Non-Employee Director Remuneration
and
Expense Reimbursement Summary
| 1. | Cash Compensation |
| a) | Annual Retainers |
| • | A non-employee Chairperson of the Board of Directors shall receive an annual Board retainer of $125,000.00 paid quarterly in advance on May 1, August 1, November 1, and February 1 |
| • | Each non-employee member of the Board of Directors other than the non-employee Chairperson shall receive an annual Board retainer of $50,000.00 paid quarterly in advance on May 1, August 1, November 1, and February 1 |
| • | The non-employee director who serves as Chairperson of the Audit Committee shall receive, in addition to his or her Board retainer, an annual Committee retainer of $20,000.00 paid quarterly in advance on May 1, August 1, November 1, and February 1 |
| • | Each non-employee director who serves as Chairperson of a Board Committee other than the Audit Committee shall receive, in addition to his or her Board retainer, an annual Committee retainer of $10,000.00 paid quarterly in advance on May 1, August 1, November 1, and February 1 |
| • | Non-employee directors may convert all or any portion of their annual Board retainers (but not their Committee retainers) to the award of Common Stock Equivalents (the “Retainer CSEs”) |
| • | Retainer CSEs are purchased on each date an installment of the annual Board retainer is paid |
| • | Any non-employee director who elects to purchase Retainer CSEs will receive a supplemental credit equal to 25% of the portion of the annual Board retainer used to purchase Retainer CSEs (referred to as the “Match”) |
| • | The Match may be applied only to the purchase of additional CSEs (“Match CSEs”) |
| • | The number of Retainer CSEs and Match CSEs to be received is based on the closing price of Novell common stock on the day before the grant |
| • | Retainer CSEs are fully vested at the time of the grant |
| • | Match CSEs, unlike Retainer CSEs, are subject to a cliff vesting period of three years from the date of award |
| • | The Retainer CSEs will be converted into shares of Novell common stock on the earlier to occur of (i) the termination of service as a non-employee director and (ii) a date prior to the termination of service as a non-employee director specified by the non-employee director |
| • | Vested Match CSEs will be converted into shares of Novell common stock on the termination of service as a non-employee director |
| b) | Meeting Fees |
| • | $1,500 for each Board and Board telephonic meeting attended |
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| • | $1,500 for each Committee and Committee telephonic meeting attended as a Committee member |
| 2. | Equity Compensation |
| • | Each non-employee director shall receive an annual equity award with a value of $130,000 (the “Annual Equity Award”) |
| • | The Annual Equity Award shall be granted at the first Compensation Committee meeting following Novell’s Annual Meeting of Stockholders that falls during an open trading window for Novell’s securities |
| • | The Annual Equity Award shall be comprised of stock options with a grant date value of $43,000 and restricted stock units with a grant date value of $87,000 |
| • | The stock options and restricted stock units comprising the Annual Equity Award shall vest 50% per year on the first two (2) anniversaries of the grant date of the Annual Equity Award and shall have the following additional terms: |
| • | Upon the retirement of a non-employee director at age 73, there shall be 100% acceleration of all unvested stock options and restricted stock units, and vested stock options shall remain exercisable for twelve (12) months following retirement |
| • | Upon the disability of a non-employee director, there shall be no acceleration of unvested stock options and/or restricted stock units, but vested stock options shall remain exercisable for twelve (12) months following a disability |
| • | Upon the death of a non-employee director, there shall be an accelerated vesting of those stock options and restricted stock units that would have vested within twelve (12) months following such death had the non-employee director not died and remained a non-employee director, and vested stock options shall remain exercisable for twelve (12) months following the death of a non-employee director |
| • | New non-employee directors shall receive a one-time grant of 50,000 stock options that shall vest 50% per year on the first two (2) anniversaries of the grant date of the award |
| • | Non-employee directors are required to hold equity (Novell common stock) equal to three times their annual Board retainer |
| • | Non-employee Chairperson of the Board of Directors Total Stock Ownership Requirement (“Total SOR”) is $375,000 ($125k x 3) |
| • | Other non-employee directors Total SOR is $150,000 ($50k x 3) |
| • | Non-employee directors have five years to achieve the Total SOR, in accordance with the following schedule: |
Year | Percentage of Total SOR | ||
1 | 5 | % | |
2 | 15 | % | |
3 | 30 | % | |
4 | 60 | % | |
5 | 100 | % |
| • | Forms of equity that count towards Total SOR consist of shares that are already |
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owned and held, shares acquired on the open market, shares acquired upon the exercise of stock options, vested restricted stock units, Retainer CSEs, and any vested Match CSEs |
| • | The five year “phase in” of the SOR requirement described above applies (i) from November 1, 2004 for non-employee directors who were on the Board as of that date and (ii) for non-employee directors who joined the Board after November 1, 2004, from the date of their election to the Board |
| 3. | Reimbursements |
| a) | Meetings |
| • | Novell will provide reimbursement for attendance to all Board and Committee meetings covering the following: |
| • | first class airfare ticket or equivalent |
| • | lodging |
| • | meals |
| • | ground transportation to and from the meeting |
| b) | Conferences |
| • | Novell will provide reimbursement for attendance to one conference per year covering the following: |
| • | registration fees |
| • | first class airfare ticket or equivalent |
| • | lodging |
| • | meals |
| • | ground transportation to and from the conference |
| c) | Orientation |
| • | Novell will provide reimbursement for new non-employee directors for attendance to one third-party orientation program covering the following: |
| • | registration fees |
| • | first class airfare ticket or equivalent |
| • | lodging |
| • | meals |
| • | ground transportation to and from the orientation program |
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