EXHIBIT 10.1

 

 

 

Internet Security Systems, Inc.

[YEAR] ISS Executive

Incentive Plan

 

[Effective Date]

I. PURPOSE

This Executive Incentive Plan (the "Plan") sets forth the Company's policies
governing incentive compensation effective April 1, [YEAR] through March 31,
[YEAR] or until such time as the Plan is amended in writing. Your individual
base salary, quarterly and annual incentive targets are provided on the attached
Individual Compensation Opportunity Statement.

In order to receive incentive compensation payments under this Plan, you must
sign and return a copy of this Plan to the VP, Human Resources. Further, you
must be employed through the end of a performance period to qualify for an
incentive payment for that period (quarterly or annual).

II. OBJECTIVES

The objectives of the Executive Incentive Plan are to reward you for:

 * Executing our plan in accordance with corporate revenue, profitability and
   operational goals
 * Representing ISS' best interests in all business relationships
 * Contributing to the successful development and achievement of ISS' strategic
   goals and objectives, [Insert special programs]
 * Working with other members of the management team in clarifying and
   communicating a winning market and product strategy, and translating this
   strategy into clear market plans
 * Developing a corporate culture based upon performance, integrity, compassion
   and ISS core values

III. RESPONSIBILITIES

Your responsibilities in keeping with the objectives stated above are to:

 * Represent yourself and ISS at all times in the most ethical and professional
   manner
 * Lead your individual unit with integrity and in accordance with ISS core
   values
 * Take full responsibility to execute company plans and meet performance
   objectives established in accordance with our strategic imperatives
 * Meet or exceed performance targets as set forth in this Plan
 * Manage expenses wisely, prudently, and in accordance with the company's
   expense policies
 * Ensure that your behavior and leadership continually perpetuate the GO ISS!
   culture

IV. INCENTIVE COMPENSATION PLAN

Your variable compensation opportunity will be made up of quarterly and annual
incentive opportunities as outlined on your Individual Compensation Opportunity
Statement.

V. PAYMENTS

Incentive Payments will be made quarterly within 30 days from ISS announced
earnings and performance. All payments will be made for achievement against the
[YEARS] ISS measures and approved by the Compensation Committee of the Board of
Directors.

VI. QUARTERLY INCENTIVE PLAN MEASURES

The quarterly incentive plan measures for Corporate Executives are:

 * ISS consolidated quarterly revenue
 * Quarterly earnings per share (non-GAAP, as adjusted)
 * Days Sales Outstanding at end of quarter

The quarterly incentive plan measures for Theatre Heads are:

 * Theatre product quarterly revenue
 * Theatre total quarterly revenue
 * Theatre quarterly contribution margin
 * Theatre Days Sales Outstanding at end of quarter

The relative weighting among the incentive plan measures is provided in the
Individual Compensation Opportunity Statement furnished to you.

VII. ANNUAL INCENTIVE MEASURES

The annual incentive plan measures for Corporate Executives are:

 * ISS consolidated annual revenue
 * Annual earnings per share (non-GAAP, as adjusted)

The annual incentive plan measures for Theatre Heads are:

 * Theatre total annual revenue
 * Theatre annual contribution margin

The relative weighting among the quarterly and annual incentive plan measures is
provided on your Individual Compensation Opportunity Statement.

VIII. ANNUAL PRODUCT LINE PERFORMANCE (PLP) BONUS FOR THEATRE HEADS

In [YEAR], if the Company reports an EPS of at least [TARGET], Theatre Heads are
also eligible for an annual Product Line Performance (PLP) opportunity based on
the attainment of selected Product Line or Service (PLS) revenue achievements.
Payments under the PLP opportunity are not prorated for an achievement of less
than an EPS of [TARGET]. The incentive opportunity is stated in the Individual
Compensation Opportunity Statement furnished to you.

IX. PLP PLAN MEASUREMENTS:

The annual Product Line Performance Bonus will be determined by the Product
Line/Service (PL/S) revenue schedule. The incentive opportunity for each PL/S is
independent from each other in that participants could earn a payout under one,
all, or any combination, based on each revenue achievement. Payments under a
PL/S opportunity are not prorated for partial achievement of a PL/S revenue
target.

Results against PL/S revenue measures will be determined by the Chief Executive
Officer and the Chief Financial Officer and may incorporate any adjustments
deemed appropriate to correctly reflect the PL/S revenue results. Final approval
of payouts will be made by the Compensation Committee of the Board of Directors.

