Exhibit 10.18
ShoreTel Executive Bonus Plan
The purpose of the ShoreTel Executive Bonus Plan is to incentivize executives, including the CEO, to achieve key company objectives. Executives will have the opportunity to earn a cash bonus based on their individual and departmental performance and the achievement of company objectives. The bonus plan applies to all executives, except as set forth in “Exceptions” below. To participate in the plan, an executive must be employed on a regular basis and meet other requirements set forth below.
Company Objectives; Bonus Pool
The key measurement metrics are revenues, non-GAAP operating profit and customer satisfaction ratings (“Company Performance Targets”). The goals for these three metrics will be established and approved by the Board of Directors near the beginning of each six-month fiscal period (July-December and January-June). The six-month targets will be recommended by the CEO and approved by the Board of Directors near the beginning of each six-month period. The Board of Directors has discretion to modify the key measurement metrics and weighting thereof.
The total amount of incentive compensation available for distribution to participants under this bonus plan in each six-month period (the “Bonus Pool”) is equal to the product of (a) percentage achievement of the Company Performance Targets (which may be subject to minimum and maximum percentages), and (b) the sum of each participant’s base salary for the six-month period multiplied by 45% (85% in the case of the CEO).
Individual Target Levels
Payments to participants are based on the size of the Bonus Pool and each participant’s individual performance rating. The actual amount paid to a participant is equal to the product of (a) percentage achievement of the Company Performance Target (which may be subject to minimum and maximum percentages), (b) the participant’s base salary for the six-month period, (c) 45% (85% in the case of the CEO) and (d) the participant’s performance rating, as adjusted (which could be zero, or could be subject to a maximum multiplier).
The CEO will have the discretion to recommend bonus payment allocations for the executive officers, up to a maximum of 150% of the Bonus Pool. However, to prevent total bonus payments under this plan from exceeding the Bonus Pool, each participant’s performance rating is subject to downward adjustment to reflect his/her achievement relative to the achievement of other participants.
Exceptions
VP Sales. The VP Sales bonus is not part of the Bonus Pool. The VP Sales bonus arrangement is a target of $140,000 per year, instead of 45% of base salary. In addition, for the VP Sales, performance targets are based on revenues, expenses, and customer satisfaction. VP Sales bonus is paid quarterly.
Former CFO. For the first half of fiscal 2008, John, Finegan, our former CFO, is entitled to a bonus that provides for a payout at the 150% level so long as he remains employed by the company at December 31, 2007.
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