Exhibit 10.1

 

LOGO [g602071im1.jpg]

EMULEX CORPORATION

EXECUTIVE INCENTIVE COMPENSATION PLAN (EICP)

(Effective July 1, 2013)

PLAN PURPOSE

To focus members of the management team on the achievement of specific Company
and individual accomplishments which contribute to the creation of shareholder
value.

To assist in attracting and retaining top quality management.

GENERAL PLAN DESCRIPTION

These terms and conditions set forth within this document hereby govern the
interpretation, eligibility, and calculations for the Emulex Corporation (the
“Company”) Executive Incentive Compensation Plan (the “Plan”).

This Plan provides for a cash award based upon Company performance against Net
Revenue and Net Operating Income plan goals and specified business goals. In
addition, a discretionary incentive for recognition of extraordinary
contributions to the success of the company may be recommended. All incentive
compensation recommendations are subject to the approval of the Compensation
Committee of the Emulex Board of Directors.

ELIGIBILITY

Corporate officers, executive officers, operating officers, senior vice
presidents, vice presidents, senior directors, and directors, excluding those
eligible for sales commission (unless otherwise indicated in this Plan), are
eligible for selection to participate in this Plan. Actual 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.

See the “Appendix” for a list of eligible positions/levels and targets covered
by this Plan.

TERM, PERFORMANCE PERIOD, AND PAYMENT

Plan Term – The Plan is effective on the first day of the Company’s fiscal year
and ends on the last day of the fiscal year.

Performance Period — The performance period is selected at the discretion of the
Company and may be:

 

¡   

Quarterly: Beginning on the first day of the fiscal quarter and ending on the
last day of the fiscal quarter.

 

¡   

Semi-Annual: Beginning on the first day of the fiscal quarter 1 and ending on
the last day of the fiscal quarter 2, and beginning on the first day of fiscal
quarter 3 and ending on the last day of fiscal quarter 4.

 

¡   

Annual: Beginning on the first day of the fiscal year and ending on the last day
of the fiscal year.

--------------------------------------------------------------------------------

Payment — Incentive awards are payable upon approval by the Compensation
Committee, as recommended by the CEO.

TARGET INCENTIVE OPPORTUNITY

Each eligible participant will be assigned a Target Award Opportunity expressed
as a percentage of his or her actual gross base salary in effect at the end of
the respective performance period based on job title.

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 incentive calculations will be made using the equivalent
gross base salary in US currency.

INCENTIVE AWARD CRITERIA

Incentive award criteria will be based upon achievement of a combination of
performance goals. The Emulex Corporate metrics and associated weighting are:

 

Operating  
Unit  

 

 

 

Emulex Corporate Plan - Metric Weightings

 

     

Metric  

 

 

Emulex Revenue

 

 

Emulex Net Operating Income

 

     

Weighting  

 

 

45%

 

 

55%

 

A separate metrics and weighting scheme will be applied to the Endace Division.
For FY14, it will be:

 

   

 

Endace Division Plan Metrics Weightings

 

 

Operating

Unit

 

 

Emulex Corporate Metric Weightings

 

  

Endace Division Metrics Weightings

 

Metric

 

 

Emulex Revenue  

 

 

 

Emulex Net  

Operating Income  

 

  

Endace Revenue  

 

  

 

Endace Pre-EICP

Operating Income

 

       

Weighting

 

 

9%

 

 

11%

 

  

44%

 

  

36%

 

 

Overall

Weighting

 

  20% Emulex Corporation Weighting    80% Endace Division Weighting

For both groups, the incentive award pool will be established based on the
following:

 

CORPORATE

PERFORMANCE GOAL

   THRESHOLD
(MINIMUM)*    TARGET    MAXIMUM      

ACHIEVEMENT %

 

   80.00%

 

   100.00%

 

   133.33%

 

     

INCENTIVE AWARD - %

EARNED

 

   70.0%

 

   100.0%

 

   150.0%

 

* Note: No cash award will be deemed earned or payable if Net Operating Income
for the Operating Unit’s applicable performance periods falls below 50% of the
AOP approved plan.