The annual Product Line Performance opportunity will be based on the following
schedule:

Product Line or Service (PL/S)

2006 Revenue Target

X. GENERAL PROVISIONS

Modification of the Plan

ISS reserves the right to modify this Plan as deemed necessary by the
Compensation Committee of the Board of Directors.

Final Authority on Disputes

Final authority for issues not specifically addressed in this Plan, and for all
matters of administration of the Plan shall be decided by the Compensation
Committee of the Board of Directors.

Right to Terminate

Nothing in this Plan shall be construed to imply a contract of employment
between ISS and you. ISS reserves the right to terminate your employment or
participation in this Plan at any time with or without cause. Should you
terminate employment, either voluntarily or involuntarily, then all incentive
payments/commissions under this Plan not yet earned, as defined in the Plan,
shall be forfeited.

Governing Law

This Plan shall be governed by and construed in accordance with the laws of the
[State of Georgia or local jurisdiction].

IX. FORM OF -

[YEAR] INDIVIDUAL COMPENSATION OPPORTUNITY STATEMENT

Participant:

Title:

    Quarterly and Annual Metrics for Corporate Executives and Theatre Heads.
 1. The total incentive opportunity will be split between quarterly and annual
    components as follows:

    

    Participant
    
    Quarterly
    
    Annual
    
    Corporate Executives
    
       
    
    Theatre Heads
    
       

    

    
 2. The quarterly incentive plan measures for Corporate Executives are allocated
    among the following performance metrics:
    

    Measure
    
    Description
    
    Weight
    
    Quarterly Revenue
    
    ISS Revenue
    
     
    
    Profitability
    
    Earnings Per Share
    
     
    
    DSO
    
    Days Sales Outstanding
    
     

    The quarterly incentive plan measures for Theatre Heads are allocated among
    the following performance metrics:

    

    Measure
    
    Description
    
    Weight
    
    Theatre Product Revenue
    
    Total quarterly revenues from software licenses and products
    
     
    
    Theatre Total Revenue
    
    Total quarterly revenues from products, subscriptions and services
    
    
    
    Contribution Margin
    
    Measured as the percentage of (theatre operating revenues minus theatre
    operating expenses) to theatre operating revenues
    
     
    
    Theatre DSO
    
    Days Sales Outstanding
    
     

    

    The annual incentive plan measures for Corporate Executives are allocated
    among the following performance metrics:

    Measure
    
    Description
    
    Weight
    
    Annual Revenue
    
    ISS Revenue
    
     
    
    Annual Profitability
    
    Earnings per Share
    
     

    
 3. The annual incentive plan measures for Theatre Heads are allocated among the
    following performance metrics:
    

    Measure
    
    Description
    
    Weight
    
    Annual Revenue
    
    Theatre Revenue
    
     
    
    Annual Profitability
    
    Contribution Margin
    
     

    The annual Product Line or Service incentive plan measures for Theatre Heads
    are allocated among the following performance metrics:
    
    

    Product Line or Service (PL/S)
    
    [YEAR]
    
    Revenue Target
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    

    Incentive weights and [YEAR] annual targets for the metrics were approved by
    the Compensation Committee. Specific quarterly targets, any changes to the
    annual targets, and calculations for payment of quarterly and annual
    incentive compensation are subject to approval of the Compensation Committee
    of the Board of Directors. Its decisions are final.

 

Your Individual Compensation.

Participant:

Title:

Annual Base Salary As of April 1, [YEAR]:

     

Quarterly Incentive Opportunity for [YEAR]:

 

Q2

Q3

 

Q4

 

Q1

[YEAR] Total Quarterly Opportunity

 

   

 

[YEAR] Annual Incentive Plan Opportunity

 

   

 

[YEAR] Total Cash Compensation Opportunity

 

   

 

[Product Line Performance Bonus Opportunity]

     

[Additional Bonus Opportunity (Contingent upon achieving stated ISS [YEAR]
Consolidated Revenues)]

     

Long-Term Incentives:

 * [Stock Options]
 * [Restricted Stock]

 

 

 

 

 

   

 

 

In order to receive incentive compensation payments under this Plan, you must
sign and return the original to the VP Human Resources. Please retain a copy for
your records.

ACCEPTED:

Participant's Name:

Signature:

Date: