Document:

EX-10.1  LETTER TO CLAES DAHLBACK

 

Exhibit 10.1

June 20, 2003                                                                           

PERSONAL AND
CONFIDENTIAL

Claes Dahlbäck

Investor AB

Arsenalsgatan 8c

103 32 Stockholm

Sweden

Dear Claes:

     We are all very pleased that you have agreed to join the Board of
Directors of The Goldman Sachs Group, Inc. (“GS Inc.”). I am writing to set
forth the terms of your compensation as a non-management director. The terms
of non-management directors’ compensation are, of course, subject to future
modification by the Board.

     Your term as a director will commence on June 22, 2003 and will run
through the 2004 annual meeting of shareholders of GS Inc. You have also been
appointed a member of the Compensation and Corporate Governance and Nominating
Committees as of June 22, 2003.

     You will receive an initial grant of 3,000 fully vested restricted stock
units (“RSUs”) under The Goldman Sachs Amended and Restated Stock Incentive
Plan (the “SIP”).

     As additional compensation for your services, you will receive:

	 	•	 	$35,000 per year (the “Annual Retainer”);
	 
	 	•	 	$15,000 per year for serving on each Board committee of which you are
a member (the “Committee Fees”);
	 
	 	•	 	$1,000 for each meeting of the Board or of a Board committee that you
attend (the “Meeting Fees”); and
	 
	 	•	 	an annual grant (the “Annual Grant”), at your election, of (a) 2,000
fully vested RSUs; (b) fully vested options (“Options”) to purchase
6,000 shares of GS Inc. common stock; or (c) 1,000 RSUs and Options to
purchase 3,000 shares of GS Inc. common stock.

 

 

     The Annual Retainer and the Committee Fees are paid annually in arrears in
the form of RSUs unless GS Inc. determines to pay them in cash. The Meeting
Fees are payable in cash, also annually in arrears. The Annual Grant is paid
annually in advance of the fiscal year to which it pertains in the form of RSUs
and/or Options as elected by you.

     For fiscal year 2003, you will receive the Annual Retainer, Committee Fees
and Annual Grant pro rated from the date of your appointment. Meeting Fees
will be calculated based on the number of meetings you attend for the remainder
of 2003 and will be paid in cash in arrears. I enclose a form for the 2003
Annual Grant election as between RSUs and Options.

     The terms of the Options for the 2003 Annual Grant were set in November
2002 and have the same exercise price ($78.87) as the options that were granted
to employees for the 2002 fiscal year; will become exercisable on the earlier
of (a) the first trading day in January 2006 unless that day is not during an
“access person window period” (“Window Period”) under GS Inc.’s trading policy,
in which case, the first trading day of the first Window Period that begins
thereafter, and (b) the date on which you cease to be a director of GS Inc.;
and will expire on November 30, 2012.

     Any Options granted to you as part of the Annual Grant for fiscal 2004 and
thereafter will:

	 	 	(i)	 	be granted on the same date as the date of grant of
any year-end equity awards granted to employees of GS Inc. and
its affiliates who are subject to Section 16 of the Securities
Exchange Act (“Section 16 Persons”) for the prior fiscal year
or, if no such equity awards are granted, on the last business
day of December in the fiscal year to which the Annual Grant
pertains;
	 

	 	 	(ii)	 	first become exercisable on the earlier of (a) the
same date that year-end options granted to Section 16 Persons
for the prior fiscal year become exercisable or, if no such
options are granted, on the first trading day in January three
years after the date of grant unless that date is not during a
Window Period, in which case the first trading day of the first
Window Period that begins thereafter, and (b) the date on which
you cease to be a director of GS Inc.;
	 

	 	 	(iii)	 	have an exercise price equal to the exercise price
of any year-end options granted to Section 16 Persons for the
prior fiscal year or, if no such options are granted, the
closing price of GS Inc.’s common stock on the New York Stock
Exchange on the date of grant of the Annual Grant; and
	 

	 	 	(iv)	 	will expire ten years after the date of grant.

