exv10w1






Exhibit 10.1




GENENTECH, INC.




EXECUTIVE RETENTION PLAN




     Genentech, Inc. hereby adopts this Executive Retention Plan (the “Plan”) effective as of
August 18, 2008.



1. Purpose.




     (a) The Special Committee (as defined below), is evaluating a proposal by Roche Holding Ltd.
or an Affiliate of Roche Holding Ltd. (collectively “Roche”) to acquire the shares of Company (as
defined below) common stock it does not currently own for US$89 per share in cash. The Board
recognizes that the consideration of such a proposal can be a distraction to its executives and can
cause its executives to consider alternative employment opportunities. The Plan is intended to (i)
ensure that the Company will have the continued dedication and objectivity of its executives
notwithstanding the possibility or occurrence of a Change of Control (as defined below), and (ii)
provide the Company’s executives with enhanced financial security and incentive and encouragement
to remain with the Company notwithstanding the possibility or occurrence of a Change of Control.



     (b) The benefits provided under the Plan shall be in lieu of the stock option grants the
Company otherwise would expect to make to its executives in September 2008. Instead, each Covered
Executive (as defined below) will be eligible to receive a retention bonus under the Plan with a
value equal to approximately the discounted Black-Scholes value (as determined by the Company) of
the stock option grant the Covered Executive otherwise would have received in September 2008.



2. Definitions.




     (a) “Administrator” means the Special Committee, or in the event the Special Committee is
dissolved by the Board, then another duly constituted committee of members of the Board, or
officers of the Company as delegated by the Board.



     (b) “Affiliate” with respect to any entity means any corporation or any other entity
(including, but not limited to, partnerships and joint ventures) controlling, controlled by, or
under common control with the entity, whether now or hereafter existing, provided that prior to the
earlier of a Change of Control or June 30, 2009, for the purposes of the Plan, the Company shall
not constitute an Affiliate of Roche and Roche shall not constitute an Affiliate of the Company.



     (c) “Board” means the Company’s Board of Directors or the Special Committee.



     (d) “Cause” means:



          (i) The Covered Executive’s willful and continued material failure to perform the reasonable
duties and responsibilities of his or her position after the Company has provided the Covered
Executive with a written demand for performance that describes the basis for the





1









 







Company’s belief that the Covered Executive has not substantially performed his or her duties
and the Covered Executive has not corrected the failure within thirty (30) days of the written
demand;




          (ii) Any act of personal dishonesty taken by the Covered Executive in connection with his or
her responsibilities as an employee of the Company and intended to result in his or her substantial
personal enrichment;




          (iii) The Covered Executive’s conviction of, or plea of nolo contendere to, a felony that the
Board reasonably believes has had or will have a material detrimental effect on the Company’s
reputation or business;




          (iv) The Covered Executive’s breach of any fiduciary duty owed to the Company by the Covered
Executive that has a material detrimental effect on the Company’s reputation or business; or




          (v) The Covered Executive being found liable in any Securities and Exchange Commission or
other civil or criminal securities law action or entering any cease and desist order with respect
to such action (regardless of whether or not the Covered Executive admits or denies liability).




     (e) “Change of Control” means a merger of the Company with Roche.



     (f) “Closing” will have the same definition as such term is defined in the definitive
agreement governing the Change of Control.



     (g) “Company” means Genentech, Inc. and its Affiliates, and any successor thereto (as
determined in accordance with Section 9 below).



     (h) “Company Options” means the then unvested portion of all of the Covered Executive’s
outstanding options to purchase Company common stock granted or assumed under the Company’s equity
plans or assumed plans as of the date of Covered Executive’s Covered Termination, including,
without limitation, outstanding Company Options, outstanding awards to acquire Roche equity
securities following an assumption or substitution of the Company Options by Roche, or any other
rights substituted by Roche for Company Options, in connection with a Change of Control.



     (i) “Covered Executive” means each individual who is eligible to participate in the Plan in
accordance with Section 4(a) below.



