   

   

   $

   185,404Marian L. Heard

   

   $

   175,000

   

   

   $

   4,169

   

   

   $

   179,169Gonzalo de Las Heras

   

   $

   —

   

   

   $

   —

   

   

   $

   —Nuno Matos

   

   $

   —

   

   

   $

   —

   

   

   $

   —Jorge Morán

   

   $

   —

   

   

   $

   —

   

   

   $

   —Alberto Sánchez

   

   $

   —

   

   

   $

   —

   

   

   $

   —Wolfgang Schoellkopf

   

   $

   290,000

   

   

   $

   —

   

   

   $

   290,000Juan Andres Yanes

   

   $

   —

   

   

   $

   —

   

   

   $

   —
   Footnotes: 1.         Reflects amounts paid in 2012 for the fourth quarter of 2011 and the first three quarters of 2012.  Messrs.Alvarez, Fuster, Garcia, de Las Heras, Matos, Morán, Sánchez, and Yanes did not receive compensation for service on our Board for 2012. 2.         For Messrs. Ferriss and Hamill and Ms. Heard, reflects amounts that we reimbursed for airfare for spousal travel to and from Madrid, Spain.  For Mr. Grundhofer, reflects amounts that we paid for tickets for his spouse to attend a Formula One racing event.


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Director Compensation Our Board adopted the following compensation program for non-executive directors (other than Mr. de Las Heras, who receives no compensation for service on our Board) for service on our Board and on the Sovereign Bank Board for 2012: •$140,000 in cash annually; plus •$75,000 in cash annually for the chair of our Enterprise Risk Committee; plus •$50,000 in cash annually for each non-executive director who serves on the Executive Committee; plus •$35,000 in cash annually for the non-executive directors who serve as the chairs of our Audit Committee and our Compensation Committee; plus •$35,000 in cash annually for the non-executive directors who serve on Sovereign Bank's Oversight Committee; plus •$5,000 in cash annually for each other Board committee for which such non-executive director serves as chair.  We pay these amounts quarterly in arrears. Santander approved an arrangement under which Mr. Grundhofer agreed to serve as our non-executive chair for an initial term of July 1, 2011, through June 30, 2014.  Under this arrangement, Mr. Grundhofer is entitled to receive a $1,000.000 per year cash retainer, plus an additional $100,000 per year fee, which amount (less applicable taxes) he must use to purchase Santander common stock.  We pay these amounts in arrears.  If we terminate Mr. Grundhofer's service involuntarily before June 30, 2014, he is entitled to receive the full amount of the retainer fee in a lump sum within 10 days of termination. On October18, 2012, our Board approved an annual $35,000 cash retainer for those non‐executive directors who serve on our BSA/AML Oversight Committee.  Such cash retainer became effective for the fourth quarter of 2012. For 2013, the compensation program for non‐executive directors will remain the same.  Directors Participation in Deferred Compensation Plan Our non-executive directors of SHUSA and of Sovereign Bank may elect defer cash fees earned beginning in 2007 into the Deferred Compensation Plan.  The relevant terms of the revised Deferred Compensation Plan, as we describe in the section entitled “Deferred Compensation Arrangements,” apply in the same manner to participants who are directors as they do to participants who are executive officers. No director deferred fees earned for 2012 into the Deferred Compensation Plan.


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PART IV  ITEM 15 - EXHIBITS AND FINANCIAL STATEMENT SCHEDULES  (a)  1. Financial Statements.  The following financial statements are filed as part of this report:  Consolidated Balance SheetsConsolidated Statements of OperationsConsolidated Statements of Stockholders' EquityConsolidated Statements of Cash FlowsNotes to Consolidated Financial Statements
  Audited consolidated financial statements of SCUSA of December 31, 2012 and 2011 and for each of the three years in the period ended December 31, 2012 are filed with this Report as Exhibit 99.2 and incorporated herein by reference.  2. Financial Statement Schedules.  Financial statement schedules are omitted because the required information is either not applicable, not required or is shown in the respective financial statements or in the notes thereto.  (b)Exhibits  (2.1)

   Transaction Agreement, dated as of October 13, 2008, between Santander Holdings USA, Inc. and Banco Santander, S.A. (Incorporated by reference to Exhibit 2.1 to SHUSA's Current Report on Form 8-K filed October 16, 2008) (Commission File Number 333-172807)(3.1)

   Amended and Restated Articles of Incorporation of Santander Holdings USA, Inc. (Incorporated by reference to Exhibit 3.1 to Santander Holdings USA, Inc.’s Current Report on Form 8-K filed January 30, 2009) (Commission File Number 333-172807)(3.2)

   Articles of Amendment to the Articles of Incorporation of Santander Holdings USA, Inc. (Incorporated by reference to Exhibit 3.1 to Santander Holdings USA, Inc.'s Current Report on Form 8-K filed March 27, 2009) (Commission File Number 333-172807)(3.3)

