Exhibit 10.3
MCAFEE, INC. EXECUTIVE BONUS PLAN
Adopted by the Board of Directors January 29, 2008
Approved by Stockholders July 28, 2008
Effective January 29, 2008

1.   Purpose. The purpose of this Plan is to provide certain employees of the
Company and its subsidiaries with incentive compensation based upon the level of
achievement of financial, business and other performance criteria. This Plan is
intended to permit the payment of bonuses that may qualify as performance-based
compensation under Code Section 162(m).

2.   Definitions.

  (a)   “Affiliate” means any corporation or other entity (including, but not
limited to, partnerships and joint ventures) controlled by the Company.     (b)
  “Award Setting Deadline” means, for a Performance Period, (i) the earlier of:
(a) ninety (90) days after commencement of the Performance Period or (b) the
expiration of twenty-five percent (25%) of the Performance Period, provided that
the achievement of targeted goals under the selected Performance Measures for
the Performance Period is substantially uncertain at such time; or (ii) such
other date on which a performance goal is considered to be pre-established
pursuant to Code Section 162(m).     (c)   “Board” means the Board of Directors
of the Company.     (d)   “Bonus” means a cash payment made pursuant to this
Plan with respect to a particular Performance Period, determined pursuant to
Section 8 below; provided, however, a Bonus shall not be greater than an amount
equal to two hundred percent (200%) of the Bonus Target.     (e)   “Bonus
Target” shall mean a Bonus amount that may be paid if one hundred percent (100%)
of all the applicable Performance Measures are achieved at target in the
Performance Period. The Bonus Target shall be equal to a fixed percentage of the
Participant’s base salary for such Performance Period, and such fixed percentage
shall not exceed one hundred and fifty percent (150%) of a Participant’s base
pay. Such percentage shall be determined by the Committee prior to the Award
Setting Deadline.     (f)   “Bonus Formula” means as to any Performance Period,
the formula established by the Committee pursuant to Section 6 in order to
determine the Bonus amounts, if any, to be paid to Participants based upon the
level of achievement of targeted goals for the selected Performance Measures.
The formula may differ from Participant to Participant or business group to
business group. The Bonus Formula shall be of such a nature that an objective
third party having knowledge

 

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      of all the relevant facts could determine whether targeted goals for the
Performance Measures have been achieved.     (g)   “Code” means the United
States Internal Revenue Code of 1986, as amended.     (h)   “Company” means
McAfee, Inc., a Delaware corporation.     (i)   “Committee” means the Committee
as described in Section 5 that has been designated to administer programs
intended to qualify as “performance-based compensation” within the meaning of
Section 162(m).     (j)   “Fiscal Year” means the calendar year.     (k)  
“Participant” means any senior executive of the Company or of an Affiliate who
has been selected by the Committee to participate in the Plan for a given
Performance Period.     (l)   “Performance-Based Compensation” means
compensation that qualifies as “performance-based compensation” within the
meaning of Code Section 162(m).     (m)   “Performance Measure” means any one or
more of the following performance criteria, either individually, alternatively
or in any combination, applied to either the Company as a whole or to a business
unit, Affiliate, region, or business segment, either individually, alternatively
or in any combination, and measured either on an absolute basis or relative to a
pre-established target, a previous period’s results or a designated comparison
group, in each case as specified by the Committee:

  i.   cash flow (including operating cash flows or free cash flow),     ii.  
revenue (on an absolute basis or adjusted for currency effects),     iii.  
gross margin,     iv.   operating expenses or operating expenses as a percentage
of revenue,     v.   earnings (which may include: earnings before interest and
taxes; earnings before taxes; net earnings; earnings before interest,
depreciation and amortization (“EBITDA”); earnings before interest,
depreciation, amortization and equity compensation; and may be determined in
accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) or
adjusted to exclude any or all non-GAAP items),     vi.   earnings per share (on
a GAAP or non-GAAP basis),     vii.   growth in any of the foregoing measures,  
  viii.   stock price,     ix.   return on equity or average stockholders’
equity,     x.   total stockholder return,