     (j) “Good Reason” means the occurrence of one or more of the following without the Covered
Executive’s written consent:



          (i) A fifteen percent (15%) or more reduction in the Covered Executive’s total annual cash
compensation opportunity (base salary and target bonus opportunity collectively) as compared to the
Covered Executive’s total annual cash compensation opportunity immediately prior to the Closing;




2









 








          (ii) A change in the Covered Executive’s principal work location resulting in a new one-way
commute that is more than fifty (50) miles greater than the Covered Executive’s one-way commute
prior to the change in the Covered Executive’s principal work location, regardless of whether the
Covered Executive receives an offer of relocation benefits; or




          (iii) A material reduction in the Covered Executive’s authority, duties and/or
responsibilities as compared to the Covered Executive’s authority, duties and/or responsibilities
in effect immediately prior to the Closing (for example, but not by way of limitation, this
determination will include an analysis of whether the Covered Executive maintains at least the same
level, scope and type of duties and responsibilities with respect to the management, strategy,
operations and business of the combined entity resulting from such transaction, taking the Company,
Roche and their respective parent corporations, subsidiaries and other affiliates, together as a
whole).




     (k) “Participation Agreement” means the individual agreement (a form of which is shown in
Appendix C) that identifies the potential Retention Bonus for certain Covered Executives.



     (l) “Payment Date” means:



          (i) June 30, 2009, if a Change of Control has not occurred on or prior to such date; or




          (ii) Each date on which a payment of all or a portion of a Covered Executive’s Retention Bonus
is scheduled to be made in accordance with Sections 6(b) or 6(c) below, as applicable, if a Change
of Control occurs on or prior to June 30, 2009.




     (m) “Plan” means this Executive Retention Plan.



     (n) “Section 409A” means Section 409A of the Internal Revenue Code of 1986, as amended, and
the final regulations and any guidance promulgated thereunder.



     (o) “Special Committee” means the Special Committee of the Board, duly constituted by
resolution of the Board adopted by unanimous written consent on July 24, 2008.



3. Administration.




     With respect to all Covered Executives, the Plan will be interpreted and administered by the
Administrator. The Administrator will have the power and discretion to construe the terms of the
Plan and perform such acts as it deems necessary or appropriate to effect the purpose of the Plan.
Notwithstanding the foregoing, if the Board, as the case may be, has delegated authority to one or
more officers of the Company in accordance with Section 2(a) above, the delegate may not interpret
or construe the terms of the Plan in a manner that would otherwise materially increase the cost or
materially change the type or scope of benefits, whether individually or in the aggregate, to be
provided under the Plan.



     The Administrator, or such officer or officers of the Company designated by the Special
Committee, each of whom shall be deemed to be an “Administrator” solely for the purposes of this
paragraph, shall provide each Covered Executive who is identified on Exhibit B with a
Participation



3









 




Agreement on which the Administrator shall designate the amount of such Covered Executive’s
Retention Bonus as determined in accordance with Section 5.




     The Administrator will not be liable for any action or determination made by the Administrator
with respect to the Plan or any distribution paid under the Plan. All expenses and liabilities
that the Administrator incurs in connection with the administration of this Plan will be borne by
the Company. The Administrator will not be personally liable for any action, determination or
interpretation made in good faith with respect to this Plan or any distribution paid hereunder, and
the Administrator will be fully indemnified and held harmless by the Company in respect of any such
action, determination or interpretation.



4. Eligibility.




     (a) Each of the Company’s Chief Executive Officer, the Company’s President, Product
Development, each member of the Company’s Executive Committee, the Company’s Executive Vice
President, Research Drug Discovery, the Company’s Controller and Chief Accounting Officer, the
Company’s Treasurer, and each Senior Vice President or Vice President of the Company shall be
eligible to participate in this Plan, provided that such individual is employed by the Company on
August 18, 2008, and is not excluded from the Plan by Section 4(b) below. Notwithstanding anything
to the contrary herein, a Covered Executive described in the preceding sentence who is on
short-term disability leave, as determined in accordance with the Company’s leave policies, on the
Payment Date will continue to be eligible to receive a Retention Bonus.