 

2

--------------------------------------------------------------------------------

The actual goals for measurement purposes will be based upon the Company’s
fiscal Annual Operating Plan (AOP) as approved by the Emulex Board of Directors.
Corporate incentive components will be calculated according to the following
procedure (assumes quarterly performance period):

 

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 as stated above
times the Target Award give the incentive target for each weighting factor.

Example :        45% x $8,750 = $3,937.50 (net revenue target)

                         55% x $8,750 = $4,812.50 (net operating income target)

 

3.

An accelerator formula of 1.5 x % of performance less 50% will be used for each
part of the quantitative incentive award calculation to reinforce
over-achievement opportunity as well as to minimize any incentive payment 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:

LOGO [g602071im2.jpg]   107.5% x $3,937.50 = $4,232.81 net revenue incentive
component

 

  •  

(110% x 1.50) less 50% = 165% - 50% = 115% of net operating income target:

LOGO [g602071im2.jpg]   115% x $4,812.50 = $5,534.38 net operating income
incentive component

Total first quarter incentive components = $9,767.19

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:

LOGO [g602071im2.jpg]   85% x $3,937.50 = $3,346.88 net revenue incentive
component

 

  •  

(80% x 1.50) less 50% = 120% - 50% = 70% of net operating income target:

LOGO [g602071im2.jpg]   70% x $4,812.50 = $3,368.75 net operating income
incentive component

Total second quarter incentive components = $6,715.63

 

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 performance threshold of 80% of the
Board of Directors’ approved AOP for Net Revenue and Net Operating Income must
be achieved for each respective incentive component to be included in the cash
award. Likewise, a maximum award has been established based on performance at
133% of plan for each component.

Note: In no event will a cash award be deemed earned or payable under any
component or provision of the plan if actual Net Operating Income for the
Operating Unit’s applicable performance periods falls below 50% of the approved
AOP for Net Operating Income for such performance period.

 

3

--------------------------------------------------------------------------------

5.

A participant’s cash award may be adjusted by a Performance Contribution Factor
(PCF) which represents the level of the participant’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, as a factor to be multiplied by the cash
award for the performance period. A PCF other than 1.0 should be applied on an
exception basis. The PCF for a participant will be based on exceptional
performance (positive or negative) against 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.

DISCRETIONARY AWARDS

When an individual makes an extraordinary contribution to the success of the
Company, the employee’s contribution deserves special recognition and financial
reward. It is the intention of this “Discretionary Awards” provision to provide
the CEO with the latitude to recommend unusual incentive awards to be made to
such contributors when they occur. Such incentive award 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.

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 includes recommendations as noted below as well as:

 

¡   

Identification of Plan participants, corporate performance goals, award
opportunity and award payment.

 

¡   

Interpretation of 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.

ELIGIBILITY THRESHOLDS & PRO-RATION OF INCENTIVE TARGET / PAYOUT

Except as otherwise provided in this Plan or as required by law, if an employee
is (a) hired by the Company into an eligible incentive position, (b) is promoted
or transferred during the performance period into an eligible position or
(c) demoted or transferred during the performance period out of a bonus eligible
position, his/her award opportunity will be based on the effective date of the
event.

New Hires Minimum Participation Requirement – A participant must be an active
regular full-time employee during the performance period for which the incentive
is paid. A pro-rated payment will be made for employment during portions of a
performance period, provided the participant has been employed for a minimum of:

  •   30 calendar days during the performance period if performance period is
defined as quarterly.

  •   60 days if the performance period is semi-annual.

 

4

--------------------------------------------------------------------------------

  •   90 days if the performance period is annual.

Calculation of Prorated Targets – An employee, who is placed into or removed
from an incentive eligible position during the performance period, is eligible
for a prorated award target based upon the number of days divided by the total
number of day in the performance period to get the proration factor (minimum
days of service required for new-hires as stated above). Proration factor will
be applied against the employee’s incentive target to get the performance
period’s eligible target percentage.

