Exhibit 10.1
Energy Focus, Inc.
Executive Bonus Plan

EXHIBIT 10.1

Objectives of the Executive Bonus Plan:

The Energy Focus, Inc. Executive Bonus Plan (or the “Plan”) is designed to
provide an effective means to motivate and compensate eligible executive
officers, on an annual basis, by providing for an award based on the achievement
of business and individual performance objectives achieved throughout the year
commencing on January 1 and ending on December 31 of each year (“Plan Year”).
This Plan is intended to be the Company’s primary method of granting annual
bonuses to its executive-level “officers”, as defined under Rule 16a-1 of the
Securities Exchange Act (“Officers”). However, the Company may, in certain
circumstances, grant bonuses outside of this Plan, in the sole discretion of the
Board of Directors (“Board”) or the Compensation Committee of the Board (the
“Compensation Committee”).

Bonuses are a “pay for performance” award, in that any payout under the Plan is
subject to the achievement of specific performance goals by the Company and by
the applicable individual Officer during the Plan Year. The Company believes
that such compensation can be a highly effective form of compensation that can
enhance the employer-employee relationship and better align common Company and
individual goals and objectives. Also, by providing a bonus structure, the
Company will create and maintain a culture of performance and reward, which will
in-turn motivate and increase the retention of its key employees, and also
enhance the Company’s enterprise value.

Eligibility and Administration:

All full-time Officers of the Company will be eligible to be considered for
designation by the Board or the Compensation Committee as a participant in the
Plan. All participants must comply with the terms and conditions outlined in the
Plan and with general employment practices and policies of Energy Focus, Inc.

To qualify for a bonus, the participant,

•
must be considered an active employee at the time of the payout of the bonus

•
must have worked for the Company at least ninety (90) days during the Plan Year

The Company’s Chief Financial Officer (CFO) will submit the amounts payable
under the Plan following the terms of the Plan to the Compensation Committee for
approval on an annual basis. The Board or the Compensation Committee may grant
exceptions to the above eligibility criteria at its discretion.

Effective Date:

This Plan is effective as of January 1, 2019 with respect to Plan Years
beginning on such date and thereafter until terminated, amended or superseded by
the Board or the Compensation Committee. This Plan supersedes all plans,
agreements and/or terms previously in effect as related to Officer bonuses.

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Plan Design:

Each participant is assigned a target bonus amount under the Plan, as a
percentage of such participant’s annual base salary in effect as of the end of
the Plan Year. The bonus that may be earned under the Plan is determined based
on two components - Company Performance and Individual Performance.

Company Performance is measured by the criteria established for the applicable
Plan Year recommended by the Compensation Committee and approved by the Board,
which shall consist of a Minimum, Target and Maximum level of achievement that
will correspond to the payout amounts for achieving such levels designated for
each participant.

For purposes of this Plan, the criteria used for Company Performance shall be
any one or more of the following, either individually, alternatively or in any
combination, on a basis consistent with U.S. Generally Accepted Accounting
Principles (“GAAP”) or on a non-GAAP or adjusted GAAP basis, applied to either
the Company as a whole or to a subsidiary, business unit, affiliate or business
segment, either individually, alternatively or in any combination, and measured
either annually or cumulatively over a period of years, on an absolute basis or
relative to a pre-established target, to previous years’ results or to a
designated comparison group, in each case as specified by the Compensation
Committee: (i) net revenue, revenue, sales or cash return on sales; (ii) cash
flow or free cash flow or net cash from operating activities; (iii) earnings
(including gross margin) or adjusted earnings before interest, taxes,
depreciation and amortization, as adjusted to exclude certain non-cash items;
(iv) basic or diluted earnings per share; (v) growth in earnings or earnings per
share; (vi) stock price; (vii) return on equity or average shareholders’ equity;
(viii) total shareholder return; (ix) return on capital; (x) return on assets or
net assets; (xi) return on investments; (xii) net revenue or gross profits;
(xiii) income before or after interest, taxes, depreciation and amortization, or
net income; (xiv) pretax income before allocation of corporate overhead and
bonus; (xv) operating income or net operating income; (xvi) operating profit or
net operating profit (whether before or after taxes); (xvii) operating margin;
(xviii) return on operating net revenue; (xix) working capital or net working
capital; (xx) market share; (xxi) asset velocity index; (xxii) contract awards
or backlog; (xxiii) overhead or other expense or cost reduction; (xxiv) growth
in shareholder value relative to the moving average of the S&P 500 Index or a
peer group index; (xxv) credit rating; (xxvi) strategic plan development and
implementation; (xxvii) improvement in workforce diversity; (xxviii) customer
satisfaction; (xxvix) employee satisfaction; (xxx) management succession plan
development and implementation; (xxxi) employee or customer retention; (xxxii)
loan balances; (xxxiii) fiscal year-end cash balances, and (xxxiv) equity
issuances.

