Document:

EXHIBIT 10.13

 Exhibit 10.13 
  
 PROFESSIONAL BRANCH MANAGER RETENTION PROGRAM 
  
 Under The Legg Mason, Inc. 
  
 1996 Equity Incentive Plan, As Amended 
  
 The Compensation Committee of the Legg Mason, Inc. Board of Directors has adopted this Professional Branch Manager Retention Program (the
“Program”) under the Legg Mason, Inc. 1996 Equity Incentive Plan, as amended from time to time (the “Plan”), in order to enhance the ability of Legg Mason Wood Walker, Incorporated, a wholly owned subsidiary of Legg Mason, to
attract and retain professional branch managers. Under this Program, certain professional branch managers will be granted Performance Units in the nature of deferred bonuses and retention awards. Deferred bonuses will generally be payable six years
after the close of the fiscal year to which they relate. Retention awards will generally be payable if the grantee remains employed by the Company for a specific period of time. Deferred bonuses and retention awards will be payable in Legg Mason,
Inc. common stock. This document sets out the terms and conditions under which the Program will operate and the terms and conditions of each deferred bonus and retention award granted under the Program. This document, the Program and each deferred
bonus and retention award are subject to the applicable terms and conditions of the Plan. 
  
 1. Purpose – The purpose of the Program is to provide for the grant of Performance Units that include deferred bonuses and retention awards for Professional Branch Managers that are designed to
further enhance the ability of Legg Mason Wood Walker, Incorporated to attract and retain Professional Branch Managers. The additional compensation payable to a Professional Branch Manager for remaining with the Company for a specified period is in
addition to the compensation provided for services rendered and is intended solely to encourage Professional Branch Managers to remain employed by the Company. 
  

2. Definitions – As used herein, the following definitions shall apply: 
  
 (a) “Account” means the investment account established for
Deferred Bonuses and Retention Awards pursuant to the Program as described in Section 5(a) and Section 6(a) of this document. 
  
 (b) “Branch Manager Compensation Schedule” means the Branch Manager Compensation Schedule that is in effect at the Company for a
particular Fiscal Year. 
  
 (c) “Board” means
the Legg Mason, Inc. Board of Directors. 
  
 (d)
“Committee” means the Compensation Committee of the Board, or such other committee designated by the Board, authorized to administer the Plan under Section 3 thereof. 

 (e) “Company” means Legg Mason Wood Walker, Incorporated. 
  
 (f) “Compensation Arrangement” means, for each Professional
Branch Manager whose compensation for a Fiscal Year is not determined pursuant to the Company’s Branch Manager Compensation Schedule, the separate agreement or arrangement between the Professional Branch Manager and the Company’s Private
Client Group management that provides the method to calculate such Professional Branch Manager’s compensation for such Fiscal Year. 
  
 (g) “Deferred Bonus” means a Performance Unit granted under the Program consisting of a deferred bonus credited to an Eligible
Professional Branch Manager pursuant to Section 4 of this document. 
  
 (h) “Disability” means a medically determinable physical or mental impairment which, as determined by the Committee using such criteria as it establishes in its sole and absolute discretion, will prevent the Professional
Branch Manager from performing his or her usual duties or any other similar duties available in the Company’s employ for a period of at least twelve (12) months. 
  
 (i) “Distribution Valuation Date” means (i) in the case of a distribution following the death of a
Professional Branch Manager or the termination of a Professional Branch Manager’s employment as a result of Disability, the date that is ten (10) business days before the applicable Payment Date; and (ii) in all other cases, April
25th (or, if Legg Mason Common Stock is not traded on its principal exchange on that day, the next following day on
which Legg Mason Common Stock is traded on its principal exchange) preceding the applicable Payment Date. 
  
 (j) “Dividend Payment Date” has the meaning specified in Section 6(b). 
  
 (k) “Eligible Professional Branch Manager” means a Professional Branch Manager (i) who is employed in the
Company’s Private Client Group, (ii) who is classified by the Company as a Professional Branch Manager, (iii) who is designated by the Committee as an Eligible Professional Branch Manager for the relevant Fiscal Year prior to the end of such
Fiscal Year, (iv) whose Formula Compensation exceeds any applicable Guarantee for the Fiscal Year, and (v) who is employed by the Company on the last day of the Fiscal Year, or who terminated employment during the Fiscal Year by reason of death,
Disability or Retirement. 
  
 (l) “Fair Market
Value” means an amount equal to the average of the closing prices on the principal exchange on which Legg Mason Common Stock is traded for the date on which the price is being determined (i.e., the Valuation Date, Dividend Payment Date,
Distribution Valuation Date or other specified date) and the four (4) trading days immediately following the applicable date on which the value is being determined or, if Legg Mason Common Stock is not then traded on an exchange, such amount as is
determined by the Committee, in its discretion, using any reasonable method of valuation. Any decline in the actual trading price of Legg Mason Common Stock during the five (5) day pricing period shall be the sole risk of the Professional Branch
Manager. 
  

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 (m) “Formula Compensation” means the cash compensation due a Professional Branch
Manager (excluding the value of any Deferred Bonus or Retention Award, and excluding any Recruiting Bonus) for a Fiscal Year as determined under the Company’s Branch Manager Compensation Schedule for such Fiscal Year or the Compensation
Arrangement for such Professional Branch Manager for such Fiscal Year, as applicable; provided that, in calculating Formula Compensation for purposes of the Program, the provisions of the Branch Manager Compensation Schedule or Compensation
Arrangement that reduce a Professional Branch Manager’s compensation for the Fiscal Year by up to $12,000 shall be disregarded. 
  
 (n) “Fiscal Year” means the fiscal year of the Company, which, as of the date the Program is adopted, is the 12 month period beginning
April 1 and ending March 31. References herein to any certain Fiscal Year will refer to the Fiscal Year ended on the March 31 of the year specified in such references. 
  
 (o) “Guarantee” means the minimum amount of compensation guaranteed to a Professional Branch Manager for a
Fiscal Year pursuant to an agreement or arrangement between the Professional Branch Manager and the Company’s Private Client Group management. 
  
 (p) “Legg Mason” means Legg Mason, Inc., a Maryland Corporation. 
  
 (q) “Legg Mason Common Stock” means shares of common stock, $.10 par value per share, of Legg Mason, Inc.

  
 (r) “Legg Mason Share Units” or
“Share Units” means units that are economically equivalent to, but are not actual, shares of Legg Mason Common Stock. 
  
 (s) “Override” means the difference for a Fiscal Year between (a) a Professional Branch Manager’s Formula Compensation and (b) the
greater of (i) such Professional Branch Manager’s Salary Plus Draw or (ii) if such Professional Branch Manager has a Guarantee for such Fiscal Year, such Professional Branch Manager’s minimum compensation as specified in such Guarantee.

  
 (t) “Payment Date” the date a Professional
Branch Manager receives a payment from Legg Mason pursuant to the Program. 
  
 (u) “Performance Unit” means an award granted pursuant to Section 11 of the Plan. Performance Units granted under the Program will consist of Deferred Bonuses and Retention Awards. 
  
 (v) “Professional Branch Manager” means an employee who
devotes all of his or her working time to the management of a retail branch office of the Company and who is classified by the Company as a professional branch manager. 
  

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 (w) “Program” means the Professional Branch Manager Retention Program, the terms and
conditions of which are contained in this document, pursuant to which Legg Mason will grant Deferred Bonuses and Retention Awards to Eligible Branch Managers under the Plan. 
  