For example: A employee who is promoted into (or out of) an incentive eligible
position on August 16th would be eligible for a prorated payment under the plan
(assuming a quarterly payout) as follows:

 

  ¡    August 16th = 46th day of quarter; full quarter is 91 days therefore
proration factor would be 49.45% (45 days/91 days)

 

  ¡    Assuming this employee had a 35% incentive target the prorated incentive
target for the quarter would be = 17.31% (35% Incentive Target x 49.45%)

All quarterly, semi-annual and/or annual incentive opportunities under the Plan
will be determined and prorated based on full days, as described above.

Leaves of Absence (LOA) – Except as otherwise provided in this Plan or as
required by law, if an employee goes on an approved Family Medical Leave Act
(FMLA), Workers Compensation or Personal Leave of Absence during the performance
period, his/her incentive award will be prorated based upon full number of days
worked during the performance period.

 

  ¡    An employee who is out of work on an Approved Leave of Absence for any
reason and, as a result, does not work during the performance period will NOT be
eligible for an award payout.

 

  ¡    Payment for any incentive earned up to the start of an applicable
Approved Leave of Absence will be calculated and paid according to the normal
process, even if such payment occurs while an employee is out on an Approved
Leave of Absence. Further, payment for any incentive earned during an applicable
Approved Leave of Absence will be calculated according to the normal process,
and payment will be made as soon as administratively possible following the
employee’s return from approved leave.

Participant Performance Requirement – Notwithstanding anything to the contrary
in this document, except as otherwise required by law, eligibility to
participate in the Plan or to earn or receive credit for any incentives for a
given full-month period during the performance period is contingent on
performance by the employee at a “satisfactory level” for such period, which is
defined as: (i) having no deficiencies in meeting goals or failure to meet job
standards as determined by the Company in its discretion; (ii) effectively
performing his/her duties and responsibilities as generally outlined in the job
description as determined by the Company in its discretion; or (iii) not being
subject to a written Performance Improvement Plan (PIP) or on probation for the
period defined in such PIP or probation.

Separation From Employment - Except as otherwise provided in the Plan, below in
this Section or as required by law, an employee is eligible to receive an
incentive if he/she is employed by the Company on the day of actual incentive
payout and otherwise meets the incentive goal/target, performance, and other
eligibility requirements set forth in this Plan.

 

5

--------------------------------------------------------------------------------

  ¡    In the event an employee is terminated by the Company from his/her
employment for the reasons summarized below, an employee will be eligible to
receive an incentive payout for each applicable performance period (e.g., for
monthly, quarterly and/or annual components) The incentive award will be based
upon the full number of days the employee worked during the performance period,
regardless of when the incentive(s) are later paid.

 

  —   Permanent or indefinite reduction in staff resulting in job elimination;

  —   Reduction of an employee’s position as the result of an organizational or
business restructuring;

  —   Discontinuance of an operation;

  —   Relocation of all or a part of Emulex’s business;

  —   Lack of work;

  —   Location closing;

  —   Sale of an operation to a third party; or

  —   Sale or other change in ownership of all or a part of Emulex’s business.

 

  ¡    In the event an employee is terminated by the Company, resigns or is
otherwise separated from his/her employment for any reason other than those
described in this Section above prior to payment of all or a portion of a Plan
award for an applicable performance period (e.g., for quarterly, semi-annually,
and/or annual), the employee shall immediately cease eligibility as a
participant in the Plan, and shall not be entitled to any incentive award.

Examples of reasons for termination or separation that disqualify an employee
from earning a potential incentive award include, but are not limited to:

 

  —   Resignation by the Employee for any reason.

  —   Termination by the Company for unsatisfactory job performance, violation
of rules of conduct, disloyalty or breach of fiduciary duty to the Company, or
any other reason not specifically listed in this Section above.

 

  ¡    In the event of an employee’s death, the employee’s estate will be
eligible to receive an incentive award payout in whole or prorated for each
applicable performance period (e.g., for quarterly, semi-annually and/or annual)
if decedent was employed by the Company prior to death of such performance
period and otherwise meets the incentive goal/target.