     (b) An employee of the Company will not be eligible to participate in the Plan if:



          (i) The Company hires or rehires the employee after August 18, 2008.




          (ii) On June 30, 2009, the employee is on a Company Performance Improvement Plan and a Change
of Control has not occurred on or prior to such date.




          (iii) On June 30, 2009, the employee is on long-term disability leave, as determined in
accordance with the Company’s leave policies, and a Change of Control has not occurred on or prior
to such date.




5. Amount of Retention Bonus.




     Each Covered Executive will be eligible to earn a retention bonus under the Plan (the
“Retention Bonus”). The Retention Bonus will be a fixed dollar amount determined as a function of
the Covered Executive’s job category and job level as specified in Appendix A or
Appendix B or otherwise set forth in written resolutions of the Special Committee.



6. Payment of Retention Bonus.




     If the conditions for payment of any Retention Bonus set forth in this Plan are satisfied, the
payment of the Retention Bonus will occur as follows:



     (a) If a Change of Control occurs on or before June 30, 2009, and vesting accelerates as to
one hundred percent (100%) of the Company Options in connection with the Change of Control,



4









 




fifty percent (50%) of the Retention Bonus will be paid in a lump-sum payment on the date of
the Closing and the remaining fifty percent (50%) of the Retention Bonus will be paid in a lump-sum
payment on the first anniversary of the Closing.




     (b) If a Change of Control occurs on or before June 30, 2009, and vesting accelerates as to
less than one hundred percent (100%) of the Company Options in connection with the Change of
Control, one hundred percent (100%) of the Retention Bonus will be paid in a lump-sum payment on
the date of the Closing.



     (c) If the Company does not consummate a Change of Control on or before June 30, 2009, one
hundred percent (100%) of the Retention Bonus will be paid in a lump-sum payment on June 30, 2009.



7. Termination and Forfeiture of bonus Amounts.




     (a) Except as otherwise provided in Section 7(c) or Section 7(d) below, a Covered Executive
must remain employed with the Company through the applicable Payment Date in order to receive his
or her Retention Bonus (or the portion thereof) that is scheduled to be paid on such date.



     (b) If a Change of Control does not occur on or prior to June 30, 2009, and prior to such
date, a Covered Executive: (i) voluntarily terminates his or her employment, or (ii) is terminated
for any reason (including, but not limited to, a termination due to poor performance, a termination
for Cause, or the elimination of the Covered Executive’s position), he or she will not receive a
Retention Bonus. Any Retention Bonus not paid to a Covered Executive will revert to the Company
and will not be reallocated to any other Covered Executive.



     (c) If, on or after a Change of Control, the Covered Executive is terminated by the Company
other than for Cause or the Covered Executive terminates his or her employment for Good Reason
within three (3) months of the initial existence of the condition or event that constitutes Good
Reason, then any unpaid Retention Bonus (or portion thereof) will be paid as soon as practicable
following the date of such termination (but in no event later than thirty (30) days following the
date of such termination).



     (d) If Retention Bonuses are payable in accordance with Section 6(a) above and a Covered
Executive dies after the Closing but prior to the final Payment Date, the portion of his or her
Retention Bonus scheduled to be paid in a lump-sum payment on the first anniversary of the Closing
shall be paid to his or her designated beneficiary, if the Administrator permits the designation of
a beneficiary, or, if no beneficiary has been designated (or the Administrator determines that it
will not permit the designation of a beneficiary), to his or her estate on the first anniversary of
the Closing.



8. Amendment or Termination of the Plan.




     Although the Company currently expects to continue the Plan, the Administrator reserves the
right to amend or terminate the Plan at any time. After a Change of Control, the Company may not,
without the Covered Executive’s written consent, amend or terminate the Plan in any way that
(a) prevents the Covered Executive from becoming eligible for his or her Retention Bonus under the



5









 




Plan, or (b) reduces the amount of Retention Bonuses payable, or potentially payable, to a
Covered Executive under the Plan. Any Plan amendment or termination will be made in writing and
approved by the Administrator.