 (x) “Recruiting Bonus” means any compensation payable to a Professional Branch Manager in connection with,
or as a result of, the recruiting or hiring of new employees of the Company. 
  
 (y) “Retention Award” means a Performance Unit granted under the Program that is designed to assist the Company in retaining Eligible Professional Branch Managers. The value of a Retention Award is
based on an Eligible Professional Branch Manager’s Override for such Fiscal Year. The right to receive payments under a Retention Award is based the continued employment of a Professional Branch Manager for a specific period of time.

  
 (z) “Retirement” means a Professional Branch
Manager’s termination of employment with the Company (i) on or after age sixty-five (65); or (ii) at any time when the sum of the Professional Branch Manager’s age at termination of employment and his or her years of service with the
Company equals at least seventy (70). 
  
 (aa) “Salary
Plus Draw” means the total amount of compensation that a Professional Branch Manager has received during a Fiscal Year (generally, the amount of such Professional Branch Manager’s salary for such Fiscal Year plus any mid-year profit
sharing or other in-year bonuses paid to such Professional Branch Manager), but excluding (i) all bonus amounts that were paid during such Fiscal Year but were earned during the prior Fiscal Year and (ii) any Recruiting Bonus paid to such
Professional Branch Manager during such Fiscal Year. 
  
 (bb)
“Valuation Date” means May 15th of each year (beginning with May 15, 2005) or, if that day is not a
day on which Legg Mason Common Stock is traded on the principal exchange on which it is regularly traded, the next following trading day. 
  
 3. Program Participation – Eligible Professional Branch Managers shall become participants in the Program on the last day of the first
Fiscal Year for which they are designated by the Committee as an Eligible Professional Branch Manager. In order to receive a Deferred Bonus or a Retention Award for any Fiscal Year during which the Eligible Professional Branch Manager was employed,
the Professional Branch Manager must have been designated by the Committee prior to the end of such Fiscal Year as an Eligible Professional Branch Manager for such Fiscal Year. If an otherwise Eligible Professional Branch Manager terminates
employment with the Company during a Fiscal Year by reason of the Professional Branch Manager’s death, Disability or Retirement, the Professional Branch Manager may be entitled to a prorated Deferred Bonus and Retention Award for such Fiscal
Year (determined in accordance with Section 4). 
  
 If a
Professional Branch Manager ceases to be an Eligible Professional Branch Manager (e.g., because he or she ceases to be classified as a Professional Branch Manager by the Company), but remains in the employ of the Company, the Professional Branch
Manager will 
  

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 continue to participate in the Program, but only with respect to amounts previously credited to the Professional Branch
Manager’s Account. If a Professional Branch Manager ceases to be an Eligible Professional Branch Manager, the Account shall be distributed in accordance with the provisions of Section 8 (subject to the forfeiture provisions of Section 7), but
no further Deferred Bonuses or Retention Awards will be credited to the Account with respect to any subsequent periods. 
  
 4. Deferred Bonuses and Retention Awards – 
  
 (a) Deferred Bonuses – As of the end of each Fiscal Year, Legg Mason will credit to the Account of each Eligible Professional Branch
Manager who has a positive Override for such Fiscal Year an amount equal to the lesser of (i) the Override of such Professional Branch Manager for such Fiscal Year or (ii) the first $12,000 of the Override (or such other higher amount as may be
determined by the Committee). Such credit shall be designated as a Deferred Bonus. 
  
 The Deferred Bonus credited to the Account of an Eligible Professional Branch Manger shall be subtracted from the Override otherwise payable to the Professional Branch Manager. 
  
 (b) Retention Awards – As an incentive for Eligible
Professional Branch Managers to continue their employment with the Company, as of the end of each Fiscal Year, Legg Mason will credit to the Account of each Eligible Professional Branch Manager who has a positive Override for such Fiscal Year an
amount equal to the amount of Deferred Bonus credited to such Account for such Fiscal Year. Such credit shall be designated as a Retention Award. 
  
 (c) Allocation of Deferred Bonuses and Retention Awards – Deferred Bonuses and Retention Awards will be allocated to the Professional
Branch Manager’s Account as of the first Valuation Date following the close of the Fiscal Year to which the Deferred Bonus and Retention Award relates. 
  
 (i) Allocation in Case of Death, Disability or Retirement – If the employment of an Eligible Professional Branch Manager terminates
during a Fiscal Year by reason of the Professional Branch Manager’s death, Disability or Retirement, the Professional Branch Manager may be entitled to a prorated Deferred Bonus and/or Retention Award for such Fiscal Year. The Committee shall
determine the appropriate proration by multiplying the amount credited as a Deferred Bonus or Retention Award and the amount of the Override for the Fiscal Year by a fraction, the numerator of which is the number of calendar days during the Fiscal
Year during which the Professional Branch Manager was employed by the Company and the denominator of which is 365. 
  
 5. Establishment of Professional Branch Manager Accounts 
  
 (a) Account Established for Each Professional Eligible Branch Manager – An individual Account shall be
established on the books of Legg Mason in the name of each Eligible Professional Branch Manager, for the purpose of accounting for Deferred 
  

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 Bonuses and Retention Awards credited to the Professional Branch Manager, and to account for the Legg Mason Share Units
into which such Deferred Bonuses and Retention Awards are converted pursuant to Section 6. A separate sub-account shall be established with respect to Deferred Bonuses and Retention Awards credited for each Fiscal Year. Other sub-accounts may be
established as the Committee or Legg Mason deems appropriate to properly implement the provisions of the Program. 
  
 (b) Account Statements – As soon as practicable after the Valuation Date, Legg Mason shall provide each Eligible Professional Branch
Manager who has a balance in his or her Account with a statement showing the Deferred Bonuses and Retention Awards credited to his or her Account with respect to each Fiscal Year, the date on which the Professional Branch Manager is scheduled to
vest in the Retention Award (and the amount of Legg Mason Share Units into which Deferred Bonuses and Retention Awards have been converted pursuant to Section 6) for each Fiscal Year, and such other information as the Committee shall deem relevant.

  
 6. Investment of Deferred Bonuses and Retention
Awards 
  
 (a) Phantom Stock Account
– All Deferred Bonuses and Retention Awards for a Fiscal Year shall be allocated to the Professional Branch Manager’s Account and shall be deemed converted into Legg Mason Share Units. Legg Mason shall credit the Professional Branch
Manager’s Account with the amount of Share Units resulting from the conversion of the Deferred Bonuses and Retention Awards. The number of Share Units into which such Deferred Bonus and Retention Award shall be converted (calculated to four
decimal places) will be determined as of the first Valuation Date following the Fiscal Year to which the Deferred Bonuses and Retention Awards relate and will be equal to the amount of the Deferred Bonuses and Retention Awards for the Fiscal Year
divided by the Fair Market Value of a share of Legg Mason Common Stock on such Valuation Date. The conversion of Deferred Bonuses and Retention Awards into Legg Mason Share Units will be made by Legg Mason as soon as administratively practicable
after the first Valuation Date following the Fiscal Year to which the Deferred Bonuses and Retention Awards relate. 
  
