Security at McAfee not just for computers…

August 26, 2010

We—ll leave it to the pundits to determine whether or not Intel Corporation’s (NASDAQ: INTC) proposed $7.7 billion acquisition of McAfee, Inc. (MFE) is a wise move. But regardless of the answer, the deal offers some nice rewards to some of McAfee’s top executives. The details are in an 8-K and an updated proxy that McAfee filed August 25.

Assuming the deal goes through, McAfee’s current CEO/president, David DeWalt, will become the President of McAfee, which will then be a subsidiary of Intel. In an Executive Employment Agreement dated August 18, 2010, Intel and McAfee promise DeWalt an annual base salary of $950,000 and a target annual bonus of up to $1,050,000. His equity awards will vest on an accelerated basis, and — if he stays with the company — he—ll get a $2 million retention payment after the merger’s first anniversary, and another $2 million after the second anniversary. DeWalt is also —potentially eligible to receive a third $2 million payment if the company meets its performance metrics for the 2011 calendar year, and $2 million more if McAfee meets the 2012 metrics.

Jonathan Chadwick (who joined McAfee on June 14, 2010, following a move from Cisco Systems, Inc.) will remain as CFO and report to DeWalt, according to his Executive Employment Agreement. His base salary is $600,000, and his target annual bonus is also $600,000. In addition to accelerated equity awards, Chadwick will get another $600,000 in retention payments if he stays with the company through July 31, 2013 (he gets $300,000 of that in 2012). His incentive payments for achieving the company’s performance metrics will be $450,000 for calendar year 2011 and another $450,000 for 2012.

Three other named executive officers got letter agreements which provide ongoing payments to them as part of the —McAfee, Inc. Special Bonus Program. In each case, the company assures the letter’s recipient that ——you are critical to the success of McAfee’s future business operations and you have the potential to make a significant impact on McAfee’s future growth.

If the criteria are met (staying with the company through July 31, 2013 and meeting the performance metrics for a given calendar year):

Michael P. DeCesare (EVP — worldwide sales operations) could receive a total of $600,000 in retention bonus payments and $900,000 in performance incentive bonuses;

Mark D. Cochran (EVP — chief legal officer, general counsel) could receive a total of $390,000 in retention bonus payments and $585,000 in performance incentive bonuses; and

Gerhard Watzinger (EVP — worldwide strategy, business development and general manager, data protection) could receive a total of $400,000 in retention bonus payments and $600,000 in performance incentive bonuses.

Perhaps it’s fitting that a company which sells external security to customers also provides a little security for some of its own.

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