Exhibit 10.01
2014 MANAGEMENT BONUS PLAN
The President and CEO, all executives who report to the President and CEO of Meru Networks, Inc. (the “Company”), and certain other executives who do not otherwise receive variable compensation will be eligible to participate in this cash bonus plan and who have been notified of their eligibility by the Committee (as defined below) (this “Plan”).
The cash bonus available will be calculated annually based on a percentage of an executive’s base salary upon the Company’s achievement of revenue targets andnon-GAAP EBITA targets1, as described below, as well as, for executives other than the CEO, CFO and Senior Vice President of Worldwide Sales and Field Operations (“SVP Sales”), individual performance against objectives (collectively, the “Annual Cash Bonus”). Following the end of each quarter, the Revenue Bonus will be calculated and paid based on the Company’s achievement of quarterly revenue targets (or in some circumstancesyear-to-date target achievement), with such payment not to exceed 100% of the executive’s targeted year-to-date revenue bonus, subject to the terms described below and irrespective of whether thenon-GAAP EBITA targets were met. Following the end of the year, the annual cash bonus available is calculated and paid based upon the Company’s achievement of annual revenue targets andnon-GAAP EBITA1 compared to the annual target objectives (without duplication of amounts previously paid for revenue achievement). The Revenue Bonus element of the Annual Cash Bonus will be awarded based on revenue performance irrespective of whether the MinimumNon-GAAP EBITA threshold has been met (subtracting amounts previously paid for the quarterly revenue achievement), and theNon-GAAP EBITA bonus will be awarded irrespective of whether the revenue target is achieved. In addition, except for the Company’s CEO, CFO and SVP Sales, a portion of the Annual Cash Bonus will be awarded based upon executive’s performance against certain objectives as reasonably determined by the Company’s CEO, and approved by the Company’s Compensation Committee (the “Committee”). The executive may earn more or less than his or her target bonus based on achievement of the performance goals; provided, however that the total bonus amount2 shall not exceed 200% of the executive’s targeted bonus value.
The following table provides the percentage of the executive’s base salary that is such executive’s targeted annual bonus value.
| | | | |
Executive Officer | | Percentage of Annual Salary | |
President and Chief Executive Officer (CEO) | | | 100 | % |
Chief Financial Officer (CFO) | | | 50 | % |
Senior Vice President Sales & Services | | | 118 | % |
Senior Vice Presidents (includes GM’s and General Counsel) | | | 45 | % |
Vice Presidents (Exec Level) | | | 40 | % |
50% of the overall target bonus award for the CEO and CFO, 60% of the overall target bonus award for the SVP Sales, and 40% of the overall target bonus award to the other executives, is tied to achievement
| 1 | Thenon-GAAP EBITA targets and determination of achievement exclude items the Company excludes from their non-GAAP EBITA calculations for their financial reports, but include the impact of any bonuses determined under the Plan. |
| 2 | The total bonus amount equals the aggregate of the Revenue Bonus (as defined below), theNon-GAAP EBITA Bonus (as defined below), and for executives other than the CEO, CFO and SVP Sales, the Management Objective Bonus (as defined below). The Revenue Bonus and Non-GAAP EBITA Bonus shall not exceed 200% of the applicable target bonus value. |
of the revenue target as described in the Company’s operating plan as approved by the board of directors (the “Revenue Bonus”). In order for any amounts to be payable under the Revenue Bonus, the revenue target must be met at a level of at least 96.3% of the target. For achievement between 96.3% and 100.0% of the revenue target, the Revenue Bonus will start at a payout of 80% of the target Revenue Bonus amount and will increase on astraight-line basis according to the percentage of achievement up to 100%.3
The executives are also eligible to receive an increased Revenue Bonus if the Company’s revenue exceeds the revenue target as follows: (a) for achievement above 100.0% and up to 114.9% of the revenue target, the Revenue Bonus will start at a payout of 100% of the target Revenue Bonus amount and will increase on a straight-line basis according to the percentage of achievement up to 150%; and (b) for achievement above 114.9% and up to 127.3% of the revenue target, the Revenue Bonus will start at a payout of 150% of the target Revenue Bonus amount and will increase on a straight-line basis according to the percentage of achievement up to 200% of the target Revenue Bonus.4
A pro rata portion of the annual Revenue Bonus, if any is achieved, shall be paid quarterly following each of the Company’s quarterly earnings announcements based on the year-to-date achievement of the quarterly revenue plan. If the year-to-date revenue threshold is not met for particular quarter(s), but in a subsequent quarter the cumulativeyear-to-date threshold is achieved, then the pro rata annual Revenue Bonus payment shall be made based upon theyear-to-date percentage of attainment, with such payment not to exceed 100% of the executive’s targetedyear-to-date Revenue Bonus (less any Revenue Bonus already paid).5 Following the Company’s earnings announcement covering the full year 2014, the executives may receive a Revenue Bonus based on the criteria set forth in the two prior paragraphs less the amount of any Revenue Bonus payments made pursuant to this paragraph.