 (b) Adjustment to Phantom Stock Account upon Dividend by Legg Mason – If, prior to a Payment Date, Legg Mason pays any dividend (other
than in Legg Mason Common Stock) on its Common Stock, or makes any distribution (other than in Legg Mason Common Stock) with respect thereto, the Professional Branch Manager’s Account will be credited with a number of additional Share Units
determined by dividing the amount of the dividend or other distribution allocable to the Share Units already credited to the Professional Branch Manager’s Account as of the record date for the dividend or distribution, by 95% of the Fair Market
Value of a share of Legg Mason Common Stock on the payment date for the dividend or distribution (the “Dividend Payment Date”). Amounts to be credited under this subsection 6(b) will be credited as soon as administratively practicable
after the applicable Dividend Payment Date. 
  
 (c)
Adjustment to Phantom Stock Account upon Certain Events – In the event that, prior to a Payment Date, the number of outstanding shares of Legg Mason Common Stock is changed by reason of a stock split, stock dividend, combination
of shares or 
  

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 recapitalization, or Legg Mason Common Stock is converted into or exchanged for other shares as a result of a merger,
consolidation, sale of assets or other reorganization or recapitalization, the number of Share Units then credited to a Professional Branch Manager’s Account will be appropriately adjusted so as to reflect such change (based upon the best
estimate of Legg Mason as to relative values). 
  
 (d)
Rights as LMI Stockholder –Neither the allocation of a Deferred Bonus or Retention Award to the Account, nor any other provision of the Plan, shall confer or be construed as conferring upon a Professional Branch Manager any rights
as a stockholder of Legg Mason or any right to have access to the books and records of Legg Mason or any affiliate or subsidiary. 
  
 7. Vesting; Forfeiture of Account – 
  
 (a) Vesting of Deferred Bonus – The Deferred Bonus for each Fiscal Year shall be fully vested at all times. 
  
 (b) Vesting of Retention Award – The Retention Award is
designed to encourage a Eligible Professional Branch Manager to remain employed by the Company. The Retention Award for each Fiscal Year is subject to a six year “class year” vesting schedule; that is, the Retention Award for a particular
Fiscal Year (together with any related investment adjustments thereto) shall vest if the Professional Branch Manager remains continuously employed by the Company through the last day of the sixth (6th) Fiscal Year following the Fiscal Year to which the Retention Award relates. If a Professional Branch Manager’s employment with the Company terminates
for any reason (whether involuntary or voluntary and whether with or without cause) other than death, Disability or Retirement on or before the last day of the sixth Fiscal Year following the Fiscal Year to which the Retention Award relates, the
portion of the Professional Branch Manager’s Account that relates to such non-vested Retention Award (consisting of the Legg Mason Share Units into which such non-vested Retention Award was converted pursuant to Section 6) shall be forfeited in
their entirety. 
  
 (c) Retirement, Death or
Disability – A Professional Branch Manager shall become fully (100%) vested in the portion of his or her Account consisting of Retention Awards (and the Legg Mason Share Units into which such Retention Awards were converted pursuant to
Section 6) upon Retirement, death or Disability. However, the distribution (and potential forfeiture) of such portion of the Account to a retired Professional Branch Manager shall be conditioned upon his or her continued compliance with the
provisions of Section 10. 
  
 (d) Forfeitures
– Forfeited amounts (including amounts forfeited pursuant to Section 10) shall revert to Legg Mason and will not be allocated to other Professional Branch Managers. 
  
 8. Distributions – 
  
 (a) Stated Time – Except for cases of Retirement, Disability or death during employment or following
Retirement, and subject to the terms and conditions of the Program and the Plan, distributions of the Deferred Bonus and Retention Award credited to a 
  

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 Professional Branch Manager’s Account shall be made within seventy-five (75) days after the last day of the sixth
(6th) Fiscal Year following the Fiscal Year to which the Deferred Bonus and Retention Award relates. 
  
 (b) Retirement – In the event a Professional Branch
Manager’s employment with the Company terminates as a result of Retirement, distribution of the Professional Branch Manager’s remaining Account (including any prorated Deferred Bonus and Retention Award to which the Professional Branch
Manager may be entitled for the Fiscal Year pursuant to Section 4) shall be made, subject to the terms and conditions of the Program and the Plan, within seventy-five (75) days after the close of the Fiscal Year following the Fiscal Year in which
the Professional Branch Manager retired, unless distribution of benefits is forfeited pursuant to Section 10. 
  
 (c) Disability of Professional Branch Manager – In the event a Professional Branch Manager’s employment with the Company
terminates as a result of the Professional Branch Manager’s Disability, all amounts in the Professional Branch Manager’s Account (including any prorated Deferred Bonus and Retention Award to which the Professional Branch Manager may be
entitled for the Fiscal Year pursuant to Section 4) shall be paid, subject to the terms and conditions of the Program and the Plan, within seventy-five (75) days following the later of (i) the date on which the Professional Branch Manager’s
employment terminated and (ii) the date the Committee determines that the Professional Branch Manager’s employment terminated as a result of the Professional Branch Manager’s Disability. The Committee, in its sole discretion, may determine
that a Professional Branch Manager has a Disability and that the Professional Branch Manager’s employment with the Company terminated as a result of such Disability at any time before, at the time of, or after the Professional Branch
Manager’s termination of employment. 
  
 (d)
Death – 
  
 (i) Death During
Employment – If a Professional Branch Manager’s employment with the Company terminates as a result of the Professional Branch Manager’s death, all amounts in the Professional Branch Manager’s Account (including any
prorated Deferred Bonus and Retention Award to which the Professional Branch Manager may be entitled for the Fiscal Year pursuant to Section 4) shall be paid to the Professional Branch Manager’s beneficiary (as determined pursuant to Section
8(d)(iii)) within seventy-five (75) days following the date of the Professional Branch Manager’s death. 
  
 (ii) Death Following Retirement – In the event of a Professional Branch Manager’s death subsequent to the date of the
Professional Branch Manager’s Retirement and at a time during which the Professional Branch Manager’s remaining Account under the Program has not been distributed, all amounts then remaining in the Professional Branch Manager’s
Account shall be paid to the Professional Branch Manager’s beneficiary (as determined pursuant to Section 8(d)(iii)) within seventy-five (75) days following Committee’s receipt of written notification of the Professional Branch
Manager’s death. 
  
 (iii) Designation of
Beneficiary – Each Professional Branch Manager from time to time may designate, on such form as the Committee may prescribe from 

  

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time to time, any person or persons (who may be named contingently or successively) to receive any amount payable under the Program upon or after his or her
death, and such designation may be changed from time to time by the Professional Branch Manager by filing a new designation with the Committee. Each designation will revoke all prior designations by the Professional Branch Manager, shall be on a
form prescribed by the Committee, and will be effective only when filed in writing with the Committee during the Professional Branch Manager’s lifetime. In the absence of a valid beneficiary designation, or if, at the time any amount is payable
to a Professional Branch Manager or beneficiary, there is no living beneficiary eligible to receive the payment that has been validly named by the Professional Branch Manager, then Legg Mason shall pay any such amount to the Professional Branch
Manager’s surviving spouse (if the Professional Branch Manager was legally married at the time of his or her death) or if there is no surviving spouse, to the Professional Branch Manager’s estate. In determining the existence or identity
of anyone entitled to payment, the Committee may rely conclusively upon information supplied by the personal representative of the Professional Branch Manager’s estate. In the event of a lack of adequate information having been supplied to the
Committee, or in the event that any question arises as to the existence or identity of anyone entitled to receive a payment as aforesaid, or in the event that a dispute arises with respect to any such payment, or in the event that a beneficiary
designation conflicts with applicable law, or in the event the Committee is in doubt for any other reason as to the right of any person to receive a payment as beneficiary then, notwithstanding the foregoing, Legg Mason, in its sole discretion, may,
in complete discharge, and without liability for any tax or other consequences which might flow therefrom: (i) distribute the payment to the Professional Branch Manager’s estate, (ii) retain such payment, without liability for interest, until
the rights thereto are determined, or (iii) deposit the payment into any court of competent jurisdiction. 
  
