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<TITLE>Filed by Bowne Pure Compliance</TITLE>
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<P align="center" style="font-size: 14pt"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>
<FONT style="font-size: 12pt">Washington, D.C. 20549
</FONT></B>

<P align="center" style="font-size: 18pt"><B>FORM 8-K</B>

<P align="center" style="font-size: 12pt"><B>CURRENT REPORT<BR>
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934</B>

<P align="center" style="font-size: 10pt"><B>Date of Report (Date of earliest event reported): October 2, 2008</B>

<P align="center">

<P align="center" style="font-size: 24pt"><B>Sovereign Bancorp, Inc.<BR></B>
<FONT style="font-size: 10pt">(Exact name of registrant as specified in its charter)
</FONT>

<TABLE border="0" width="100%" cellspacing="0" cellpadding="0" style="font-size: 10pt; text-align: center">
<TR>
    <TD width="32%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="33%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="32%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD style="border-bottom: 1px solid #000000"><B>Pennsylvania</B></TD>
    <TD>&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000"><B>1-16581</B></TD>
    <TD>&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000"><B>23-2453088</B></TD>
</TR>
<TR valign="top">
    <TD>(State or other Jurisdiction of Incorporation)</TD>
    <TD>&nbsp;</TD>
    <TD>(Commission File Number)</TD>
    <TD>&nbsp;</TD>
    <TD>(IRS Employer Identification No.)</TD>
</TR>
</TABLE>

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<TR>
    <TD width="49%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="49%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD style="border-bottom: 1px solid #000000"><B>1500 Market Street, Philadelphia, Pennsylvania<BR></B></TD>
    <TD>&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000"><B>19102</B></TD>
</TR>
<TR valign="top">
    <TD>(Address of Principal Executive Offices)</TD>
    <TD>&nbsp;</TD>
    <TD>(Zip Code)</TD>
</TR>
</TABLE>

<P align="center" style="font-size: 10pt">Registrant&#146;s telephone number, including area code: <B>(267) 256-8601</B>


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<TR>
    <TD width="100%">&nbsp;</TD>
</TR>
<TR>
    <TD nowrap style="border-bottom: 1px solid #000000"><B>n/a<BR></B></TD>
</TR>
<TR>
    <TD nowrap>(Former name or former address if changed since last report.)</TD>
</TR>
</TABLE>

<P align="left" style="font-size: 10pt">Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:

<P align="left" style="font-size: 10pt">
<FONT face="Wingdings">&#111;</FONT> Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)<BR><BR>
<FONT face="Wingdings">&#111;</FONT> Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)<BR><BR>
<FONT face="Wingdings">&#111;</FONT> Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))<BR><BR>
<FONT face="Wingdings">&#111;</FONT> Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))<BR>


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<P align="left" style="margin-left:0%; font-size: 10pt"><B>Item&nbsp;5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers.</B>


<P align="left" style="font-size: 10pt; text-indent: 4%">On September&nbsp;30,&nbsp;2008, Sovereign Bancorp, Inc. (&#147;<U>Sovereign</U>&#148; or the&nbsp;"<U>Company</U>&#148;) and Kirk&nbsp;W.&nbsp;Walters
entered into (i)&nbsp;the First Amendment to an employment agreement, dated March&nbsp;3, 2008 (as so amended, the&nbsp;"<U>Prior
Employment Agreement</U>&#148;), which appointed Mr.&nbsp;Walters as the Interim Chief Executive Officer, Interim President and
Chief Financial Officer effective as of September&nbsp;30, 2008, and (ii)&nbsp;an employment agreement (the&nbsp;"<U>Initial Walters
Employment Agreement</U>&#148;) to employ Mr.&nbsp;Walters as its Senior Executive Vice President, Chief Administrative Officer
and Chief Financial Officer effective on January&nbsp;3,&nbsp;2009 (the&nbsp;"<U>Initial Walters Effective Date</U>&#148;). The Company
and Mr.&nbsp;Walters entered into an employment agreement, dated October&nbsp;2,&nbsp;2008 (the&nbsp;"<U>Walters Employment
Agreement</U>&#148;), which superseded the terms of the Prior Employment Agreement and the Initial Walters Employment
Agreement to, among other things,&nbsp;amend the Initial Walters Employment Agreement to change the Initial Walters
Effective Date to October&nbsp;2,&nbsp;2008 (the&nbsp;"<U>Walters Effective Date</U>&#148;).