50% of the overall target bonus award for the CEO and CFO and 40% of the overall target bonus award for each other executive, is tied tonon-GAAP EBITA6 (the“Non-GAAP EBITA Bonus”). In order for theNon-GAAP EBITA Bonus to be paid, the Company must achieve the minimumNon-GAAP EBITA target as approved by the Committee (the “MinimumNon-GAAP EBITA Amount”)7. Upon achievement of the MinimumNon-GAAP EBITA, the amount of theNon-GAAP EBITA Bonus will be calculated on a straight line basis starting at 50% of the targetNon-GAAP EBITA Bonus upon achievement of the MinimumNon-GAAP EBITA Amount and up to 100% of the targetNon-GAAP EBITA Bonus upon achievement of 100.0% the fiscalNon-GAAP EBITA target under the Company’s operating plan (the “TargetNon-GAAP EBITA Amount”).8
| 3 | For example, in the event that the annual revenue is achieved at the 96.3% of target level, the Revenue Bonuses will be paid at 80% of the target Revenue Bonus amount such that the Revenue Bonus paid to the Company’s Chief Financial Officer would equal 80% multiplied by 50% multiplied by 50% multiplied by the Chief Financial Officer’s annual salary. |
| 4 | For example, in the event that the Company’s actual revenue is 114.9% of the annual revenue target, the Revenue Bonus will be paid at 150% of the target Revenue Bonus amount such that the Revenue Bonus paid to the Company’s Chief Financial Officer would equal 150% multiplied by 50% multiplied by 50% multiplied by the Chief Financial Officer’s annual salary. |
| 5 | For example, in the first quarter if the quarterly revenue goal is achieved at 110.0%, the Company’s Chief Financial Officer will receive a quarterly payment for the Revenue Bonus equal to 25% multiplied by 100% multiplied by 50% multiplied by the Chief Financial Officer’s annual salary. |
| 6 | After giving effect to (i) the Revenue Bonus, (ii) theNon-GAAP EBITA Bonus, and (iii) the MBO Bonus, each as adjusted for any applicable accelerator. |
| 7 | The MinimumNon-GAAP EBITA Amount shall equal $3.43 million less than the TargetNon-GAAP EBITA Amount. |
| 8 | For example, in the event that non-GAAP EBITA is achieved at the midway point between the MinimumNon-GAAP EBITA Amount and the TargetNon-GAAP EBITA Amount, the Non-GAAP EBITA Bonus will be paid at 75% of the target Non-GAAP EBITA Bonus amount, such that the Non-GAAP EBITA Bonus paid to the Company’s Chief Financial Officer would equal 75% multiplied by 50% multiplied by 50% multiplied by the Chief Financial Officer’s annual salary. |
The executives are also eligible to receive an increased Non-GAAP EBITA Bonus if the Company’s non-GAAP EBITA exceeds the TargetNon-GAAP EBITA Amount as follows: (a) for achievement above 100.0% and up to 230.2% of the TargetNon-GAAP EBITA Amount, the Non-GAAP EBITA Bonus will start at a payout of 100% of the targetNon-GAAP EBITA Bonus and will increase on a straight-line basis according to the percentage of achievement up to 150% targetNon-GAAP EBITA Bonus; and (b) for achievement above 230.2% and up to 382.1% of the TargetNon-GAAP EBITA Amount, the Non-GAAP EBITA Bonus will start at a payout of 150% of the targetNon-GAAP EBITA Bonus and will increase on a straight-line basis according to the percentage of achievement up to 200% of the targetNon-GAAP EBITA Bonus.9
| III. | Management Objective Bonus |
