EXHIBIT 10.1
TEKELEC
2002 Executive Officer Bonus Plan
Tekelec ("Tekelec" or the "Company") believes that a portion of each executive
officer's annual compensation should be directly related to the Company's
financial performance and such officer's achievement of certain objectives. The
2002 Executive Officer Bonus Plan ("2002 Bonus Plan") is designed to motivate
Tekelec's executive officers and to reward them if in 2002 the Company achieves
certain financial results and/or such officers achieve certain individual,
business or strategic objectives. The Company believes that the achievement of
these results and objectives is essential for the Company's success and for the
continued growth in shareholder value.
2002 Bonus Plan:
Each Eligible Officer (as defined below) will be eligible to receive:
(i) a quarterly bonus ("Quarterly Bonus") based on the Company's financial
performance as measured by the degree of the Company's attainment of a
pre-set, Board of Directors' approved, operating income before bonus goal
for each calendar quarter during 2002; and
(ii) an annual bonus ("Annual Bonus") based on his/her achievement in 2002 of
individual, business or strategic objectives that the Company's Chief
Executive Officer (in the case of the Chief Executive Officer, the Board
of Directors) approves during the first quarter of 2002.
The Quarterly Bonuses and Annual Bonus payable to an Eligible Officer under the
2002 Bonus Plan will be calculated as a percentage of such officer's actual
earnings paid during a calendar quarter or the calendar year, as the case may
be, excluding certain compensation and payments (e.g., reimbursement for moving
expenses, bonus payments received under the 2001 or 2002 Bonus Plan, stock
option compensation, disability benefits, sign-on bonuses, vacation cash-outs,
and similar payments).
Eligible Officers:
Unless additional officers are expressly designated as Eligible Officers under
the 2002 Bonus Plan pursuant to a subsequent, duly adopted Board of Directors'
resolution, only the following executive officers shall be eligible to
participate in the 2002 Bonus Plan (all titles are positions with Tekelec unless
otherwise specified):
Chief Executive Officer
Chief Operating Officer
Chief Financial Officer
Vice President and General Manager, Network Systems
Division
Vice President and General Manager, NDD
Vice President and General Counsel
Vice President, Global Sales and Marketing, Network Systems
Vice President and General Manager, IEX Contact Center Division
Vice President, Corporate Development
Vice President, Human Resources
Vice President, Operations and Quality
In order to be eligible to receive a Quarterly or an Annual Bonus, an Eligible
Officer must be employed by Tekelec or one of its subsidiaries as an Eligible
Officer on the date on which such bonuses are paid, unless such requirement is
waived in writing by the Company's Chief Executive Officer in the case of an
Eligible Officer other than the Chief Executive Officer, or by the Board of
Directors in the case of the Chief Executive Officer. An Eligible Officer who is
on an approved leave of absence from the Company during a calendar quarter will,
for purposes of determining eligibility under the 2002 Bonus Plan, be treated as
being employed by the Company during such leave of absence.
Quarterly Bonuses:
The Company's pro forma operating income before bonus (which excludes the
effects of acquisition-related amortization and other merger-related charges)
calculated on a consolidated basis ("Operating Income before Bonus") for each
calendar quarter will be the financial measure for the Quarterly Bonuses.
EXHIBIT 10.1
The amount of bonus payable as a Quarterly Bonus to an Eligible Officer will be
calculated by multiplying (i) the product of such Eligible Officer's actual
earnings paid in a calendar quarter and the Quarterly Bonus Percentage for such
calendar quarter listed opposite such officer's title in the Bonus Participation
Table below by (ii) the applicable Bonus Factor (as determined in accordance
with the matrix set forth in Schedule A attached hereto). Stated mathematically,
the amount of a Quarterly Bonus equals (AxB)xC, where A = an Eligible Officer's
actual earnings paid in a calendar quarter; B = the applicable Quarterly Bonus
Percentage; and C = the applicable Bonus Factor.
The amount of the Company's quarterly Operating Income before Bonus will
determine the applicable Bonus Factor. As indicated on Schedule A, minimum
quarterly Operating Income before Bonus will result in a Bonus Factor of 25%;
mid-point Operating Income before Bonus will result in a Bonus Factor of 50%;
and maximum quarterly Operating Income before Bonus will result in a maximum
Bonus Factor of 100%. There will be a linear increase in the percentage amount
of the Bonus Factor between (i) the minimum quarterly Operating Income before
Bonus and the mid-point Operating Income before Bonus; and (ii) the mid-point
Operating Income before Bonus and the maximum quarterly Operating Income before
Bonus.