<P align="left" style="font-size: 10pt; text-indent: 4%">The terms of the Walters Employment Agreement are provided below.


<P align="left" style="font-size: 10pt; text-indent: 4%">The Walters Employment Agreement has an initial term of three years and, unless terminated as set forth therein,
is automatically extended annually to provide a new term of three years.


<P align="left" style="font-size: 10pt; text-indent: 4%">The Walters Employment Agreement provides for an annual base salary of $700,000, which the Board may increase from
time to time. Contingent upon the Company achieving annual bonus objectives for itself established by the Board in
consultation with Mr.&nbsp;Walters, Mr.&nbsp;Walters will be eligible to receive an annual bonus determined in accordance with
guidelines of the Company&#146;s bonus plans for senior bank executives with a target bonus for each calendar year of at
least 100% of his salary. For the 2008 calendar year, Mr.&nbsp;Walters will receive a base salary of $550,000.


<P align="center" style="font-size: 10pt">2




<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt; display: none">2
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<P align="left" style="font-size: 10pt; text-indent: 4%">The Walters Employment Agreement provides that Mr.&nbsp;Walters receive the following equity grants, each of which was
granted to Mr.&nbsp;Walters by the Company&#146;s Board of Directors (the&nbsp;"<U>Board</U>&#148;):


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A one-time award of 19,045&nbsp;shares of restricted Company stock, which was granted on October&nbsp;2, 2008
at the closing trading price on such date. The grant of the restricted stock conditionally vests,
subject to the terms of the incentive compensation plan and the continued employment of Mr.&nbsp;Walters, in
three equal annual installments beginning on the first anniversary of the Walters Effective Date. In
the event of a Change in Control (as defined in the Walters Employment Agreement), all shares of
restricted stock that have not vested or been forfeited shall become automatically vested upon the
effective date of the Change in Control.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A one-time award of 180,955&nbsp;restricted stock units, which was granted on October&nbsp;6, 2008 at the
closing trading price on such date. The grant of the restricted stock units conditionally vest, subject
to the continued employment of Mr.&nbsp;Walters, in three equal annual installments beginning on the first
anniversary of the Walters Effective Date. In the event of a Change in Control, all restricted stock
units that have not vested or been forfeited shall become automatically vested upon the effective date
of the Change in Control. All restricted stock units will be payable upon the vesting date in cash,
based on the closing trading price of the Company&#146;s common stock on the date of vesting, reduced by any
amount required for withholding of taxes. However, if the shareholders approve an amendment to an
incentive compensation plan, all restricted stock units will be payable in shares of Company common
stock.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A one-time award of stock options to purchase 300,000&nbsp;shares of the Company&#146;s common stock, which was
granted on October&nbsp;2, 2008 at the closing trading price on such date. The options are divided into two
tranches which will conditionally vest, subject to certain conditions. The first tranche of options to
purchase 150,000 shares of Company common stock (the&nbsp;"<U>First Tranche</U>&#148;) is subject to the
continued employment of Mr.&nbsp;Walters and the terms of the incentive compensation plan; the second
tranche, representing the remaining options (the&nbsp;"<U>Second Tranche</U>&#148;), in addition to the foregoing
conditions, is also subject to a condition regarding the performance of the Company&#146;s stock price.
Subject to the foregoing conditions, (i)&nbsp;the First Tranche vests in three equal annual installments
beginning on the first anniversary of the Walters Effective Date, and (ii)&nbsp;the Second Tranche also vests
in three equal annual installments beginning on the first anniversary of the Walters Effective Date;
provided, however, that the Second Tranche also 100% vests on the fifth anniversary of the Walters
Effective Date, subject to the foregoing conditions (including a certain Company stock price performance
condition) being satisfied. In the event of a Change in Control, all options that have not vested or
been forfeited shall become automatically vested upon the effective date of the Change in Control.</TD>
</TR>