 9. Form of Distribution – The Professional Branch Manager’s Account shall be distributed in whole shares of Legg Mason Common
Stock as described below, based on the Fair Market Value of Legg Mason Common Stock on the Distribution Valuation Date. Whole Share Units to be distributed within a Professional Branch Manager’s Account will be converted into shares of Legg
Mason Common Stock on a one-for-one basis. The portion of a Professional Branch Manager’s Account that represents fractional Share Units and thus cannot be converted into whole shares of Legg Mason Common Stock shall be distributed in cash. Any
decline in the actual trading price of Legg Mason Common Stock during the period between the Distribution Valuation Date and the applicable Payment Date, as well as any brokerage commissions, fees or other charges incurred by a Professional Branch
Manager in connection with the disposition of any shares of Legg Mason Common Stock that are distributed to the Professional Branch Manager, shall be the sole risk and responsibility of the Professional Branch Manager. 
  
 10. Non-Compete – If a retired Professional Branch Manager
engages in competition with the Company prior to the date of a distribution, the portion of the Professional Branch Manager’s Account attributable to Retention Awards (consisting of the Legg Mason Share Units into which such Retention Awards
were converted pursuant to Section 6) shall be forfeited in its entirety. Forfeited amounts shall revert to Legg Mason and will not be allocated to other Branch Managers. 
  

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 (a) For purpose of this Section, a Professional Branch Manager shall be deemed to have “engaged in
competition” with the Company if he or she: 
  
 (i)
discloses the names of or otherwise identifies any of the Company’s customers to any person, firm, corporation, association, or other entity which provides products or services that are similar to those provided by the Company; 
  
 (ii) discloses to any person, firm, corporation, association, or other
entity any information regarding the Company’s general business practices or procedures, methods of sale, list of products, personnel information or any other information concerning the Company’s business; 
  
 (iii) owns, manages, operates, controls, is employed by, acts as an agent
for, participates in or is connected in any manner with the ownership, management, operation or control of any firm, corporation, association or other entity which is engaged in businesses which are or may be competitive to the business of the
Company; provided, further, that this restrictive covenant shall encompass the State of Maryland and any other states where the Company is engaged in business, and every city, county, and other political subdivision of such states; or 
  
 (iv) solicits or calls, either by himself or at his or her direction has any
other person or firm solicit or call, any of the customers of the Company on whom the Professional Branch Manager called, with whom the Professional Branch Manager became acquainted, or of whom the Professional Branch Manager learned of during his
or her employment by the Company. 
  
 (b) The determination of
whether a Professional Branch Manager has violated the terms of Section 10(a) shall be made by the Committee, in its sole and absolute discretion, and the determination of the Committee shall be final, conclusive and binding upon both the
Professional Branch Manager (or any person or entity claiming through the Professional Branch Manager) and Legg Mason. 
  
 (c) As a condition precedent to any distribution, the Committee may require a certificate from the Professional Branch Manager certifying that he or she
has not violated any of the provisions of Section 10(a). 
  
 (d)
It is the intention of Legg Mason and the Professional Branch Managers that this Section be given the broadest protection allowed by law with regard to the restrictions herein contained. Each restriction set forth in this Section shall be construed
as a condition separate and apart from any other restriction or condition. To the extent that any restriction contained in this Section is determined by any court of competent jurisdiction to be unenforceable by reason of it being extended for too
great a period of time, or as encompassing too large a geographic area, or over too great a range of activity, or any combination of these elements, then such restriction shall be interpreted to extend only over the maximum period of time,
geographic area, and range of activities which the court deems reasonable and enforceable. 
  

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 (e) In the event a Professional Branch Manager desires a ruling as to the potential application of this
Section, he may request a ruling from the Committee in accordance with Section 16. 
  
 (f) If the Committee in its discretion determines that an activity otherwise described herein would not be injurious to the Company, it may waive the application of this Section to such activity, which waiver shall be
binding upon the Professional Branch Manager and Legg Mason. The Committee shall exercise such discretion in a uniform, nondiscriminatory manner. 
  
 11. Withholding Taxes – Amounts payable under the Plan shall be subject to such deductions or withholding as may be required by law.
Notwithstanding anything herein to the contrary, Legg Mason may delay any distribution under the Plan until the recipient of the distribution has separately provided for the payment of any required withholding taxes with respect to the distribution
by check or other method approved by the Committee in its sole discretion. Legg Mason, to the extent permitted or required by law, shall have the right (i) to deduct any federal, state or local taxes of any kind required by law to be withheld with
respect to any taxable event under the Program from any amount payable hereunder or from any commission or other payment (including salary or bonus) otherwise due to a Professional Branch Manager from Legg Mason or the Company, and (ii) to retain or
sell without notice a sufficient number of shares of Legg Mason Common Stock to be issued to such Branch Manager (or any other person entitled to receive the payment due a Professional Branch Manager) to cover any such taxes. 
  
 12. Assignment of Benefits – No amount payable, or other
right or benefit, under the Plan will, except as otherwise specifically provided by the terms of this document, the Plan or by applicable law, be subject to sale, assignment, transfer, pledge, encumbrance, attachment, garnishment or levy prior to
distribution to a Professional Branch Manager. Since the Plan is intended to be a non-qualified, unfunded plan that is not subject to the Employment Retirement Income Security Act of 1974, as amended, payments under the Plan (including payments
under the Program) will not be subject to the provisions of any qualified domestic relations order (as defined under the Internal Revenue Code of 1986, as amended) applicable to a Professional Branch Manager’s Account. 
  
 13. Right to Offset – Notwithstanding any provision herein
to the contrary, any distribution payable under the Plan (including under the Program) may be used, at the discretion of the Committee and subject to compliance with applicable law, to offset any debt owed by a Professional Branch Manager to the
Company at the date such distribution would otherwise be paid. Legg Mason may withhold distributions payable under the Plan (including distributions under the Program) to offset any debts or other liabilities owed by a Professional Branch Manager to
Legg Mason or the Company. If Legg Mason is aware of any errors, loans outstanding, or outstanding or pending liabilities of a Professional Branch Manager, Legg Mason may withhold distributions under the Plan (including distributions under the
Program) until such time as the liabilities are satisfied or Legg Mason has determined that an outstanding or pending liability no longer exists. 
  

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 14. Unfunded Nature of The Plan – Legg Mason will not be required to purchase, hold or
dispose of any investments with respect to amounts credited to the Account of any Professional Branch Manager participating in the Program. A Professional Branch Manager has no interest in the Account or in any investments Legg Mason may purchase
with such amounts, except as a general, unsecured creditor of Legg Mason. 
  