Individual Performance is measured through the Company’s annual Performance
Evaluation process completed for such participant. Additionally, the
accomplishments identified and completed on the Strategic Focus & Priorities
Plan (Key Performance Indicators) for such participant can be taken into account
for Individual Performance.

The Board or the Compensation Committee may, in its sole discretion, adjust
amounts payable to any participant downward or upward to reflect such
considerations as it may in its sole discretion deem to be appropriate.

Subject to the foregoing:

(a) the Minimum payout is achieved when the Company Performance reaches the
Minimum threshold level, the Target payout is achieved when the Company
Performance reaches the Target threshold level

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and the Maximum payout is achieved when the Company reaches or surpasses the
Maximum value, with a linear scale of amounts applicable between such points;
and

(b) in the event that performance with respect to any Company Performance metric
is below the Minimum for such metric, the Plan pays no bonus amount to the
participant for such metric; however, amounts may still be earned with respect
to another metric or Individual Performance if at least the Minimum level for a
metric is achieved.

I. Subject to the terms of the Plan, Bonus Eligibility based on Job
title/category - as a percentage of salary (these percentages are applied
separately to each component of the bonus (as set forth below)):

Title
Minimum
At Target
Maximum
Chief Executive Officer
0%
120%
240%
President and CFO
0%
60%
120%

II. Subject to the terms of the Plan, distribution based on Company Performance
and Individual Performance as a percent of total bonus:

Title
Company Performance
Individual Performance
Chief Executive Officer
70%
30%
President and CFO
70%
30%

III. For the Plan Year beginning on January 1, 2019, Company Performance is
based on two components - Total Revenue (“Revenue”) and Cash Management
comprising of the Company’s operating cash balance, loan balance(s), and any
equity financings done throughout the year (“Cash Management”) as reported in
the Company’s annual form 10-K as filed with the Securities Exchange Commission.
The Compensation Committee shall recommend and the Board shall approve the
values which correspond to the Minimum, Target and Maximum payout levels under
the Plan. Unless otherwise decided by the Board, the Minimum value with respect
to Revenue Company Performance metric shall represent achievement of 80% of the
Target value and the Maximum value shall represent achievement of 120% of the
Target value; and the Minimum value with respect to Cash Management Company
Performance metric shall represent achievement of 88.7% of the Target value and
the Maximum value shall represent achievement of 129% of the Target value. The
Board may, at its sole discretion, approve different Company Performance metrics
for subsequent Plan years.

The portion of a participant’s 2019 bonus based on Company Performance shall be
allocated between each metric as set forth below (in each case, subject to the
applicable payout percentage for achieving the Minimum, Target and Maximum
levels as set forth above):

Title
Revenue
Cash Management
Chief Executive Officer
50%
50%
President and CFO
50%
50%

Calculation Mechanics:

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•
Company Performance metrics shall be calculated by reference to amounts in the
Company’s audited financial statements, to the extent applicable, with such
adjustments thereto as may be approved by the Compensation Committee.

•
Each Company Performance metric is exclusive of each other. For example, for
2019, the Company may reach Revenue at Target and Cash Management at Maximum and
each such component of a bonus will be calculated separately to arrive at total
bonus for the participant.

•
Individual Performance is measured based on the objective and subjective
achievement, as determined by the Compensation Committee, of the Strategic Focus
& Priorities Plan (Key Performance Indicators), if applicable, for such
participant.

•
Bonuses earned for Participants hired during the Plan year will be pro-rated
from the Participant’s hire date through December 31st.

Timing of Bonus Payments:

•
Bonus amounts will be calculated following conclusion of the applicable Plan
Year. The total bonuses for the year and the amount payable to each Officer must
be approved by the Compensation Committee (or the Board) and will be paid by the
end of the full calendar quarter following such approval, and in no event to be
later than March 31st of each calendar year following the fiscal year.

Modifications to Bonus Plan:

•
The Plan can be modified at the discretion of the Compensation Committee or the
Board as it deems necessary or appropriate at any time.

•
The establishment of this Plan, or any provisions within this Plan do not confer
upon any employee the right to continued employment with the Company.

•
The Company hereby reserves the right to seek repayment or recovery of a bonus,
as appropriate, notwithstanding any contrary provision of the Plan, pursuant to
any recovery, recoupment, clawback and/or other forfeiture policy adopted or
maintained by the Company from time to time, and under any applicable law or
regulation or the standards of any stock exchange on which the Company’s shares
are then listed that provide for any such recovery, recoupment, clawback and/or
forfeiture. The Company may also specify with respect to a particular bonus that
the participant’s rights, payments and benefits with respect to such bonus shall
be subject to reduction, cancellation, forfeiture or recoupment upon the
occurrence of certain events, which may include, without limitation, breach of
non-competition, non-solicitation, confidentiality or other restrictive
covenants, a termination of the participant’s employment for cause, or other
conduct by the participant that is detrimental to the business or reputation of
the Company and/or its affiliates.

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