</TABLE>


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<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt; display: none">3
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A one-time award of stock appreciation rights with respect to 700,000 shares of the Company&#146;s common
stock, which was granted on October&nbsp;6, 2008 at the closing trading price on such date. The stock
appreciation rights will conditionally vest, subject to the continued employment of Mr.&nbsp;Walters and the
performance of the Company&#146;s stock price, in three annual installments beginning on the first
anniversary of the Walters Effective Date; provided, however, that the stock appreciation rights may
also 100% vest on the fifth anniversary of the Walters Effective Date, subject to the foregoing
conditions (including a certain Company stock price performance condition) being satisfied. In the event
of a Change in Control all shares of stock appreciation rights that have not vested or been forfeited
shall become automatically vested upon the effective date of the Change in Control. All stock
appreciation rights will be payable upon the date of exercise in cash, based on the closing trading
price of the Company common stock on the date of exercise, reduced by any amount required for
withholding of taxes. However, if the shareholders of the Company approve an amendment to an incentive
compensation plan, all stock appreciation rights will be payable in shares of Company common stock.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt; text-indent: 4%">In addition, the Walters Employment Agreement provides, among other things, a right to participate in all employee
benefit plans and programs available to senior management, automobile and parking allowances, temporary housing and
relocation costs and club dues and business-related expenses.


<P align="left" style="font-size: 10pt; text-indent: 4%">In the event, the employment of Mr.&nbsp;Walters is terminated without Cause (as defined in the Walters Employment
Agreement) or for Good Reason (as defined in the Walters Employment Agreement), Mr.&nbsp;Walters is entitled to receive his
accrued but unpaid base salary, his earned but unpaid annual bonus, any unreimbursed business expenses and all
payments, rights and benefits under the employee benefit plans. Mr.&nbsp;Walters is also entitled to receive severance
benefits, which are calculated differently based on a Change in Control of the Company. If the termination of
employment takes place in the absence of a Change in Control, he will receive (1)&nbsp;a lump sum payment equal to two times
his current base salary payable on the 30<sup>th</sup> day after the termination date, (2)&nbsp;a lump sum payment equal to
two times the greater of the prior year&#146;s bonus amount or the average of the prior three year&#146;s annual bonus amounts
payable on the 30<sup>th</sup> day after the termination date, (3)&nbsp;a pro-rata annual bonus based on the number of days
during the calendar year and the actual performance of the Company payable in cash, and (4)&nbsp;a continuation of all his
health and medical benefits for a three year period following the termination date. If the termination of employment
takes place following a Change in Control, he will receive (1)&nbsp;a lump sum payment in monthly installments equal to
three times his current base salary payable on the 30<sup>th</sup> day after the termination date, (2)&nbsp;a lump sum
payment equal to three times the greater of the prior year&#146;s annual bonus amount or the average of the prior three
years&#146; annual bonus amounts, (3)&nbsp;a pro-data annual bonus based on the number of days during the calendar year and the
actual performance of the Company payable in cash, and (4)&nbsp;a continuation of all his health and medical benefits for a
three year period following the termination date.


<P align="center" style="font-size: 10pt">4




<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt; display: none">4
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<P align="left" style="font-size: 10pt; text-indent: 4%">The Walters Employment Agreement also contains restrictive covenants imposing non-competition obligations,
restricting the solicitation of Company employees, protecting confidential information and requiring cooperation in
litigation, as well as other covenants, during his employment and for specified periods after the termination of
employment.


<P align="left" style="font-size: 10pt; text-indent: 4%">The foregoing summary of the Walters Employment Agreement does not purport to be complete and is qualified in its
entirety by the Walters Employment Agreement, which is attached hereto as Exhibit&nbsp;10.1 and incorporated herein by
reference.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>Item&nbsp;9.01</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Financial Statements and Exhibits.</B></TD>
</TR>

</TABLE>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
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<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="87%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Exhibit No.</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Description</TD>
</TR>

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<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Employment Agreement, dated October&nbsp;2,&nbsp;2008, between Sovereign
Bancorp, Inc. and Kirk&nbsp;W.&nbsp;Walters</TD>
</TR>
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</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">5




<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt; display: none">5
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<P align="center" style="font-size: 10pt"><B>SIGNATURES</B>



<P align="left" style="font-size: 10pt; text-indent: 4%">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 hereunto duly authorized.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="44%">&nbsp;</TD>
</TR>

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<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">SOVEREIGN BANCORP, INC.</TD>
</TR>

<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Dated: October&nbsp;7, 2008
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Stacey V. Weikel</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Stacey V. Weikel</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Vice President</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">