 The Program at all times shall be entirely unfunded. The Professional Branch Manager’s Account is merely a record for measuring and determining the amount of Deferred Bonuses and Retention Awards to be paid by
Legg Mason to, or with respect to, the Professional Branch Manager under the Program, and such Account shall be established solely for such bookkeeping purposes. Legg Mason shall not be required to segregate any funds or other assets to be used for
payment of benefits under the Program. The Professional Branch Manager’s Account shall not be, or be considered as evidence of the creation of, a trust fund, an escrow or any other segregation of assets for the benefit of the Professional
Branch Manager or any beneficiary of the Professional Branch Manager. There is no guaranty of benefit payments to the Professional Branch Manager. 
  
 The obligation of Legg Mason to make the payments under the Program is an unsecured contractual obligation only, and neither the Professional Branch
Manager nor any beneficiary of the Professional Branch Manager shall have any beneficial or preferred interest by way of trust, escrow, lien or otherwise in and to any specific assets or funds. The Professional Branch Manager and each beneficiary of
the Professional Branch Manager shall look solely to the general credit of Legg Mason for satisfaction of any obligations due or to become due under the Program. 
  
 Should Legg Mason elect to make contributions to a trust (hereinafter referred to as the “Trust”) to assist Legg
Mason in paying the benefits which may accrue hereunder, the amounts contributed shall be used to purchase the deemed investments under Section 6, subject to application of the provisions of this Section 14 to the actual investments. However,
contributions to the Trust shall not reduce or otherwise affect Legg Mason’s liability to pay benefits under the Program (which benefits may be paid from the Trust or from Legg Mason’s general assets, in the discretion of Legg Mason),
except that Legg Mason’s liability shall be reduced by actual benefit payments from the Trust (and the Account shall be appropriately adjusted to reflect such payments). If any such investments, or any contributions to the Trust, are made by
Legg Mason, such investments shall have been made solely for the purpose of aiding Legg Mason in meeting its obligations under the Program, and, except for actual contributions to the Trust, no trust or trust fund is intended. To the extent that
Legg Mason does, in its discretion, purchase or hold any such investments (other than through contributions to the Trust), Legg Mason will be named sole owner of all such investments and of all rights and privileges conferred by the terms of the
instruments or certificates evidencing such investments. Nothing stated herein will cause such investments, or the Trust, to form part of the Account, or to be treated as anything but the general assets of Legg Mason, subject to the claims of its
general creditors, nor will anything stated herein cause such investments, or the Trust, to represent the vested, secured or preferred interest of the Professional Branch Manager. Legg Mason shall have the right at any time to use such investments
not held in the Trust in the ordinary course of its business. Neither the Professional Branch Manager nor any of his or her beneficiaries shall at any time have any interest in the Account or the Trust or in any such investments, except as a
general, unsecured creditor of Legg Mason to the extent of the Deferred Bonuses and Retention Awards which are the subject of the Program. 
  

 12 

 15. Effect on Employment Rights And Other Benefit Programs – Neither participation in
nor any of the provisions of the Program shall give the Professional Branch Manager any right to be retained in the employment of the Company. The Program shall not be construed as a contract of employment. Legg Mason and the Company maintain an
employment-at-will policy. As an employee at will, the Professional Branch Manager is free to end his or her employment with the Company at any time for any reason or no reason, the Company is free to end the employment with a Professional Branch
Manager at any time for any reason or no reason. Furthermore, the Company may end at any time a Professional Branch Manager’s employment as a Professional Branch Manager or a Branch Manager. In the event a Professional Branch Manager is no
longer employed as a Professional Branch Manager or otherwise ceases to be an Eligible Professional Branch Manager, the Professional Branch Manager will no longer be entitled to Deferred Bonuses and Retention Awards pursuant to the Program. However,
as long as a Professional Branch Manager continues to be employed in good standing by the Company, the Professional Branch Manager shall continue to be entitled to the Deferred Bonuses and Retention Awards previously credited to the Professional
Branch Manager’s Account under the Program. The Program is in addition to, and not in lieu of, any other employee benefit plan or program in which the Professional Branch Manager may be or become eligible to participate by reason of employment
with the Company, and the timing of receipt of benefits hereunder shall have no effect on contributions to or benefits under such other plans or programs except as the provisions hereof and of each such plan or program may specify. 
  
 16. Administration – The Committee, as constituted from
time to time, shall have full power to interpret, construe and administer the Program, including authority to determine any dispute or claim with respect thereto. The determination of the Committee in any matter within the powers and discretion
granted to it under the Plan, made in good faith, shall be binding and conclusive upon Legg Mason, the Professional Branch Manager and all other persons having any right or benefit hereunder. The Program is in all respects subject to the applicable
terms of the Plan. The Committee’s determinations under the Program need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, Deferred Bonuses or Retention Awards under the Program, whether or
not such persons are similarly situated. 
  
 17. Paperless
Communications – Notwithstanding anything contained herein to the contrary, the Committee from time to time may establish uniform procedures whereby with respect to any or all instances herein where a writing is required, including, but
not limited to any required written notice, election, consent, authorization, instruction, direction, designation, request or claim, communication may be made by any other means designated by the Committee, including by paperless communication, and
such alternative communication shall be deemed to constitute a writing to the extent permitted by applicable law, provided that such alternative communication is carried out in accordance with such procedures in effect at such time. 
  
 18. Arbitration – As a condition precedent to the
crediting and receipt of Deferred Bonuses and Retention Awards under the Plan, each Professional Branch Manager 
  

 13 

 agrees that any controversy or dispute arising under the Plan which cannot be resolved by the Committee shall be
submitted for arbitration upon demand of either party in accordance with the rules of the National Association of Securities Dealers, Inc. or the New York Stock Exchange, Inc. 
  
 19. Controlling Law – The Program and this document shall be construed, and the legal relations between
the parties in connection with any dispute relating to the Plan shall be determined, in accordance with the laws of the State of Maryland; provided, however, that employment laws (including wage and hour laws) shall be based on the law of the
jurisdiction in which the Professional Branch Manager is employed. 
  
 20. Amendment or Termination – Legg Mason reserves the right to amend or terminate the Program at any time. Any such amendment or termination shall be by action of the Committee. 
  
 21. Effect of Amendment or Termination – No amendment or
termination of the Program shall directly or indirectly affect the rights of any Professional Branch Manager (or the Professional Branch Manager’s designated beneficiary) to payment of the amount in his or her Account, to the extent that such
amount was payable under the terms of the Plan prior to the effective date of such amendment or termination. 
  

 14EXHIBIT 10.14

 Exhibit 10.14 
  
 KEY EMPLOYEE PHANTOM STOCK AGREEMENT 
  

This Key Employee Phantom Stock Agreement (this “Agreement”) is made this          day of
                                  between Legg Mason, Inc.
(“Legg”) and                      (“Employee”), but intended to be effective as of the date of the approval of transfer to
Legg Mason Wood Walker, Incorporated (“LMWW”) of Employee’s registration with the National Association of Securities Dealers, Inc., the New York Stock Exchange, Inc. and the state(s) in which Employee is licensed (the “Effective
Date”). 
  
 WHEREAS, LMWW is a wholly owned subsidiary
of Legg; 
  
 WHEREAS, Employee has accepted employment by
LMWW; and 
  
 WHEREAS, in consideration of Employee
accepting employment by LMWW, Legg has agreed to grant Employee certain deferred compensation, upon the terms and conditions contained herein, under the Legg Mason, Inc. 1996 Equity Incentive Plan, as amended from time to time (the
“Plan”), 
  
 Now therefore, Legg and Employee agree as
follows: 
  
 1. Certain Monetary Compensation 

 
 In consideration of Employee’s employment with LMWW, Legg shall be
obligated to pay Employee certain compensation under the Plan in an amount to be determined pursuant to the terms and conditions of this Agreement. This Agreement is subject to all applicable terms and conditions of the Plan. 
  