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  xi.   growth in stockholder value relative to the moving average of the
Standard & Poor’s 500 Index or another index,     xii.   return on capital,    
xiii.   return on assets or net assets,     xiv.   return on investment,     xv.
  economic value added,     xvi.   operating income,     xvii.   operating
profit, controllable operating profit, or net operating profit,     xviii.   net
profit,     xix.   net income,     xx.   operating margin,     xxi.   cash
conversion cycle,     xxii.   market share,     xxiii.   contract awards or
backlog,     xxiv.   overhead or other expense reduction,     xxv.   bookings,  
  xxvi.   performance against budget,     xxvii.   credit rating,     xxviii.  
strategic plan development and implementation,     xxix.   succession plan
development and implementation,     xxx.   improvement in workforce diversity,
customer indicators and metrics,     xxxi.   customer renewals,     xxxii.  
customer satisfaction surveys,     xxxiii.   customer response time,     xxxiv.
  resolution of customer complaints,     xxxv.   human resource metrics,    
xxxvi.   employee attrition,     xxxvii.   new product invention or innovation,
    xxxviii.   attainment of research and development milestones,     xxxix.  
improvements in productivity, and     xl.   attainment of objective operating
goals.

  (n)   “Performance Period” means any Fiscal Year or such other period as
determined by the Committee.

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  (o)   “Plan” means this McAfee, Inc. Executive Bonus Plan.

3.   Eligibility. The Committee, in its sole discretion, shall select the
employees of the Company who shall be Participants for any Performance Period.
Participation in the Plan is in the sole discretion of the Committee, and on a
Performance Period by Performance Period basis. Accordingly, an employee who is
a Participant for a given Performance Period in no way is guaranteed or assured
of being selected for participation in any subsequent Performance Period.   4.  
Plan Administration.

  (a)   Committee is the Administrator. The Plan shall be administered by the
Committee. The Committee shall consist of not less than two (2) members of the
Board. The members of the Committee shall be appointed from time to time by, and
serve at the pleasure of, the Board. Each member of the Committee shall qualify
as an “outside director” under Code Section 162(m). If it is later determined
that one or more members of the Committee do not so qualify, actions taken by
the Committee prior to such determination shall be valid despite such failure to
qualify. The initial Committee shall be the Compensation Committee of the Board.
    (b)   Committee Authority. It shall be the duty of the Committee to
administer the Plan in accordance with the Plan’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

  i.   determine which Employees shall be granted awards,     ii.   prescribe
the terms and conditions of awards,     iii.   interpret the Plan and the
awards,     iv.   adopt such procedures and subplans as are necessary or
appropriate to permit participation in the Plan by employees who are foreign
nationals or employed outside of the United States,     v.   adopt rules for the
administration, interpretation and application of the Plan as are consistent
therewith, and     vi.   interpret, amend or revoke any such rules.

  (c)   Decisions Binding. All determinations and decisions made by the
Committee, the Board, and any delegate of the Committee pursuant to the
provisions of the Plan shall be final, conclusive and binding on all persons,
and shall be given the maximum deference permitted by law.     (d)   Delegation
by the Committee. The Committee, in its sole discretion and on such terms and
conditions as it may provide, may delegate all or part of its authority

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      and powers under the Plan to one or more directors and/or officers of the
Company; provided, however, that the Committee may delegate its authority and
powers only with respect to awards that are not intended to qualify as
Performance-Based Compensation.

5.   Term. This Plan shall be effective as first stated above. Notwithstanding
the foregoing, this Plan shall terminate unless it is approved at the next
Company annual stockholders meeting following the date that the Board adopts
this Plan. Once approved by the Company’s stockholders, this Plan shall continue
until the earlier of (i) a termination under Section 9 of this Plan, (ii) the
date any stockholder approval requirement under Code Section 162(m) ceases to be
met or (iii) the date that is five years after the stockholder meeting in the
2008 Fiscal Year.   6.   Bonuses. Prior to the Award Setting Deadline for a
Performance Period, the Committee shall designate or approve in writing (which
could be in minutes of the Committee), the following:

  (a)   Performance Period;     (b)   Employees who will be Participants for the
Performance Period;     (c)   Targeted goals for selected Performance Measures
during the Performance Period;     (d)   Bonus Target for each Participant or
group of Participants; and     (e)   Applicable Bonus Formula for each
Participant, which may be for an individual Participant or a group of
Participants.