   Articles of Amendment to the Articles of Incorporation of Santander Holdings USA, Inc. (Incorporated by reference to Exhibit 3.1 to Santander Holdings USA, Inc.’s Current Report on Form 8-K filed February 5, 2010) (Commission File Number 333-172807)(3.4)

   Articles of Amendment to the Articles of Incorporation of Santander Holdings USA, Inc. (Incorporated by reference to Exhibit 3.2 to Santander Holdings USA, Inc.’s Current Report on Form 8-K filed June 21, 2011) (Commission File Number 333-172807)(3.5)

   Amended and Restated Bylaws of Santander Holdings USA, Inc. (Incorporated by reference to Exhibit 3.1 of Santander Holdings USA, Inc.’s Current Report on Form 8-K filed June 21, 2011) (Commission File Number 333-172807)(4.1)

   Santander Holdings USA, Inc. has certain debt obligations outstanding. None of the instruments evidencing such debt authorizes an amount of securities in excess of 10% of the total assets of Santander Holdings USA, Inc. and its subsidiaries on a consolidated basis; therefore, copies of such instruments are not included as exhibits to this Annual Report on Form 10-K. Santander Holdings USA, Inc. agrees to furnish copies to the SEC on request.(4.2)

   Fiscal Agency Agreement dated December 22, 2008 between Sovereign Bank and The Bank of New York Mellon Trust Company, N.A., as fiscal agent (Incorporated by reference to Exhibit 4.1 to SHUSA's Current Report on Form 8-K filed December 22, 2008) (Commission File Number 333-172807)(4.3)

   Fiscal Agency Agreement dated December 22, 2008 between Santander Holdings USA, Inc. and The Bank of New York Mellon Trust Company, N.A., as fiscal agent (Incorporated by reference to Exhibit 4.2 to SHUSA's Current Report on Form 8-K filed December 22, 2008) (Commission File Number 333-172807)(10.1)

   Commercial Paper Dealer Agreement between Santander Holdings USA, Inc. and Santander Investment Securities Inc., dated as of July 15, 2010 (Incorporated by reference to Exhibit 10.1.1 to SHUSA's Current Report on Form 8-K filed July 21, 2010) (Commission File Number 333-172807)(10.2)

   Investment Agreement, dated October 20, 2011, by and between Santander Holdings USA, Inc. and Sponsor Auto Finance Holdings Series LP., together with the exhibits thereto. (Incorporated by reference to Exhibit 10.2 to SHUSA's Current Report on Form 8-K/A filed filed October 18, 2012 (Commission File Number 001-16581) and SHUSA's Current Report on Form 8-K filed October 21, 2011 (Commission File Number 001-16581)).(10.3)

   Investment Agreement, dated October 20, 2011, by and between Santander Holdings USA, Inc. and Dundon DFS LLC, together with the exhibits thereto. (Incorporated by reference to Exhibit 10.3 to SHUSA's Current Report on Form 8-K/A filed October 18, 2012 (Commission File Number 001-16581) and SHUSA's Current Report on Form 8-K filed October 21, 2011 (Commission File Number 001-16581))* (10.4)

   Settlement Agreement and Release dated as of November 23, 2012 between The Bank of New York Mellon Trust Company, N.A. and Santander Holdings USA, Inc.* (21.1)

   Subsidiaries of Registrant* (23.1)

   Consent of Deloitte & Touche LLP (Santander Holdings USA, Inc.)(31.1)

   Chief Executive Officer certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(31.2)

   Chief Financial Officer certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(31.3)

   Comptroller certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant toSection 302 of the Sarbanes-Oxley Act of 2002(32.1)

   Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(32.2)

   Chief Financial Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(32.3)

   Comptroller certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* (99.1)

   Santander Consumer USA consolidated financial statements as of December 31, 2012 and 2011 and for the years ended December 31, 2011, 2012* (101)

   Interactive Data File (XBRL)


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  *  Previously filed with the registrant’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on March 15, 2013.


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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.   SANTANDER HOLDINGS USA, INC.

   (Registrant)Date:

   April 4, 2013

   

   /s/ Jorge MoránJorge MoránPresident and Chief Executive Officer

   (Authorized Officer)
  Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.   Signature

   Title

   Date/s/ Jorge Morán

   Jorge Morán

   President

   Chief Executive Officer

   (Principal Executive Officer)

   April 4, 2013/s/ Juan Carlos Alvarez

   Juan Carlos Alvarez

   Executive Vice President, Treasurer

   Chief Financial Officer

   (Co-Principal Financial Officer)

   April 4, 2013/s/ Guillermo Sabater

   Guillermo Sabater

   Senior Executive Vice President

   Comptroller

   (Co-Principal Financial Officer)

   April 4, 2013


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