20% of the overall target bonus award for eligible executives other than the CEO, CFO and SVP Sales shall be tied to performance by the executive against management objectives as reasonably determined in writing by the Company’s CEO and reported to the Chair of the Committee (each an “MBO Bonus”). The Company’s CEO shall determine achievement against the specific objectives, with such achievement to be approved by the Company’s Compensation Committee, and with such achievement not to exceed 100% for this portion of the Annual Cash Bonus.10
The Committee will be responsible for the general administration and interpretation of this Plan and for carrying out its provisions, including the authority to construe and interpret the terms of this Plan, determine the manner and time of payment of any Annual Cash Bonuses, prescribe any necessary procedures for distribution of Annual Cash Bonuses and adopt rules, regulations and to take such actions as it deems necessary or desirable for the proper administration of this Plan. The Committee, in its sole discretion and on such terms and conditions as it may provide, may delegate all or part of its authority and powers under the Plan to one or more directors and/or officers of the Company.
Any rule or decision by the Committee or its delegate(s) that is not inconsistent with the provisions of this Plan shall be conclusive and binding on all persons, and shall be given the maximum deference permitted by law.
The Committee may amend, modify, suspend or terminate this Plan, in whole or in part, at any time, including the adoption of amendments deemed necessary or desirable to correct any defect or to supply omitted data or to reconcile any inconsistency in this Plan or in any Annual Cash Bonus awarded hereunder. Moreover, the Committee may pay up to 50% of any bonus described under this Plan in fully vested restricted stock units (“RSUs”). In the event the Committee pays a portion of any bonus with fully vested RSUs, the Committee shall apply a 10% liquidity uplift to its calculations. For any bonus payment made under this Plan, an executive officer shall be eligible to receive payment if the executive officer is employed by the Company on the date such payment is actually made.
Notwithstanding any other provision hereof or any other agreement between the Company and any participant, the Company may, in its sole discretion, implement any recoupment or clawback policies or make any changes to any of the Company’s existing recoupment or clawback policies, as the Company deems necessary or advisable in order to comply with applicable law or regulatory guidance (including, without limitation, theDodd-Frank Wall Street Reform and Consumer Protection Act and any rules of the SEC or a stock exchange or similar body implemented pursuant thereto that is applicable to the Company), and any Annual Cash Bonuses (including, for avoidance of doubt, any quarterly portion) awarded under this Plan is subject to the terms and conditions of any such recoupment or clawback policies (as as may be adopted, amended or restated from time to time).
| 9 | For example, in the event that the Company’s actualnon-GAAP EBITA is 230.2% of TargetNon-GAAP EBITA Amount, theNon-GAAP EBITA Bonus will be paid at 150% of the target Non-GAAP EBITA Bonus, such that theNon-GAAP EBITA Bonus paid to the Company’s Chief Financial Officer would equal 150% multiplied by 50% multiplied by 50% multiplied by the Chief Financial Officer’s annual salary. |
| 10 | For example, in the event that the Management Objectives are reached at a level of 75%, the Management Objective Bonus paid to the Company’s General Counsel would equal 75% multiplied by 20% multiplied by 45% multiplied by the General Counsel’s annual salary. |
