Exhibit 10.1
(EMULEX LOGO) [a43684a4368400.gif]
EMULEX CORPORATION
EXECUTIVE BONUS PLAN
Plan Purpose
To focus members of the management team on the achievement of specific Company
and individual accomplishments that contribute to the creation of shareholder
value.
To assist in attracting and retaining top quality management.
General Plan Description
This Executive Bonus Plan (“Plan”) provides for a quarterly cash award based
upon Company performance against net revenue and net operating income plan goals
and specified business goals. In addition, a discretionary bonus for recognition
of extraordinary contributions to the success of the company may be recommended.
All bonus recommendations are subject to the approval of the Compensation
Committee.
Eligibility
Corporate officers, executive officers, operating officers, senior vice
presidents, vice presidents, and senior directors, excluding those eligible for
sales commission (unless otherwise indicated within this Plan), are eligible for
selection to participate in this Plan. A participant must be an active regular
full-time employee throughout the quarter for which the bonus is paid, and no
proration will be made of any payment for employment during portions of a
quarter. Participants whose employment is terminated for “cause” (as defined
below) are not eligible for any bonus payments even if the termination occurs
following the end of a quarter for which a bonus otherwise would be paid.
Participation and Term
Actual Executive Bonus Plan participants will normally be selected from among
those eligible annually, prior to the start of each fiscal year, by the Chief
Executive Officer and approved by the Compensation Committee. The Plan is based
on a fiscal year and may be modified, extended, or canceled annually at the
discretion of the Compensation Committee.

 

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Target Bonus Opportunity
Each eligible participant will be assigned a Target Award Opportunity expressed
as a percentage of their actual gross quarterly base salary in effect at the end
of the respective quarter. The Target Award Opportunity for:
[Category 1] is 90%
[Category 2] is 70%
[Category 3] is 60%
[Category 4] is 50%
[Category 5] is 45%
[Category 6] is 35%
[Category 7] is 10%
Bonus Award Criteria
Bonus award criteria will be based upon achieving a combination of corporate
performance goals.
The weighting factors are:

                      Category 1, 2, 4, 5, 6, 7, and 8   Category 3
Net revenue
    45 %     50 %
Net operating income
    55 %     50 %

The actual goals for measurement purposes will be the Company’s fiscal Annual
Operating Plan (AOP) as approved by the Board of Directors. Corporate bonus
components will be calculated according to the following procedure:

1.   The Target Award Opportunity times the participant’s quarterly gross base
salary equals the Target Award.

         
 
  Example :   35% x $25,000 (quarterly salary) = $8,750 Target Award

2.   The weighting factors for net revenue, net operating income, and subjective
as stated above times the Target Award give the bonus target for each weighting
factor.

         
 
  Example :   45% x $8,750 = $3,938.00 (net revenue target)
 
      55% x $8,750 = $4,812.00 (net operating income target)

 

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3.   An accelerator formula of 1.5 x % of performance less 50% will be used for
each part of the quantitative bonus award calculation to reinforce
over-achievement opportunity as well as to minimize any bonus payments for
performance below fiscal AOP planned levels.

     Using the Example if the first quarter performance is 105% of net revenue
and 110% of net income:

     
 
  (105% x 1.50) less 50% = 157.5% — 50% = 107.5% of net revenue target:
 
  107.5% x $3,938.00 = $4,233.35 net revenue bonus component
 
   
 
  (110% x 1.50) less 50% = 165% — 50% = 115% of net operating income target:
 
  115% x $4,812.00 = $5,533.80 net operating income bonus component
 
   
 
                 total first quarter bonus components = $9,767.15.

