Exhibit 10.26**EMULEX CORPORATION****Description of Compensation Arrangements for Certain Executive Officers**     The following is a description of the compensation arrangements for each of the Company’snamed executive officers who were serving as executive officers of the Company on July 2, 2006.The compensation for these executive officers consists of base salary and perquisites, long-termincentive compensation and annual cash bonus compensation. As of September 5, 2006, the followingare the base salaries (on an annual basis) of the Company’s named executive officers:     Name and Principal Position Base SalaryPaul F. Folino (1) $590,527 Executive Chairman         James M. McCluney (1) $535,000 Chief Executive Officer and President         Michael J. Rockenbach $323,425 Exec. V.P. and Chief Financial Officer         Marshall Lee $293,975 Exec. V.P., Engineering         William F. Gill $271,967 Exec. V.P., Worldwide Sales     (1) Effective September 5, 2006, (i) Mr.Folino resigned as Chief ExecutiveOfficer and was appointed ExecutiveChairman of the Company, (ii) Mr.McCluney resigned as Chief OperatingOfficer and was appointed as ChiefExecutive Officer and President.     The Company does not have employment agreements with any of its executive officers but hasexecuted key employee retention agreements with each of its named executive officers and certainother officers and key employees of the Company. The Company’s agreement with Mr. Folino entitleshim to receive the following payments and benefits in the event of termination of his employment bythe Company without cause or by Mr. Folino because of a demotion (as defined in such agreement)within 2 years after a change in control of the Company: (i) a severance payment equal to thepresent value of 2 times the sum of Mr. Folino’s annual salary plus the highest annual average ofany 2 of his last 3 annual bonuses; (ii) continuation for 2 years following termination ofemployment of his health and life insurance, disability income, tax assistance and executiveautomobile benefits (reduced to the extent similar benefits are received by him from anotheremployer); and (iii) acceleration of his right to exercise his stock options and vesting of anyrestricted stock awards based on the length of his continued employment following the grant of theoption by one year upon the change in control of the Company and full acceleration of such optionexercise right and vesting of restricted stock awards in the event of termination of his employmentwithout cause or because of a demotion (as defined in such agreement) within two years after thechange in control.     Mr. McCluney’s key employee retention agreement is substantially the same as Mr. Folino’sagreement described above. Additionally, in the event that Mr. McCluney is terminated without cause(regardless of whether a change in control has occurred), he will be entitled to severance in theamount of one year’s base salary at the ratethen in effect, any deferred incentive bonuses, reimbursement of COBRA premiums, if any, for oneyear, and continued vesting of his stock options for one year.
 

 
     The above descriptions are qualified in their entirety by the forms of Key Employee RetentionAgreements for Mr. Folino and Mr. McCluney which are incorporated herein by reference to Exhibits10.2 and 10.1, respectively, to the Company’s Current Report on Form 8-K filed on September 6,2006.     The Company also has entered into similar agreements with each of the other named executiveofficers which provide for benefits similar to those described above, except that the severancepayment is equal to the present value of one times the sum of the employee’s annual salary plus thehighest annual average of any 2 of the employee’s last 3 annual bonuses; and continuationfollowing termination of employment of the employee’s health and life insurance, disability income,tax assistance and executive automobile benefits (reduced to the extent similar benefits arereceived by the employee from another employer) is limited to one year. The form of key employeeretention agreement for each of the other named executive officers is filed as Exhibit 10.8 to theCompany’s Quarterly Report on Form 10-Q for the quarterly period ended December 26, 2004.     Additionally, the Company’s executive officers are entitled to participate in health andwelfare and retirement plans, perquisite, fringe benefit and other arrangements generally availableto other salaried employees. In addition, each officer is entitled to participate in the EmulexCorporation Retirement Savings Plan, and receives group term life insurance premiums and healthcare reimbursement paid with respect to the named executive.     The Company’s executive officers are eligible for annual performance-based cash bonuses underthe Company’s Executive Bonus Plan. The Bonus Plan is intended to provide incentives to executiveofficers and other participants in the form of quarterly cash bonus payments based on Companyperformance against net revenue and net operating income targets established periodically and, incertain circumstances, other specified business goals. Actual goals for measurement purposes arethe Company’s fiscal annual operating plan that is approved by the Board of Directors. In addition,a discretionary bonus for recognition of extraordinary contributions to the success of the companymay be recommended by the Chairman and Chief Executive Officer. All bonus recommendations aresubject to the approval of the Compensation Committee. Each executive officer of the Company has aquarterly target award opportunity expressed as a percentage of quarterly gross base salary at theend of the quarter in question. The quarterly target award opportunity for the executives rangefrom 35% to 90% of quarterly base salary (the “target award percentage”). Each participant’squarterly bonus is weighted based upon achieving a combination of corporate performance goals. Forexample, 45% of an executive officers bonus may be based upon achievement of net revenueperformance goals with the remaining 55% of the bonus based on achievement of net operating incomeperformance. Targeted quarterly bonuses are further adjusted by application of an acceleratorformula pursuant to which bonuses are increased to reward for over-achievement of targets anddecreased to minimize bonus payments for performance below targeted levels. For example, ifquarterly net revenue is 10% more than targeted net revenue, the bonus attributable to achievementof net revenue targets for such quarter will be between 15 and20% above the targeted bonusamount. Similarly, if quarterly revenue is 10% less than targeted net revenue, the bonusattributable to achievement of net revenue targets for such quarterwill be decreased by 15% to 20%percent from the targeted bonus amount. Net revenue and net operating income bonuses are treatedseparately regardless of the award formula. However, no net revenue bonus or net operating incomebonus will be paid for a given quarter unless at least 80% of the corresponding net revenue or netoperating income goal, as the case may be, is achieved. In addition, no bonus payout of any kindshall be made if net operating income is less than 50% of the applicable net operating income goal.A participant must be an employee for the entire quarter to be eligible for a quarterly bonus.Quarterly bonuses are generally paid 30 days following the end of each quarter. Award formulasunder the Bonus Plan are established for a fiscal year and may be modified, extended, or canceledannually at the discretion of the Compensation Committee. The foregoing description is qualifiedin its entirety by the Executive Bonus Plan which is filed as Exhibit 10.3 to the Company’s CurrentReport on Form 8-K filed on September 6, 2006.     Long term incentives are provided to the named executives in accordance with the Company’s2005 Equity Incentive Plan which is attached as Appendix B to the Company’s Definitive ProxyStatement for the Annual Meeting of Stockholders held on December 1, 2005. In addition, theCompany’s executive officers have previously received options pursuant to option or other equityplans maintained by the Company prior to the adoption of the 2005 Equity Incentive Plan in 2005.
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