In no event shall the Committee provide or any participant receive a payment
pursuant to the Plan that exceeds $5 million for any calendar year.

7.   Determination of Amount of Bonus.

  (a)   Calculation. After the end of each Performance Period, the Committee
shall certify in writing (to the extent required under Code Section 162(m)) the
extent to which the targeted goals for the Performance Measures applicable to
each Participant for the Performance Period were achieved or exceeded. The Bonus
for each Participant shall be determined by applying the Bonus Formula to the
level of actual performance that has been certified by the Committee.
Notwithstanding any contrary provision of this Plan, the Committee, in its sole
discretion, may eliminate or reduce the Bonus payable to any Participant below
that which otherwise would be payable under the Bonus Formula.

The Committee may appropriately adjust any evaluation of performance under a
Performance Measure to exclude any of the following events that occurs during a
Performance Period:

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  i.   the effects of currency fluctuations;     ii.   any or all items that are
excluded from the calculation of non-GAAP earnings as reflected in any Company
press release or Form 8-K filing relating to an earnings announcement;     iii.
  asset write-downs;     iv.   litigation or claim judgments or settlements;    
v.   the effect of changes in tax law, accounting principles or other such laws
or provisions affecting reported results;     vi.   accruals for reorganization
and restructuring programs; and     vii.   any other extraordinary or
non-operational items.

  (b)   Right to Receive Payment. Each cash portion of a Bonus under this Plan
shall be paid solely from general assets of the Company and its Affiliates. This
Plan is unfunded and unsecured; nothing in this Plan shall be construed to
create a trust or to establish or evidence any Participant’s claim of any right
to, or form of, payment of a Bonus other than as an unsecured general creditor
with respect to any payment to which he or she may be entitled. Except as may
otherwise be provided for in Section 8 below, in the event a Participant
terminates employment with the Company (or any Affiliate) prior to the end of a
Performance Period he or she shall not be entitled to the payment of a Bonus for
the applicable Performance Period.

8.   Payment of Bonuses.

  (a)   Timing of Distributions. The Company and its Affiliates shall distribute
amounts payable to Participants as soon as is administratively practicable
following the determination and written certification of the Committee for a
Performance Period, but in no event later than two and one-half months after the
end of the Fiscal Year in which the Committee determine the Amount of the Bonus.
    (b)   Payment. The payment of a Bonus, if any (as determined by the
Committee at the end of the Performance Period), with respect to a specific
Performance Period requires that the employee be an active employee on the
Company’s or an Affiliate’s payroll on the date that such Bonus is paid, subject
to subsection (d), below. Additionally, the Committee may make exceptions to the
foregoing active employment requirement in the case of retirement, death or
disability, or in the case of a corporate change in control, in each case as
determined by the Committee.     (c)   Manner. The Bonus shall be payable in
cash in a single lump sum.

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  (d)   Change in Status. A Participant who has a change in status that results
in being ineligible to participate in this Plan in a Performance Period may
receive a prorated Bonus, if any (as determined by the Committee at the end of
the Performance Period, in its sole discretion), under this Plan; the method in
which a Bonus is prorated shall be determined by the Committee in its sole
discretion and no Participant shall have any right to a prorated Bonus.     (e)
  Code Section 409A. It is the intent that this Plan comply with the
requirements of Code Section 409A so that none of the payments to be provided
hereunder will be subject to the additional tax imposed under Code Section 409A,
and any ambiguities herein will be interpreted to so comply.

9.   Amendment and Termination.

  (a)   The Committee may amend, modify, suspend or terminate this Plan, in
whole or in part, at any time, including the adoption of amendments deemed
necessary or desirable to correct any defect or to supply omitted data or to
reconcile any inconsistency in this Plan or in any Bonus granted hereunder;
provided, however, that no amendment, alteration, suspension or discontinuation
shall be made which would (i) increase the amount of compensation payable
pursuant to such Bonus, or (ii) cause compensation that is, or may become,
payable hereunder to fail to qualify as Performance-Based Compensation.
Notwithstanding the foregoing, the Committee may amend, modify, suspend or
terminate this Plan if any such action is required by law. To the extent deemed
necessary and appropriate by the Committee, Plan amendments shall be subject to
stockholder approval. At no time before the actual distribution of funds to
Participants under this Plan shall any Participant accrue any vested interest or
right whatsoever under this Plan except as otherwise stated in this Plan.    
(b)   In the case of Participants employed outside the United States, the
Company or its Affiliate may vary the provisions of this Plan as deemed
appropriate to conform with, as required by, or made desirable by, local laws,
practices and procedures.