 

  ¡    All incentive awards paid upon separation from employment shall be
payable at the same time and in accordance with this Plan. Exceptions must be
approved in writing by the CEO.

Payment of Awards – Upon approval of an incentive award in accordance with this
Plan, the incentive award payment will be distributed no later than the first
payroll cycle following the 60 days after the performance period ends. The award
payment will be processed after financial close of the performance period,
completion of the audit/review of the Company’s financial statements by the
Company’s independent auditors, and approval by the Emulex Compensation
Committee.

 

6

--------------------------------------------------------------------------------

PLAN CHANGES

The terms and provisions of this Plan are not intended to be a contract and are
not contractually enforceable. Rather, they are guidelines that Emulex reserves
the right to amend or terminate without prior notice, and to interpret within
its sole discretion.

If any disagreements arise regarding the interpretation of the provisions of the
Plan, Emulex Corporation (the “Company”) retains the sole discretion to
interpret the Plan’s provisions. The Company further reserves the right in its
sole discretion at any time, to change, modify, amend, terminate, or discontinue
the Plan.

AT-WILL EMPLOYMENT

This document contains guidelines relating to compensation of certain employees
of Emulex. This document is not intended and shall not be read to create any
express or implied promise or contract for employment, for any benefit, or for
specific treatment in specific situations. Unless the employee has an employment
agreement with the Company, the employment relationship with Emulex is at-will,
meaning the employment is not for any minimum or set period, and is subject to
the mutual consent of the employee and Emulex, and either party may terminate
the employment at any time, for any reason, without cause or prior notice.

EQUAL EMPLOYMENT OPPORTUNITY

This plan will be administered and incentive compensation paid on an equal
opportunity basis without regard to race, religion, sex, age, national origin,
physical or mental disability, marital status, sexual orientation, or any other
characteristic that is protected by applicable law.

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 payment for
overtime, incentive payment of any type, or other income such as relocation
allowances, employee referral payment, etc.

Net Revenue: Net revenue as presented in the Company’s consolidated financial
statements.

Net Operating Income: Non-GAAP Operating income as publically disclosed.

Pre-EICP Operating Income: Non-GAAP Operating income as publically disclosed,
before reduction for EICP bonus expense.

 

7

--------------------------------------------------------------------------------

Target Incentive Opportunity Categories

 

Employee Category  

 

Target Incentive

Percentage

 

 

1

 

 

 

100%

 

2

 

 

 

90%

 

 

3

 

 

 

70%

 

 

4

 

 

 

60%

 

 

5

 

 

 

55%

 

 

6

 

 

 

50%

 

 

7

 

 

 

40%

 

 

8

 

 

 

35%

 

 

9

 

 

 

20%

 

 

10

 

 

 

10%

 

 

8

--------------------------------------------------------------------------------

NOT FOR DISTRIBUTION - ADMINISTRATIVE ADDENDUM

Target Incentive Opportunity Categories

 

 

Employee Category –

Target Incentive Percentage

 

  

 

Description of Eligible Participants

 

 

        1 - 100%

  

 

President and Chief Executive Officer

 

            2 - 90%   

Executive Chairman

 

            3 - 70%   

Senior Vice President, Worldwide Sales

 

            4 - 60%   

Executive Vice President, CFO

 

            5 - 55%   

Senior Vice President, Chief Development Executive

 

            6 - 50%   

Senior Vice President, General Counsel

 

Senior Vice President, General Manager

 

Senior Vice President, Human Resources

 

Senior Vice President, Operations

 

Senior Vice President Product Management

 

Senior Vice President Marketing & Corp Development

 

            7 - 40%   

Senior Vice President, Engineering - Network Connectivity Products

 

            8 - 35%   

Senior Vice President (All Others)

 

Vice President

 

            9 - 20%   

Senior Director

 

   

        10 - 10%

  

Director

 

 

9