<P align="center" style="font-size: 10pt">6




<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt; display: none">6
</DIV>

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<P align="center" style="font-size: 10pt"><B>Exhibit&nbsp;Index</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="87%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Exhibit No.</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Description</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Employment Agreement, dated October&nbsp;2,&nbsp;2008, between Sovereign
Bancorp, Inc. and Kirk&nbsp;W.&nbsp;Walters</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt; display: none">7




</DIV>
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Filed by Bowne Pure Compliance
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 2, 2008
Sovereign Bancorp, Inc.
(Exact name of registrant as specified in its charter)
Pennsylvania
1-16581
23-2453088
(State or other Jurisdiction of Incorporation)
(Commission File Number)
(IRS Employer Identification No.)
1500 Market Street, Philadelphia, Pennsylvania
19102
(Address of Principal Executive Offices)
(Zip Code)
Registrant's telephone number, including area code:
(267) 256-8601
n/a
(Former name or former address if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers.
On September 30, 2008, Sovereign Bancorp, Inc. ("
Sovereign
" or the "
Company
") and Kirk W. Walters
entered into (i) the First Amendment to an employment agreement, dated March 3, 2008 (as so amended, the "
Prior
Employment Agreement
"), which appointed Mr. Walters as the Interim Chief Executive Officer, Interim President and
Chief Financial Officer effective as of September 30, 2008, and (ii) an employment agreement (the "
Initial Walters
Employment Agreement
") to employ Mr. Walters as its Senior Executive Vice President, Chief Administrative Officer
and Chief Financial Officer effective on January 3, 2009 (the "
Initial Walters Effective Date
"). The Company
and Mr. Walters entered into an employment agreement, dated October 2, 2008 (the "
Walters Employment
Agreement
"), which superseded the terms of the Prior Employment Agreement and the Initial Walters Employment
Agreement to, among other things, amend the Initial Walters Employment Agreement to change the Initial Walters
Effective Date to October 2, 2008 (the "
Walters Effective Date
").
The terms of the Walters Employment Agreement are provided below.
The Walters Employment Agreement has an initial term of three years and, unless terminated as set forth therein,
is automatically extended annually to provide a new term of three years.
The Walters Employment Agreement provides for an annual base salary of $700,000, which the Board may increase from
time to time. Contingent upon the Company achieving annual bonus objectives for itself established by the Board in
consultation with Mr. Walters, Mr. Walters will be eligible to receive an annual bonus determined in accordance with
guidelines of the Company's bonus plans for senior bank executives with a target bonus for each calendar year of at
least 100% of his salary. For the 2008 calendar year, Mr. Walters will receive a base salary of $550,000.
2
The Walters Employment Agreement provides that Mr. Walters receive the following equity grants, each of which was
granted to Mr. Walters by the Company's Board of Directors (the "
Board
"):
•
A one-time award of 19,045 shares of restricted Company stock, which was granted on October 2, 2008
at the closing trading price on such date. The grant of the restricted stock conditionally vests,
subject to the terms of the incentive compensation plan and the continued employment of Mr. Walters, in
three equal annual installments beginning on the first anniversary of the Walters Effective Date. In
the event of a Change in Control (as defined in the Walters Employment Agreement), all shares of
restricted stock that have not vested or been forfeited shall become automatically vested upon the
effective date of the Change in Control.
•
A one-time award of 180,955 restricted stock units, which was granted on October 6, 2008 at the
closing trading price on such date. The grant of the restricted stock units conditionally vest, subject
to the continued employment of Mr. Walters, in three equal annual installments beginning on the first
anniversary of the Walters Effective Date. In the event of a Change in Control, all restricted stock
units that have not vested or been forfeited shall become automatically vested upon the effective date
of the Change in Control. All restricted stock units will be payable upon the vesting date in cash,
based on the closing trading price of the Company's common stock on the date of vesting, reduced by any
amount required for withholding of taxes. However, if the shareholders approve an amendment to an
incentive compensation plan, all restricted stock units will be payable in shares of Company common
stock.
•
A one-time award of stock options to purchase 300,000 shares of the Company's common stock, which was
granted on October 2, 2008 at the closing trading price on such date. The options are divided into two
tranches which will conditionally vest, subject to certain conditions. The first tranche of options to
purchase 150,000 shares of Company common stock (the "
First Tranche
") is subject to the
continued employment of Mr. Walters and the terms of the incentive compensation plan; the second
