This excerpt taken from the WDC DEF 14A filed Sep 24, 2007.
Our standard terms and conditions for awards granted under our 2004 Performance Incentive Plan, our Broad-Based Incentive Plan and our Employee Stock Option Plan each provide for accelerated vesting in connection with certain termination events as described below.
Qualified Retirement. In the event an employee retires from employment at a time when the employee meets the criteria of a qualified retiree under our standard terms and conditions for stock options, all unvested stock options held by the employee at the time of termination will accelerate. For stock options granted prior to November 2004, an employee will be a qualified retiree if the employee is at least age 55 at the time of retirement and his or her age plus total years of continuous service with us totals at least 65. For stock options granted after November 2004, the employee is also generally required to have at least five years of continuous service with us and, for stock options granted after May 2006, in addition to having at least five years of continuous service with us, the employee must also be at least age 65 at the time of retirement and his or her age plus total years of continuous service with us must total at least 75.
If an employee meets the applicable qualified retiree criteria, the employees stock options will remain exercisable for three years after his or her retirement or until their earlier expiration but will immediately terminate in the event the employee provides services to one of our competitors or otherwise competes with us. In that event, we will have the right to recover any profits realized by the employee from exercising the stock options during the immediately preceding six-month period.
Death. In the event of an employees death, the vesting of awards previously granted to the employee will accelerate as described below.
Change in Control. Upon the occurrence of a change in control (as defined in the applicable plan or award agreement), all unvested stock options, shares of restricted stock and restricted stock units granted to an employee who was one of our Section 16 officers at the time of grant will immediately vest. In addition, upon the occurrence of a change in control as defined in the 2004 Performance Incentive Plan, all outstanding long-term performance cash awards granted to our Section 16 officers will immediately become payable in an amount equal to 100% of the target cash award granted to the officer.
For all other awards of stock options, restricted stock or restricted stock units, if we dissolve or do not survive following a merger, business combination, or other reorganization, the award generally will become fully vested unless the Compensation Committee provides for the assumption, substitution, or other continuation or settlement of the award. Under our 2004 Performance Incentive Plan and our Broad-Based Stock Incentive Plan, if we survive after a change in control, the Compensation Committee will have discretion to determine whether any award that did not otherwise automatically accelerate will vest or become payable on an accelerated basis prior to the change in control.
Unless otherwise determined by the Compensation Committee, any stock options that are vested prior to or that become vested in connection with a transaction referred to above will generally terminate if not exercised prior to the transaction.