     RSUs for the Annual Retainer, the Committee Fees and, if applicable, the Annual Grant will:

	 	 	(i)	 	be granted to you as of the date of grant of any
year-end equity award granted to Section 16 Persons or, if no
such award is granted, as of the last business day of December
of such fiscal year (or, in the case of RSUs for the Annual
Grant, as of the last business day of December in the fiscal
year to which the grant pertains); and
	 
	 	 	(ii)	 	provide for delivery of shares of GS Inc. common
stock on the last business day of May in the year following the
date on which you cease to be a director of GS Inc.

     The number of RSUs you receive for the Annual Retainer and the Committee Fees
will be determined in the same manner as grants to employees for year-end RSUs
for that fiscal year or, if no such RSUs are granted, at a grant

 

 

price equal to the average closing price of GS Inc.’s common stock on the New
York Stock Exchange over the 10 trading days up to and including the last day
of the fiscal year.

     All Options and RSUs will be subject to the terms and conditions of the
SIP and the relevant award agreements.

     Please note that your non-management director’s compensation will be paid
to you net of any applicable U.S. withholding tax, which is currently imposed
at a rate of 30%. If you or your tax advisors would like to discuss any issues
relating to U.S. withholding taxes, please contact us in advance of when you
are scheduled to receive any of the above-described payments.

     We will shortly be providing you with agreements and other documentation
with respect to your initial grant. I have enclosed various other documents in
connection with these arrangements. Please complete them as necessary, sign
where indicated and return them in the enclosed envelope. The remaining copies
are for your records.

	 	 	 	 	 
	 	 	Very truly yours,
	 	 	 	 	 
	 	 	
/s/ HENRY M. PAULSON, JR.	 	 
	 	 	

	 	 
	 	 	
Henry M. Paulson, Jr.	 	 

	 	 	 
	Enclosures:	 	
The Goldman Sachs Amended and Restated Stock Incentive Plan
	 	 	
Custody Agreement
	 	 	
Signature Card
	 	 	
Election Form for 2003 Annual Grant
	 	 	
Form W-8BENEX-10.2  LETTER TO EDWARD M. LIDDY

 

Exhibit 10.2

	 	 	 
	 	 	
June 20, 2003

PERSONAL AND CONFIDENTIAL

Edward M. Liddy

The Allstate Corporation

2775 Sanders Road

Northbrook, IL 60062

Dear Ed:

     We are all very pleased that you have agreed to join the Board of
Directors of The Goldman Sachs Group, Inc. (“GS Inc.”). I am writing to set
forth the terms of your compensation as a non-management director. The terms
of non-management directors’ compensation are, of course, subject to future
modification by the Board.

     Your term as a director will commence on June 22, 2003 and will run
through the 2006 annual meeting of shareholders of GS Inc. You have also been
appointed a member of the Audit, Compensation and Corporate Governance and
Nominating Committees as of June 22, 2003.

     You will receive an initial grant of 3,000 fully vested restricted stock
units (“RSUs”) under The Goldman Sachs Amended and Restated Stock Incentive
Plan (the “SIP”).

     As additional compensation for your services, you will receive:

	 	•	 	$35,000 per year (the “Annual Retainer”);
	 
	 	•	 	$15,000 per year for serving on each Board committee of which you are
a member (the “Committee Fees”);
	 
	 	•	 	$1,000 for each meeting of the Board or of a Board committee that you
attend (the “Meeting Fees”); and
	 
	 	•	 	an annual grant (the “Annual Grant”), at your election, of (a) 2,000
fully vested RSUs; (b) fully vested options (“Options”) to purchase
6,000 shares of GS Inc. common stock; or (c) 1,000 RSUs and Options to
purchase 3,000 shares of GS Inc. common stock.

 

 

     The Annual Retainer and the Committee Fees are paid annually in arrears in
the form of RSUs unless GS Inc. determines to pay them in cash. The Meeting
Fees are
payable in cash, also annually in arrears. The Annual Grant is paid
annually in advance of the fiscal year to which it pertains in the form of RSUs
and/or Options as elected by you.