tranche, representing the remaining options (the "
Second Tranche
"), in addition to the foregoing
conditions, is also subject to a condition regarding the performance of the Company's stock price.
Subject to the foregoing conditions, (i) the First Tranche vests in three equal annual installments
beginning on the first anniversary of the Walters Effective Date, and (ii) the Second Tranche also vests
in three equal annual installments beginning on the first anniversary of the Walters Effective Date;
provided, however, that the Second Tranche also 100% vests on the fifth anniversary of the Walters
Effective Date, subject to the foregoing conditions (including a certain Company stock price performance
condition) being satisfied. In the event of a Change in Control, all options that have not vested or
been forfeited shall become automatically vested upon the effective date of the Change in Control.
3
•
A one-time award of stock appreciation rights with respect to 700,000 shares of the Company's common
stock, which was granted on October 6, 2008 at the closing trading price on such date. The stock
appreciation rights will conditionally vest, subject to the continued employment of Mr. Walters and the
performance of the Company's stock price, in three annual installments beginning on the first
anniversary of the Walters Effective Date; provided, however, that the stock appreciation rights may
also 100% vest on the fifth anniversary of the Walters Effective Date, subject to the foregoing
conditions (including a certain Company stock price performance condition) being satisfied. In the event
of a Change in Control all shares of stock appreciation rights that have not vested or been forfeited
shall become automatically vested upon the effective date of the Change in Control. All stock
appreciation rights will be payable upon the date of exercise in cash, based on the closing trading
price of the Company common stock on the date of exercise, reduced by any amount required for
withholding of taxes. However, if the shareholders of the Company approve an amendment to an incentive
compensation plan, all stock appreciation rights will be payable in shares of Company common stock.
In addition, the Walters Employment Agreement provides, among other things, a right to participate in all employee
benefit plans and programs available to senior management, automobile and parking allowances, temporary housing and
relocation costs and club dues and business-related expenses.
In the event, the employment of Mr. Walters is terminated without Cause (as defined in the Walters Employment
Agreement) or for Good Reason (as defined in the Walters Employment Agreement), Mr. Walters is entitled to receive his
accrued but unpaid base salary, his earned but unpaid annual bonus, any unreimbursed business expenses and all
payments, rights and benefits under the employee benefit plans. Mr. Walters is also entitled to receive severance
benefits, which are calculated differently based on a Change in Control of the Company. If the termination of
employment takes place in the absence of a Change in Control, he will receive (1) a lump sum payment equal to two times
his current base salary payable on the 30
th
day after the termination date, (2) a lump sum payment equal to
two times the greater of the prior year's bonus amount or the average of the prior three year's annual bonus amounts
payable on the 30
th
day after the termination date, (3) a pro-rata annual bonus based on the number of days
during the calendar year and the actual performance of the Company payable in cash, and (4) a continuation of all his
health and medical benefits for a three year period following the termination date. If the termination of employment
takes place following a Change in Control, he will receive (1) a lump sum payment in monthly installments equal to
three times his current base salary payable on the 30
th
day after the termination date, (2) a lump sum
payment equal to three times the greater of the prior year's annual bonus amount or the average of the prior three
years' annual bonus amounts, (3) a pro-data annual bonus based on the number of days during the calendar year and the
actual performance of the Company payable in cash, and (4) a continuation of all his health and medical benefits for a
three year period following the termination date.
4
The Walters Employment Agreement also contains restrictive covenants imposing non-competition obligations,
restricting the solicitation of Company employees, protecting confidential information and requiring cooperation in
litigation, as well as other covenants, during his employment and for specified periods after the termination of
employment.
The foregoing summary of the Walters Employment Agreement does not purport to be complete and is qualified in its
entirety by the Walters Employment Agreement, which is attached hereto as Exhibit 10.1 and incorporated herein by
reference.
Item 9.01
Financial Statements and Exhibits.
Exhibit No.
Description
10.1
Employment Agreement, dated October 2, 2008, between Sovereign
Bancorp, Inc. and Kirk W. Walters
5
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 hereunto duly authorized.
SOVEREIGN BANCORP, INC.
Dated: October 7, 2008
By:
/s/ Stacey V. Weikel
Name:
Stacey V. Weikel
Title:
Senior Vice President
6
Exhibit Index
Exhibit No.
Description
10.1
Employment Agreement, dated October 2, 2008, between Sovereign
Bancorp, Inc. and Kirk W. Walters