 2. Phantom Share Units 
  
 Legg and Employee agree that the compensation to be paid by Legg to Employee
under the Plan shall not be paid currently but shall be deferred, and as deferred, shall be deemed converted into units that are economically equivalent to, but are not actual, shares of Legg Common Stock, $.10 par value per share (“Common
Stock”). These “phantom” shares of Common Stock are referred to as “Share Units.” 

 3. Key Employee Phantom Stock Account 
  
 On the Effective Date, Legg will establish a Key Employee Phantom Stock
Account (the “Account”) on its books and records for the benefit of Employee wherein Legg will credit to such Account the amount of $             as certain deferred
compensation (hereafter the “Compensation Credit”) to be converted into Share Units. The number of Share Units into which such Compensation Credit shall be converted (calculated to four decimal places) will be determined as of the fourth
trading day after the date the Compensation Credit is made and will be equal to the amount of the Compensation Credit divided by the Fair Market Value of a share of Common Stock, determined as set forth below. 
  
 Fair market value of a share of Common Stock will equal the five day average
of the closing prices on the principal exchange on which Common Stock is traded for the date on which the price is being determined (i.e., the Effective Date, the Dividend Payment Date or the Distribution Valuation Date) and the four trading days
immediately following the applicable valuation date, or, if Common Stock is not then traded on an exchange, such amount as is determined by the Compensation Committee of the Legg Mason, Inc. Board of Directors (the “Committee”) using any
reasonable method of valuation (“Fair Market Value”). Any change in the trading price of Common Stock during the five day pricing period will be the sole risk of the Employee. 
  
 4. Adjustment to Account Upon Dividend by Legg 
  
 If, prior to the date Employee receives the final distribution of amounts in his or her Account from Legg pursuant to this
Agreement (the “Payment Date”), Legg pays any 
  

 -2- 

 dividend (other than in Common Stock) upon its Common Stock, or makes any distribution (other than in Common Stock) with
respect thereto, Employee’s Account will be credited with additional Share Units, equivalent to that number of Share Units determined by dividing the amount of the dividend or other distribution allocable to the Share Units already credited to
the Account as of the record date for the dividend or distribution, by 95% of the Fair Market Value of a share of Common Stock on the payment date for the dividend or distribution (the “Dividend Payment Date”). Amounts to be credited under
this Section 4 will be credited as soon as administratively practicable after the applicable Dividend Payment Date. 
  
 In the event that, prior to the Payment Date, the number of outstanding shares of Common Stock is changed by reason of a stock split, stock dividend,
combination of shares, reorganization or recapitalization, the number of Share Units then credited to Employee’s Account will be appropriately adjusted so as to reflect such change (based upon the best estimate of Legg as to relative values).

  
 Nothing contained in this Agreement shall confer or be
construed as conferring upon Employee any rights as a stockholder of Legg or any right to have access to the books and records of Legg or any subsidiary. 
  
 5. Vesting Schedule of Share Units 
  
 Employee shall vest in the Share Units credited to Employee’s Account pursuant to the following vesting schedule as long as Employee is continuously
employed in good standing by LMWW for the following elapsed periods: 
  

			
	 If Elapsed Period of Employment from
 Effective Date of this Agreement is:

	 	 Then the Vested Portion of
 Share Units in
Account shall be*:

	 12 months or less
	 	 -0-

	 Greater than 12 months, but 24 months
 or less
	 	 1/5 of Share Units

	 Greater than 24 months, but 36 months
 or less
	 	 2/5 of Share Units

	 Greater than 36 months, but 48 months
 or less
	 	 3/5 of Share Units

	 Greater than 48 months, but 60 months
 or less
	 	 4/5 of Share Units

	 Greater than 60 months
	 	 All Share Units

	*	Vesting schedule assumes no Share Units are distributed from Account and will be deemed appropriately adjusted to reflect any Share Units that are distributed

  

 -3- 

 For purposes of determining Employee’s Vested Portion of Share Units, Employee shall not be entitled
to receive any partial or pro-rated credit for having been employed by LMWW for any partial twelve month period specified in the table above. If Employee’s employment with LMWW terminates for any reason other than death or
“Disability,” as defined below, whether involuntary or voluntary and for whatever cause or no cause, Employee shall forfeit any rights to, and shall have no right or claim to, any Share Units which have not vested pursuant to the above
Vesting Schedule. In the event Employee’s employment with LMWW terminates as a result of Employee’s death or “Disability,” as defined below, all Share Units shall be immediately vested and payment shall be made as described in
Paragraph 9. 
  
 For purposes of this Agreement,
“Disability” shall mean a medically determinable physical or mental impairment which, as determined by the Committee using such criteria as it establishes in its sole and absolute discretion, will prevent Employee from performing his usual
duties or any other similar duties in connection with his employment by LMWW for a period of at least 12 months. 
  

 -4- 

 6. Assignment of Benefits 
  
 No amount payable, or other right or benefit, under this Agreement or the Plan, will, except as otherwise specifically
provided by this Agreement or by applicable law, be subject to sale, assignment, transfer, pledge, encumbrance, attachment, garnishment or levy prior to distribution to Employee. Since the Plan, and awards under the Plan including this Agreement, is
intended to be a non-qualified, unfunded plan not subject to the Employee Retirement Income Security Act of 1974, as amended, payments under this Agreement will not be subject to the provisions of any qualified domestic relations order (as defined
under the Internal Revenue Code) applicable to an Employee’s deferred compensation benefit. 
  
 Notwithstanding any provision herein to the contrary, Employee acknowledges and agrees that any distribution payable under this Agreement may be used at
the discretion of Legg to offset any debt owed by Employee to Legg or LMWW at the date such distribution would otherwise be paid. Employee expressly authorizes Legg to withhold distributions payable under this Agreement to offset any debts or other
liabilities owed by Employee to Legg or LMWW. If Legg is aware of any errors, loans outstanding or liabilities of Employee, Legg may withhold distributions under this Agreement until such time as the liabilities are satisfied or Legg has determined
that a liability no longer exists. 
  
 In addition to the
foregoing, Employee expressly agrees that if at the time any amount is payable to Employee hereunder, Employee has outstanding any debts, or other liabilities or obligations arising from errors or otherwise arising in connection with Employee’s
employment with LMWW or Employee acting as a financial advisor on behalf of LMWW, to Legg or LMWW, then Legg may credit all or any portion of the shares of Common Stock then payable to Employee under this Agreement to any brokerage account of
Employee at LMWW 
  

 -5- 

 (regardless of whether Employee is the sole or a joint owner of the account), and LMWW may immediately cause such shares
of Common Stock to be sold from such account and the proceeds applied first to pay any required withholding taxes (including payroll taxes) and the remainder paid over to Legg or LMWW to satisfy such debts or other liabilities or obligations. By
signing this Agreement, Employee authorizes Legg and LMWW to effect all of the transactions described above through any account owned by Employee at LMWW (regardless of whether Employee is the sole or a joint owner of the account), and, if
necessary, to open a brokerage account at LMWW in the name and on behalf of Employee to effect such transactions. The timing of any such crediting and sale will be as determined to be reasonable by Legg and LMWW, in their sole discretion, and the
Employee acknowledges that all risks of movements in the price of Common Stock before or after the dates of such crediting and sale shall be borne solely by Employee. 
  
 7. Unfunded Nature of the Agreement 
  
 Legg will not be required to purchase, hold or dispose of any investments with respect to amounts credited to the Account of
Employee, including Compensation Credits or Share Units. Employee has no interest in the Account or in any investments Legg may purchase with such amounts, except as a general, unsecured creditor of Legg. 
  
 This Agreement at all times shall be entirely unfunded. The Employee’s
Account is merely a record for measuring and determining the amount of the potential benefits to be paid by Legg to, or with respect to, Employee under this Agreement, and such Account shall be established solely for such bookkeeping purposes. Legg
shall not be required to segregate any funds or other assets to be used for payment of benefits under this Agreement. The Employee’s Account shall not be, or be considered as evidence of the creation of, a trust fund, an escrow or any other
segregation of assets for the benefit of Employee or any beneficiary of Employee. There is no guaranty of benefit payments to the Employee. 
  

 -6- 

 The obligation of Legg to make the payments under this Agreement is an unsecured contractual obligation
only, and neither Employee nor any beneficiary of Employee shall have any beneficial or preferred interest by way of trust, escrow, lien or otherwise in and to any specific assets or funds. Employee and each beneficiary of Employee shall look solely
to the general credit of Legg for satisfaction of any obligations due or to become due under this Agreement. 
  
 Should Legg elect to make contributions to a trust (hereinafter referred to as the “Trust”) to assist Legg in paying the benefits which may
accrue hereunder, the amounts contributed shall be used to purchase the deemed investments under Paragraph 3, subject to application of the provisions of this Paragraph 7 to the actual investments. However, contributions to the Trust shall not
reduce or otherwise affect Legg’s liability to pay benefits under this Agreement (which benefits may be paid from the Trust or from Legg’s general assets, in Legg’s discretion), except that Legg’s liability shall be reduced by
actual benefit payments from the Trust (and the Account shall be appropriately adjusted to reflect such payments). If any such investments, or any contributions to the Trust, are made by Legg, such investments shall have been made solely for the
purpose of aiding Legg in meeting its obligations under this Agreement, and, except for actual contributions to the Trust, no trust or trust fund is intended. To the extent that Legg does, in its discretion, purchase or hold any such investments
(other than through contributions to the Trust), Legg will be named sole owner of all such investments and of all rights and privileges conferred by the terms of the instruments or certificates evidencing such investments. Nothing stated herein will
cause such investments, or the Trust, to form part 
  

 -7- 

 of the Account, or to be treated as anything but the general assets of Legg, subject to the claims of its general
creditors, nor will anything stated herein cause such investments, or the Trust, to represent the vested, secured or preferred interest of the Employee. Legg shall have the right at any time to use such investments not held in the Trust in the
ordinary course of its business. Neither the Employee nor any of his beneficiaries shall at any time have any interest in the Account or the Trust or in any such investments, except as a general, unsecured creditor of Legg to the extent of the
deferred compensation arrangement which is the subject of this Agreement. 
  
 8. Mode of Distributions 
  
 Legg will make all distributions under this Agreement in shares of Common Stock. In a final distribution of all amounts in Employee’s Account, Employee will receive shares of Common Stock equal to the whole number of Share Units in the
Account to be distributed, and cash in lieu of any fractional share based on 100% of the Fair Market Value of a share of Common Stock on the applicable Distribution Valuation Date (i.e., no fractional shares will be issued). In any distribution that
is not a final distribution of all amounts in Employee’s Account, Employee will receive shares of Common Stock equal to the whole number of Share Units in the Account to be distributed and no distributions (either cash in lieu or otherwise)
with respect to fractional shares (which shall be retained in the Account). 
  
 Employee acknowledges that, because Fair Market Value will be measured by taking into account stock prices over a five day period, Employee will be subject to some market risk if the trading price of Common Stock
declines during the five day period. After the date of distribution, Employee must make his or her own decision as to whether to sell or retain the shares received under this Agreement. Any brokerage commissions or other charges incurred in the
event Employee decides to sell such shares will be the sole responsibility of the Employee, not Legg. 
  

 -8- 

 9. Timing of Distributions 
  
 Simultaneously with the execution of this Agreement, Employee must make an irrevocable election on a form prescribed by the
Committee (hereafter the “Payment Option Election” and attached as Exhibit A) to receive distributions under this Agreement either (i) in annual installments following each time Employee’s Share Units vest pursuant to Paragraph
5; or (ii) in a lump sum after the time all Share Units are vested. Employee acknowledges that, regardless of which distribution election Employee makes, Employee bears all economic risks and market risks associated with Common Stock. 
  
 If the Employee elects to receive distributions annually following the
vesting of the applicable Share Units, the Distribution Valuation Date for each such distribution will be the applicable anniversary of the Effective Date on which the Share Units vest (or, if shares of Common Stock are not traded on that day, the
first such trading day thereafter). Similarly, if the Employee elects to receive distributions in a lump sum after all Share Units have vested, the Distribution Valuation Date for the distribution will be the fifth anniversary of the Effective Date
(or, if shares of Common Stock are not traded on that day, the first such trading day thereafter). For purposes of this Agreement, the “Distribution Valuation Date” shall mean the date on which the Fair Market Value of a share of Common
Stock is determined (utilizing the closing price on such date and the subsequent four trading dates) for purposes of a distribution. In making a distribution following an annual vesting of Share Units or the vesting of all Share Units in the
Account, Legg will, subject to Section 10, distribute to Employee the whole shares of Common Stock to be distributed, together with, if applicable, cash for any fractional shares to be 
  

 -9- 

 distributed, as soon as administratively practicable after the period for determining Fair Market Value has concluded and
all withholding taxes (including payroll taxes) have been paid or provided for. 
  
 In the event that Employee has elected to receive distributions in a lump sum after all Share Units have vested and prior to the date all Share Units have vested hereunder Employee’s employment with LMWW
terminates for any reason other than death or Disability, then Legg will, subject to Section 10, distribute to Employee any previously undistributed Share Units in Employee’s Account that have vested on or prior to the date on which his or her
employment terminated. The Distribution Valuation Date for this distribution will be the date on which the Employee’s employment terminates. In making such a distribution, Legg will distribute, subject to Section 10, the whole shares of Common
Stock to be distributed (representing all vested whole Share Units in the Account), together with cash for any fractional shares to be distributed, as soon as administratively practicable after the period for determining Fair Market Value has
concluded and all withholding taxes (including payroll taxes) have been paid or provided for. 
  
 If Employee’s employment terminates as a result of death or Disability, Legg will, subject to Section 10, distribute all Share Units in Employee’s account to Employee or his or her Beneficiary in accordance
with the following. The Distribution Valuation Date for such a distribution will be the date Employee’s employment terminated. In making such a distribution, Legg will distribute, subject to Section 10, the whole shares of Common Stock to be
distributed (representing all whole Share Units in the Account), together with cash for any fractional shares to be distributed, as soon as administratively practicable after the period for determining Fair Market Value has concluded and all
withholding taxes (including payroll taxes) have been paid or provided for. 
  

