EXHIBIT 10.1

NATIONAL INSTRUMENTS CORPORATION

ANNUAL INCENTIVE PROGRAM

SECTION 1

DURATION AND PURPOSE

   1.1   Effective Date.

        The Program is an annual incentive program which will be paid out
annually following the end of the calendar year.

   1.2   Purpose.

        The Program is intended to increase shareholder value and the success of
National Instruments Corporation (the “Company”) by providing incentive and
reward for accomplishment of certain objectives for key executives. Its purpose
is to connect officer’s compensation to accomplishment of goals critical to the
Company’s performance in a calendar year.

SECTION 2

ELIGIBILITY, SELECTION AND PROCEDURE

   2.1 Eligibility. 

        Officers, Business and Technology Fellows, and Research and Development
Fellows, (whether employed at the time of or subsequent to the adoption of the
Program) are eligible for participation in the Program, with the exception of
the President who does not participate. Eligibility does not guarantee
participation and the Company may exclude eligible officers and fellows from
participation in this Program.

   2.2   Selection of Participants.

        From time to time, the President may designate eligible employees for
participation in the Program; subject to the approval by the Compensation
Committee of the Company (the Committee), in its sole discretion. Designees
approved by the Committee (Participants) will normally be added to the Program
at the start of the Company’s fiscal year.

   2.3   Bonus Procedure.

        For each calendar year, the President and the Board will approve
objectives for each eligible Participant to meet for that year. The President
and Committee will also identify a monetary amount to be awarded to Participant
corresponding to the achievement of each of Participant’s objectives for the
year. At the end of the calendar year, the President and Committee will meet to
determine whether the objectives of each individual Participant were met and
thereafter will approve or disapprove the payment of the annual incentive
amounts based upon the achievement of such objectives and the discretion of the
President and the Committee. It is acknowledged that the President and the
Committee, acting together, shall have the discretion to pay all or a portion of
a monetary amount to a Participant even if such Participant has not met a
particular objective if the President and the Committee believe that such a
payment is appropriate to achieve the objectives of the Program.

   2.4   Bonus Maximum.

        Incentive bonuses under this Program are defined as a percentage
(maximum 30 percent for Senior Vice Presidents; maximum 20 percent for Vice
Presidents, Business and Technology Fellows, and Research and Development
Fellows) of a Participant’s salary (or, in the case of the Senior Vice President
of Sales, salary plus targeted commission) on the effective date of the
Participant’s participation in the Program (“Base Salary”), based upon
attainment of objectives approved by the President and the Board.

SECTION 3

PAYMENT OF BONUS

   3.1   Timing of Payment.

        Payment of any incentive bonus under this Program shall be made as soon
as administratively practicable following the end of the calendar year once the
Company books have been closed and audited.

   3.2   Employment Required for Payment.

        Only Participants actively employed by the Company as an employee on the
day of the bonus payout are eligible to receive any incentive bonus under this
Program.

   3.3   Inclusion in other Compensation Programs.

        As determined by the Committee, in consultation with the President,
incentive bonus payouts under this Program are special incentive compensation
that may be taken into account as salary, compensation, or bonus in determining
the amount of any payment under any pension, retirement, or other employee
benefit or life insurance plan of the Corporation or any subsidiary. Thus, by
way of example only, incentive bonus payouts may be eligible for such plans as
401(k) deferral or match, but may not be eligible for ESPP and Company
performance bonus plans. Any determination by the Committee as to such matters
shall take into account the terms of the other applicable plans (i.e., the terms
of the 401 (k) plan, etc.)

   3.4   Right to Receive Payment.

        Any incentive bonus that may become payable under this Program is to be
paid solely from the general assets of the Company, as determined by the
Committee. Nothing in this Program shall be construed to create a trust or to
establish or evidence any Participant’s claim of any right to payment of an
Actual Award other than as an unsecured general creditor with respect to any
payment to which he or she may be entitled.

SECTION 4

ADMINISTRATION AND TERMINATION

   4.1   Committee Authority. 

        The Committee, in consultation with the President, shall administer the
Program in accordance with the Program’s provisions. The Committee shall have
all powers and discretion necessary or appropriate to administer the Plan and to
control its operation, including, but not limited to, the power to (a) determine
which employees shall be granted incentive bonuses, (b) prescribe the terms and
conditions of incentive bonuses, (c) interpret and amend the Program, (d) adopt
such procedures and subplans as are necessary or appropriate to permit
participation in the Program by employees who are foreign nationals or employed
outside of the United States, (e) adopt rules for the administration,
interpretation and application of the Program as are consistent therewith, and
(f) interpret, amend or revoke any such rules. Neither the members of the
Committee nor the President shall be liable for any act, omission or
determination taken or made in good faith with respect to the Program or any
incentive bonus granted under it.

   4.2   Decisions Binding.

        All determinations and decisions made by the Committee related to this
Program shall be final, conclusive, and binding on all persons, and shall be
given the maximum deference permitted by law.

SECTION 5

GENERAL PROVISIONS

   5.1   No Effect on Employment.

        Participation in this Program shall not alter any Participant’s status
as an at-will employee of the Company.

   5.2   Successors. 

        All obligations of the Company under the Program, with respect to
incentive bonus payouts, shall be binding on any successor to the Company.

   5.3   Nontransferability of Bonus. 

        No incentive bonus to be awarded under the Program may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution.

   5.4   Severability.

        In the event any provision of the Program shall be held illegal or
invalid for any reason, the illegality or invalidity shall not affect the
remaining parts of the Program, and the Program shall be construed and enforced
as if the illegal or invalid provision had not been included.

   5.5   Governing Law and Entire Terms.

        The Program and any incentive bonuses shall be construed in accordance
with and governed by the laws of the State of Texas, but without regard to its
conflict of law provisions. Further, the Program (as may be amended by the
Committee in writing) constitutes the entire understanding with respect to any
incentive bonus and shall supersede any prior or subsequent oral
representations.