9. Assumption by Successor.




     Any successor to the Company of all or substantially all of the Company’s business and/or
assets (whether direct or indirect and whether by purchase, merger, consolidation, liquidation or
otherwise), will assume the obligations under this Plan and agree expressly to perform the
obligations under this Plan in the same manner and to the same extent as the Company would be
required to perform such obligations in the absence of a succession. For all purposes under this
Plan, the term “Company” will include any successor to the Company’s business and/or assets which
become bound by the terms of this Plan by operation of law, or otherwise.



10. Rights Under the Plan.




     This Section 10 will survive the consummation of the Change of Control and the Closing. This
Plan is intended to benefit, and may be enforced by, the Covered Executive and his or her
respective heirs, representatives, successors and assigns, and will be binding on all successors
and assigns of the Company and Roche.



11. No Guarantee of Future Service.




     Participation in the Plan will not provide any guarantee or promise of continued service of
the Covered Executive with the Company, and the Company retains the right to terminate the
employment of any Covered Executive at any time, with or without Cause, for any reason or no
reason. However, as described in the Plan, a Covered Executive who terminates employment on or
after a Change of Control may be entitled to benefits under the Plan depending upon the
circumstances of the Covered Executive’s termination of employment.



12. Taxes.




     (a) The Company will withhold from any distributions under the Plan any amount required to
satisfy any applicable income, employment and other tax withholding obligations.



     (b) Notwithstanding anything to the contrary in this Plan, if the Company determines that the
Covered Executive is a “specified employee” within the meaning of Section 409A at the time of the
Covered Executive’s termination of employment (other than due to death), then to the extent delayed
commencement of any portion of the benefits to which the Covered Executive is entitled pursuant to
this Plan, when considered together with any other payments or benefits that are considered
deferred compensation under Section 409A (together, the “Deferred Compensation Separation
Benefits”), is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i)
of the Code, such Deferred Compensation Separation Benefits will become payable on the first
payroll date that occurs on or after the date six (6) months and one (1) day following the date of
the Covered Executive’s termination of employment. All subsequent Deferred Compensation Separation
Benefits will be payable in accordance with the payment schedule applicable to each payment or
benefit. An employee generally will be a specified employee only if (among other things) he or she
owns at least one percent (1%) of the Company’s stock or is



6









 




considered an officer of the Company. The Company will inform the Covered Executive if it
determines that he or she is a specified employee at the time of his or her termination.
Notwithstanding anything herein to the contrary, if the Covered Executive dies following his or her
termination but prior to the six (6) month anniversary of his or her termination, then any payments
delayed in accordance with this paragraph will be payable in a lump sum as soon as administratively
practicable after the date of the Covered Executive’s death.




     (c) The foregoing provisions of this Plan are intended to comply with the requirements of
Section 409A so that none of the benefits to be provided hereunder will be subject to the
additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to so
comply. The Company reserves the right to amend the Plan and to take such reasonable actions which
are necessary, appropriate, or desirable to avoid imposition of any additional tax or income
recognition prior to actual payment to a Covered Executive under Section 409A, provided that such
amendment or action may not materially reduce the benefits provided or to be provided to the
Covered Executive under the Plan. In no event will the Company reimburse the Covered Executive for
any taxes that may be imposed on him or her as a result of Section 409A.



13. Funding.




     No provision of the Plan will require the Company, for the purpose of satisfying any
obligations under the Plan, to purchase assets or place any assets in a trust or other entity to
which contributions are made or otherwise to segregate any assets, nor will the Company maintain
separate bank accounts, books, records or other evidence of the existence of a segregated or
separately maintained or administered fund for such purposes. Nothing contained in this Plan and
no action taken pursuant to the provisions of the Agreement will create or be construed to create a
trust of any kind. No property that may be acquired or invested by the Company in connection with
the Plan will be deemed a security for the obligations to the Covered Executives hereunder, but
will be, and continue for all purposes to be, part of the general funds of the Company. Covered
Executives will have no rights under the Plan other than as unsecured general creditors of the
Company.