 -10- 

 Employee from time to time may designate, on such form as the Committee may prescribe from time to time
(the current form of which is attached hereto as Exhibit B), any person or persons (who may be named contingently or successively) to receive any amount payable under the Plan upon or after his or her death, and such designation may be
changed from time to time by the Employee by filing a new designation with the Committee. Each designation will revoke all prior designations by Employee, shall be on a form prescribed by the Committee, and will be effective only when filed in
writing with the Committee during the Employee’s lifetime. In the absence of a valid beneficiary designation, or if, at the time any amount is payable to Employee or beneficiary, there is no living beneficiary eligible to receive the payment
that has been validly named by Employee, then Legg shall pay any such amount to the Employee’s surviving spouse (if Employee was legally married at the time of his or her death) or if there is no surviving spouse, to the Employee’s estate.
In determining the existence or identity of anyone entitled to payment, the Committee may rely conclusively upon information supplied by the personal representative of the Employee’s estate. In the event of a lack of adequate information having
been supplied to the Committee, or in the event that any question arises as to the existence or identity of anyone entitled to receive a payment as aforesaid, or in the event that a dispute arises with respect to any such payment, or in the event
that a beneficiary designation conflicts with applicable law, or in the event the Committee is in doubt for any other reason as to the right of any person to receive a payment as beneficiary then, notwithstanding the foregoing, Legg, in its sole
discretion, may, in complete discharge, and without liability for any tax or other consequences which might flow therefrom: (i) distribute the payment to the Employee’s estate, (ii) retain such payment, without liability for interest, until the
rights thereto are determined, or (iii) deposit the payment into any court of competent jurisdiction. 
  

 -11- 

 10. Withholding Taxes (Including Payroll Taxes) 
  
 Amounts payable under this Agreement shall be subject to such deductions or
withholding as may be required by law. Notwithstanding anything herein to the contrary, Legg may delay any distribution under this Agreement until the recipient of the distribution has separately provided for the payment of any required withholding
taxes (including payroll taxes) with respect to the distribution by check or other method approved by the Committee in its sole discretion. Legg, to the extent permitted or required by law, shall have the right (i) to deduct any federal, state or
local taxes of any kind required by law to be withheld with respect to any taxable event under this Agreement from any amount payable hereunder or from any wage, salary, commission, bonus or other payment otherwise due to Employee from Legg or LMWW,
and (ii) to retain or sell without notice, either directly, or by crediting the shares to any account of Employee at LMWW and having LMWW effect a sale of the shares from such account, a sufficient number of shares of Common Stock to be issued to
Employee (or any other person entitled to receive the payment due Employee) to cover any such taxes. By signing this Agreement, Employee authorizes Legg and LMWW to effect any crediting and sale of shares of Common Stock contemplated by the
foregoing clause (ii). 
  
 11. Disputes Subject to
Arbitration 
  
 Employee agrees that any controversy or
dispute arising under this Agreement which cannot be resolved by the Committee, or out of Employee’s employment by LMWW (including, but not limited to, claims arising under the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age
Discrimination in Employment Act of 1967, and analogous state statutes), 
  

 -12- 

 shall be submitted for arbitration upon demand of either party in accordance with the rules of the National Association
of Securities Dealers, Inc. or the New York Stock Exchange, Inc., provided, however, that in the event of termination of Employee’s employment, Legg or LMWW shall be entitled to seek injunctive relief or confess judgment against Employee
pursuant to the terms of any other applicable agreement and that Legg or LMWW shall be entitled to apply for and obtain from any state or federal court such relief before or after the commencement of any arbitration proceeding, such relief to be
afforded to Legg or LMWW pending the decision of the arbitrators. 
  
 12. Employment-At-Will 
  
 Employee and Legg
agree and acknowledge that this Agreement shall not be construed as a contract of employment. Nothing herein shall be deemed to make Employee an employee of Legg. Legg and LMWW maintain an employment-at-will policy. As Employee is free to end his or
her employment with LMWW at any time for any reason or no reason, LMWW is free to end the employment with Employee at any time or any reason or no reason. 
  
 13. Governing Law 
  
 This Agreement shall be governed, construed, and enforced in accordance with the laws of the State of Maryland. 
  
 14. Effectiveness of this Agreement 
  
 If any part of this Agreement shall be held invalid or unenforceable, that
part shall be deemed modified as necessary to make it effective, and the remaining provisions of this Agreement shall remain in effect. 
  

 -13- 

 15. Entire Understanding of Parties 
  
 This Agreement, and the Plan, incorporates the entire understanding between Employee and Legg on the subject matter herein.
This Agreement may be not changed except by a writing signed by a duly authorized representative of Legg and Employee. This Agreement is subject to the applicable terms and conditions of the Plan. 
  
 16. Assistance of Counsel 
  
 Employee acknowledges that Employee was given the opportunity to read this
Agreement and to seek the assistance of counsel before Employee decided to join LMWW, accept the terms of this Agreement or sign this Agreement. 
  
 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first hereinabove written. 
  

			
	 EMPLOYEE:

	
	  

	 Signature

	
	  

	 Print Full Name

	
	 LEGG MASON, INC.

		
	 By:
	 	  

	 	 	 Signature

  

 -14- 

 EXHIBIT A 
  

KEY EMPLOYEE PHANTOM STOCK AGREEMENT 
  
 Payment Option Election 
  

					
	Part 1.	  	I hereby elect to receive vested Share Units from my Account under the Agreement in the following manner: (please check one)
			
	 	  	a.             	  	annually after the Share Units vest; or
			
	 	  	b.             	  	in a lump sum after the time all Share Units are vested.

  

			
	 Employee:

	
	  

	 Signature
	 	Date                
	
	  

	 Print full name
	 	 

  

					
	 Receipt Acknowledged:

	
	 LEGG MASON, INC.

		
	 By:
	 	  

	 	 	 Signature
	 	 Date                

 EXHIBIT B 
  

KEY EMPLOYEE PHANTOM STOCK AGREEMENT 
  
 Designation of Beneficiary(ies) 
  
 By virtue of my right under the Agreement to designate the beneficiary(ies) of any death benefits payable under the Agreement, and subject to any future exercise of said
right by me, I hereby direct that any and all such death benefits shall be paid, in accordance with the terms of the Agreement (please check appropriate block): 
  

	 	 ̈	to the same beneficiary(ies) I designated with respect to my interest in the LMWW Profit Sharing and 401(k) Plan and Trust; or 

  

	 	 ̈	to the person(s) named below who are living at the time of each such payment, and, unless otherwise expressly indicated, in equal shares among them if more than one such person
shall be living at the time of each such payment: 

  
 PRIMARY BENEFICIARY(IES) 
  

			
	  

	 Name/Relationship
	 	 Address

	
	  

	 Name/Relationship
	 	 Address

	
	  

	 Name/Relationship
	 	 Address

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

			
	  

	 Name/Relationship
	 	 Address

	
	  

	 Name/Relationship
	 	 Address

	
	  

	 Name/Relationship
	 	 Address

 Key Employee Phantom Stock Agreement 
 Designation of Beneficiary(ies) 
 Page Two 
  
 In the further event that none of the
persons named above, either as primary or contingent beneficiary(ies), shall be living at the time of any death benefit payment, all remaining payment(s) shall be made to my estate pursuant to the Agreement. 
  
 NOTE: If so specified in the above designations, “person” includes
a trust or corporation. 
  

					
	 Employee:
	 	  

	 	 	 Signature
	 	 Date            

	
	  

	 Print full name

	
	  

	 Witness

  
 Receipt Acknowledged:

  

					
	 LEGG MASON, INC.

		
	 By
	 	  

	 	 	 Signature
	 	 Date            

  

 -2-

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