10.   General.

  (a)   Withholding. Distributions pursuant to this Plan shall be subject to all
applicable taxes and contributions required by law to be withheld in accordance
with procedures established by the Company.     (b)   Beneficiary Designations.
If permitted by the Committee, a Participant under the Plan may name a
beneficiary or beneficiaries to whom any vested but unpaid award shall be paid
in the event of the Participant’s death. Each such designation shall revoke all
prior designations by the Participant and shall be effective only if given in a
form and manner acceptable to the Committee. In the absence of any such
designation, any vested benefits remaining unpaid at the Participant’s death
shall be paid to the Participant’s estate.

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  (c)   Nontransferability of Awards. No award granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will, by the laws of descent and distribution, or to the limited
extent provided in the prior subsection. All rights with respect to an award
granted to a Participant shall be available during his or her lifetime only to
the Participant.     (d)   No Additional Participant Rights. The selection of an
individual for participation in this Plan shall not give such Participant any
right to be retained in the employ of the Company or any of its Affiliates, and
the right of the Company and any such Affiliate to dismiss such Participant or
to terminate any arrangement pursuant to which any such Participant provides
services to the Company, with or without cause, is specifically reserved. No
person shall have claim to a Bonus under this Plan, except as otherwise provided
for herein, or to continued participation under this Plan. There is no
obligation for uniformity of treatment of Participants under this Plan. The
benefits provided for Participants under this Plan shall be in addition to and
shall in no way preclude other forms of compensation to or in respect of such
Participants.     (e)   Successors. All obligations of the Company or its
Affiliates under this Plan, with respect to awards granted hereunder, shall be
binding on any successor to the Company, whether the existence of such successor
is the result of a direct or indirect purchase, merger, consolidation, or
otherwise, of all or substantially all of the business or assets of the Company.
    (f)   Indemnification. Each person who is or shall have been a member of the
Committee, or of the Board, shall be indemnified and held harmless by the
Company against and from (i) any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action taken or
failure to act under the Plan or any award, and (ii) from any and all amounts
paid by him or her in settlement thereof, with the Company’s approval, or paid
by him or her in satisfaction of any judgment in any such claim, action, suit or
proceeding against him or her, provided he or she shall give the Company an
opportunity, at its own expense, to handle and defend the same before he or she
undertakes to handle and defend it on his or her own behalf. The foregoing right
of indemnification shall not be exclusive of any other rights of indemnification
to which such persons may be entitled under the Company’s Certificate of
Incorporation or Bylaws, by contract, as a matter of law, or otherwise, or under
any power that the Company may have to indemnify them or hold them harmless.    
(g)   Legal Construction.

  i.   Gender and Number. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.

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  ii.   Severability. In the event any provision of the Plan shall be prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective only to the extent of such prohibition or unenforceability without
invalidating or affecting the remaining provisions hereof in such jurisdiction,
and any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
Furthermore, if any provision of this Plan would cause Bonuses not to constitute
Performance-Based Compensation, that provision shall be severed from, and shall
be deemed not to be a part of, the Plan, but the other provisions hereof shall
remain in full force and effect.     iii.   Requirements of Law. The granting of
awards under the Plan shall be subject to all applicable laws, rules and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.     iv.   Governing Law. The validity,
interpretation, construction and performance of the Plan and awards under it
shall be governed by the laws of the State of California. The Superior Court of
Santa Clara County and/or the United States District Court for the Northern
District of California shall have exclusive jurisdiction and venue over all
controversies in connection with this Plan. Any provision in this Plan which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective only to the extent of such prohibition or unenforceability
without invalidating or affecting the remaining provisions hereof in such
jurisdiction, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.     v.   Captions. Captions are provided herein for convenience
only, and shall not serve as a basis for interpretation or construction of the
Plan.

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