Except as otherwise provided herein, the Quarterly Bonus will be payable in one
lump sum (subject to applicable withholding taxes and other applicable
deductions) within 30 days after the Company's quarterly results are publicly
announced. An Eligible Officer who is on an approved leave of absence from the
Company on the date on which Quarterly Bonuses are paid by the Company and
thereafter returns to active status as an Eligible Officer upon the end of such
leave of absence, will be paid a Quarterly Bonus to which he/she is otherwise
entitled under this 2002 Bonus Plan within 30 days following his/her return to
active status as an Eligible Officer. An Eligible Officer who is on an approved
leave of absence from the Company on the date on which Quarterly Bonuses are
paid by the Company and thereafter fails to return to active status as an
Eligible Officer upon the end of such leave of absence, will forfeit his/her
right to any Quarterly Bonus to which he/she may otherwise be entitled for such
quarter.
Annual Bonuses:
The percentage degree (0% to 100%) to which an Eligible Officer achieves his/her
objectives for 2002 will be the measure for the Annual Bonus. The determination
of the percentage degree to which an Eligible Officer (other than the Chief
Executive Officer) achieves his/her objectives will be made by the Chief
Executive Officer by February 15, 2003. The determination of the percentage
degree to which the Chief Executive Officer achieves his objectives will be made
by the Board of Directors by February 15, 2003.
The amount of a bonus payable as an Annual Bonus to an Eligible Officer will be
calculated by multiplying (i) the product of such officer's actual earnings paid
in 2002 and the Annual Bonus Percentage listed opposite such officer's title in
the Bonus Participation Table below by (ii) the percentage degree to which the
Chief Executive Officer or the Board of Directors, as the case may be,
determines that such Eligible Officer has achieved his/her objectives for 2002.
Except as otherwise provided herein, the Annual Bonus will be payable in one
lump sum (subject to applicable withholding taxes and other applicable
deductions) within 30 days of the Chief Executive Officer's or Board of
Directors' determination, as the case may be, of the percentage degree to which
the Eligible Officer has achieved his/her objectives for 2002. An Eligible
Officer who is on an approved leave of absence from the Company on the date on
which Annual Bonuses are paid by the Company and thereafter returns to active
status as an Eligible Officer upon the end of such leave of absence, will be
paid an Annual Bonus to which he/she is otherwise entitled under this 2002 Bonus
Plan within 30 days following his/her return to active status as an Eligible
Officer. An Eligible Officer who is on an approved leave of absence from the
Company on the date on which Annual Bonuses are paid by the Company and
thereafter fails to return to active status as an Eligible Officer upon the end
of such leave of absence, will forfeit his/her right to any Annual Bonus to
which he/she may otherwise be entitled for 2002.
Bonus Participation Levels:
For purposes of determining an Eligible Officer's Quarterly or Annual Bonus
under the 2002 Bonus Plan, the Quarterly Bonus Percentages (by calendar quarter)
and the Annual Bonus Percentages for the Eligible Officers shall be as follows:
EXHIBIT 10.1
Bonus Participation Table
Annual
Bonus
Title Quarterly Bonus Percentage Percentage
----- ------------------------------- ----------
Q1 Q2 Q3 Q4
---- ---- ---- ----
Chief Executive Officer 40.0% 80.0% 120.0% 160.0% 25%
Chief Operating Officer 32.0 64.0 96.0 128.0 20
Chief Financial Officer 22.4 44.8 67.2 89.6 14
Vice President and General Manager, NSD 22.4 44.8 67.2 89.6 14
Vice President and General Manager, NDD 22.4 44.8 67.2 89.6 14
Vice President and General Counsel 22.4 44.8 67.2 89.6 14
Vice President, Global Sales and Marketing, Network Systems 22.4 44.8 67.2 89.6 14
Vice President and General Manager, IEX Contact Center Division 19.2 38.4 57.6 76.8 12
Vice President, Corporate Development 16.0 32.0 48.0 64.0 10
Vice President, Human Resources 16.0 32.0 48.0 64.0 10
Vice President, Operations and Quality 16.0 32.0 48.0 64.0 10
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Discretionary Bonuses:
Discretionary bonuses may also be paid under the 2002 Bonus Plan but only upon
the express approval of the Board of Directors.
* * * * *
EXHIBIT 10.1
Schedule A
2002 First Quarter Bonus Factor
Minimum Operating Income before Bonus: $ 3,250,000 25%
Mid-Point Operating Income before Bonus: $ 5,100,000 50%
Maximum Operating Income before Bonus: $ 6,700,000 100%
2002 Second Quarter
Minimum Operating Income before Bonus: $ 4,200,000 25%
Mid-Point Operating Income before Bonus: $ 7,900,000 50%
Maximum Operating Income before Bonus: $11,100,000 100%
2002 Third Quarter
Minimum Operating Income before Bonus: $ 7,650,000 25%
Mid-Point Operating Income before Bonus: $13,200,000 50%
Maximum Operating Income before Bonus: $18,000,000 100%
2002 Fourth Quarter
Minimum Operating Income before Bonus: $ 8,900,000 25%
Mid-Point Operating Income before Bonus: $16,300,000 50%
Maximum Operating Income before Bonus: $22,700,000 100%