Using the Example if the second quarter performance is 90% of net revenue and
80% of net
operating income:

     
 
  (90% x 1.50) less 50% = 135% — 50% = 85% of net revenue target:
 
  85% x $3,938.00= $3,347.30 net revenue bonus component
 
   
 
  (80% x 1.50) less 50% = 120% — 50% = 70% of net operating income target:
 
  70% x $4,812.00 = $3,368.40 net operating income bonus component
 
   
 
                 total second quarter bonus components = $6,715.70

4.   Net revenue and net operating income will be treated as separate components
independent of one another regardless of the award formula, and will be added to
compute the cash award. However, a minimum threshold of 80% of the Board of
Directors’ approved AOP for net revenue must be achieved for a net revenue bonus
component to be included in the cash award. Likewise, a minimum threshold of 80%
of the Board of Directors’ approved AOP for net operating income must be
achieved for a net operating income component to be included in the cash award.
No cash award of any kind shall be made if net operating income falls below 50%
of the AOP approved plan.

5.   In addition to the components based on net revenue and net operating
income, a participant’s cash award may be adjusted by a Performance Contribution
Factor (PCF) which represents the level of the employee’s contribution to the
company’s results for the quarter, and the payment made to the participant shall
be the cash award multiplied by the PCF. The PCF will be determined by the
Company, and can range from 0.9 to 1.1, and a PCF other than 1.0 should be
applied on an exception basis. The PCF for a participant will be based on the
objectives set for that participant at the beginning of the quarter, and the
participant’s progress against those objectives as discussed with his or her
manager. If a participant receives a PCF of 0.9, he or she should also be on a
performance improvement plan.

 

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Discretionary Bonuses
Occasionally, an individual makes an extraordinary contribution to the success
of the company, a contribution that deserves special recognition and financial
reward. It is the intention of this “Discretionary Bonus” provision to provide
the CEO with the latitude to recommend unusual bonus payments to be made to such
contributors when they occur. Such bonus recommendations are not subject to the
guidelines of the Plan described above, but are subject to the review and prior
approval of the Compensation Committee.
Payment of Awards
Any proposed awards by the CEO must be reviewed and approved by the Compensation
Committee.
Awards will be paid approximately 30 days following the end of each quarter. All
legally required deductions will be withheld.
Plan Administration
The Plan will be administered under the direction of the CEO of Emulex
Corporation upon approval by the Emulex Compensation Committee. The
administrator’s authority will include, but not be limited to:
Final approval of Plan participants, corporate performance goals, award
opportunity and award payment.
Interpretation of all rules pertaining to the Plan.
Changes to the Plan or termination of the Plan, provided such changes or
termination do not adversely affect the award opportunity or difficulty of
earning awards following the beginning of the fiscal year.
Treatment of special events in calculating performance versus plan, such as a
major acquisition or changes in accounting regulations.
Plan Term
This Plan will become effective on the first day of the fiscal year and end on
the last day of the fiscal year.

 

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Foreign Currency Considerations
All Plan participants whose gross base salary is not denominated in U.S. dollars
will be paid in the same currency as their gross base salary. All bonus
calculations will be made using the equivalent base salary in US currency as
indicated in the most recent payroll information.
Definitions
Active Regular Full-time Employee: An employee working 40 hours per week.
Gross Base Salary: An employee’s base salary, and does not include payments for
overtime, bonus payments of any type, or other income such as relocation
allowances, employee referral payments, etc.
Net Revenue: Net revenue as presented in the Company’s consolidated financial
statements.
Net Operating Income: Operating income as presented in the Company’s
consolidated financial statements, excluding amortization, impairment of
intangibles, bonus payments, profit sharing payments, retirement savings plan
payments, share based compensation, severance payments, and worker’s
compensation payments.
Termination for Cause: Termination of employment as a result of violation of one
or more written or unwritten Company policies, procedures, principles or rules
regarding employee conduct and behavior. If an employee is terminated for cause
prior to payment of a quarterly bonus, the employee will not be eligible for the
payment. Nothing in this Plan shall alter the at-will employment relationship
between the Company and its employees. Either the Company or the employee may
terminate the employment relationship at any time, for any reason or no reason,
with or without any cause.
Approved by Compensation Committee:

             
 
Bruce C. Edwards
     
 
Date    
 
           
 
           
Don M. Lyle
      Date    
 
           
Approved by CEO:
           
 
           
 
           
James McCluney
      Date