     For fiscal year 2003, you will receive the Annual Retainer, Committee Fees
and Annual Grant pro rated from the date of your appointment. Meeting Fees
will be calculated based on the number of meetings you attend for the remainder
of 2003 and will be paid in cash in arrears. I enclose a form for the 2003
Annual Grant election as between RSUs and Options.

     The terms of the Options for the 2003 Annual Grant were set in November
2002 and have the same exercise price ($78.87) as the options that were granted
to employees for the 2002 fiscal year; will become exercisable on the earlier
of (a) the first trading day in January 2006 unless that day is not during an
“access person window period” (“Window Period”) under GS Inc.’s trading policy,
in which case, the first trading day of the first Window Period that begins
thereafter, and (b) the date on which you cease to be a director of GS Inc.;
and will expire on November 30, 2012.

     Any Options granted to you as part of the Annual Grant for fiscal 2004 and
thereafter will:

	 	 	 	 	 
	 	 	(i)	 	be granted on the same date as the date of grant of
any year-end equity awards granted to employees of GS Inc. and
its affiliates who are subject to Section 16 of the Securities
Exchange Act (“Section 16 Persons”) for the prior fiscal year
or, if no such equity awards are granted, on the last business
day of December in the fiscal year to which the Annual Grant
pertains;
	 	 	 	 	 
	 	 	(ii)	 	first become exercisable on the earlier of (a) the
same date that year-end options granted to Section 16 Persons
for the prior fiscal year become exercisable or, if no such
options are granted, on the first trading day in January three
years after the date of grant unless that date is not during a
Window Period, in which case the first trading day of the first
Window Period that begins thereafter, and (b) the date on which
you cease to be a director of GS Inc.;
	 	 	 	 	 
	 	 	(iii)	 	have an exercise price equal to the exercise price
of any year-end options granted to Section 16 Persons for the
prior fiscal year or, if no such options are granted, the
closing price of GS Inc.’s common stock on the New York Stock
Exchange on the date of grant of the Annual Grant; and
	 	 	 	 	 
	 	 	(iv)	 	will expire ten years after the date of grant.

     RSUs for the Annual Retainer, the Committee Fees and, if applicable, the
Annual Grant will:

	 	 	 	 	 
	 	 	(i)
	 	be granted to you as of the date of grant of any
year-end equity award granted to Section 16 Persons or, if no
such award is granted, as of the last business day of December
of such fiscal year (or, in the case of RSUs for the Annual
Grant, as of the last business day of December in the fiscal
year to which the grant pertains); and
	 	 	 	 	 
	 	 	(ii)	 	provide for delivery of shares of GS Inc. common
stock on the last business day of May in the year following the
date on which you cease to be a director of GS Inc.

     The number of RSUs you receive for the Annual Retainer and the Committee
Fees will be determined in the same manner as grants to employees for year-end
RSUs for that fiscal year or, if no such RSUs are granted,
at a grant

 

 

price equal to the average closing price of GS Inc.’s common
stock on the New York Stock Exchange over the 10 trading days up to and
including the last day of the fiscal year.

     All Options and RSUs will be subject to the terms and conditions of the
SIP and the relevant award agreements.

     We will shortly be providing you with agreements and other documentation
with respect to your initial grant. I have enclosed various other documents in
connection with these arrangements. Please complete them as necessary, sign
where indicated and return them in the enclosed envelope. The remaining copies
are for your records.

	 	 	 
	 	 	
Very truly yours,
	 	 	 
	 	 	 
	 	 	
/s/ HENRY M. PAULSON, JR.
	 	 	

	 	 	
Henry M. Paulson, Jr.

	 	 	 
	Enclosures:	 	
The Goldman Sachs Amended and Restated Stock Incentive Plan
	 	 	
Custody Agreement
	 	 	
Signature Card
	 	 	
Election Form for 2003 Annual Grant
	 	 	
Form W-9

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