14. Bonus Plan.




     This Plan is intended to be a “bonus program” as defined under U.S. Department of Labor
regulation 2510.3-2(c) and will be construed and administered in accordance with such intention.



15. Nonassignability.




     To the maximum extent permitted by law, a Covered Executive’s right or benefits under this
Plan will not be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or
charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber or charge the same
will be void. No right or benefit hereunder will in any manner be liable for or subject to the
debts, contracts, liabilities or torts of the person entitled to such benefit.



16. Choice of Law.




     All questions concerning the construction, validation and interpretation of the Plan will be
governed by the laws of the State of California without regard to its conflict of laws provisions.



7









 





17. Headings.




     The headings in the Plan are inserted for convenience only and will not be deemed to
constitute a part hereof nor to affect the meaning thereof.



18. Entire Agreement.




     This Plan and the corresponding Participation Agreement for each Covered Executive (if
applicable), together with any benefits payable to such Covered Executive under the Genentech, Inc.
Executive Severance Plan (the “Severance Plan”) constitute the entire understanding and agreement
with respect to the subject matter contained herein, and there are no agreements, understandings,
restrictions, representations or warranties among any Covered Executive and the Company other than
those as set forth or provided for herein and in the Severance Plan.



[Remainder of Page Intentionally Left Blank]




8









 




     An authorized officer of the Company hereby adopts the Executive Retention Plan effective as
of August 18, 2008.



	 	 	 	 	 
	 	GENENTECH, INC.
 	 
	 	By:  	/s/ Stephen G. Juelsgaard 	 
	 	 	Stephen G. Juelsgaard 	 
	 	 	Executive Vice President, Secretary
and Chief Compliance Officer 	 
	 





9








 




Appendix A


The Covered Executive’s total Retention Bonus will be determined based on the Covered Executive’s
job category and job level as follows:



	 	 	 	 	 	 	 	 	 
	Job Category	 	Job Level	 	Retention Bonus Amount
	Chief Executive Officer
	 	 	O4	 	 	$	8,737,300	 
	President, Product Development
	 	PRES	 	$	4,587,200	 
	Executive Committee Members
	 	 	O3	 	 	$2,730,500 per Executive Committee Member




For purposes of example only, if the Covered Executive is an Executive Committee Member, his or her
individual Retention Bonus will be $2,730,500.


1








 




Appendix B


For the following individuals, the Retention Bonus amounts will be as provided in individual
Participation Agreements:


Executive Vice President, Research Drug Discovery

Treasurer

Controller and Chief Accounting Officer

Senior Vice President

Vice President


1








 




Appendix C


Executive Retention Plan


Participation Agreement 


     Unless otherwise defined herein, the terms defined in the Executive Retention Plan (the
“Plan”) will have the same meanings in this Participation Agreement.


 



PARTICIPANT NAME: [NAME]


EMPLOYEE ID NUMBER: [ID NUMBER]


 



     Genentech, Inc. (the “Company”) is pleased to inform you, the participant named above, that
you are a Covered Executive under the Plan. Pursuant to the terms of the Plan, you are eligible to
receive a Retention Bonus as follows:


     Retention Bonus Amount: $[AMOUNT]


     Assuming you meet the requirements of the Plan, you will receive your Retention Bonus in
accordance with the payment schedule set forth in Section 6 of the Plan (and subject to the other
restrictions and limitations set forth in the Plan).


	 	 	 	 	 
	GENENTECH, INC.	 	 
	 	 	 	 	 
	By:
	 	 	 	 
	 	 
	 	 
	 	 	 	 	 
	Print Name:	 	 	 
	 	 	 

	 	 
	 	 	 	 	 
	Title: 	 	 	 	 
	 	 
	 	 




2