Exhibit 10.02

 

2013 SALES EXECUTIVE BONUS PLAN

 

Larry Vaughan (“Mr. Vaughan” or “Executive”), Senior Vice President of Worldwide
Sales, Services and Support of Meru Networks, Inc.’s (the “Company” or “Meru”),
is eligible to participate in this Executive Incentive Plan (this “Plan”).

 

A.            ANNUAL CASH BONUS PLAN

 

The cash bonus available will be calculated annually based on a percentage of
Mr. Vauguan’s Target Bonus Value upon the Company’s achievement of revenue
targets, non-GAAP EBITA targets(1) and quarterly performance against the revenue
and non-GAAP EBITA targets, as described below (collectively, the “Annual Cash
Bonus”).  Following the end of each quarter, the Revenue Bonus will be
calculated and paid based on the Company’s achievement of quarterly revenue
targets (or in some circumstances year-to-date target achievement), with such
payment not to exceed 100% of Executive’s targeted quarterly revenue bonus (or
year-to-date target, as applicable), subject to the terms described below and
irrespective of whether the non-GAAP EBITA targets were met for the quarter (or
year-to-date, as applicable).  Following the end of the year, the annual cash
bonus available is calculated and paid based upon the Company’s achievement of
annual revenue targets, non-GAAP EBITA(1) and quarterly performance compared to
the annual target objectives for annual revenue targets and non-GAAP EBITA
(without duplication of amounts paid in respect of quarterly or year-to-date
revenue target achievement).  The Revenue Bonus element of the Annual Cash Bonus
will be awarded based on revenue performance irrespective of whether the Minimum
Non-GAAP EBITA threshold has been met, and the Non-GAAP EBITA bonus will be
awarded irrespective of whether the revenue target is achieved.  A portion of
the Annual Cash Bonus will be achieved in the event that Mr. Vaughan meets
minimum revenue or non-GAAP EBITA thresholds.  Mr. Vaughan may earn more or less
than his target bonus based on the extent to which achievement of the specified
performance goals; provided, however that the total bonus amount(2) shall not
exceed 200% of the Executive’s targeted bonus value.

 

The following table provides Mr. Vaughan’s targeted annual bonus value.

 

Executive Officer

 

Target Bonus Value

 

 

 

 

 

Senior Vice President Sales, Services and Support

 

$

325,000

 

 

I.             Revenue Bonus

 

A bonus of 60% of Mr. Vaughan’s Target Bonus Value is tied to achievement of the
revenue target (the “Revenue Bonus”).  In order for any amounts to be payable
under the Revenue Bonus, the revenue target as approved by the board of
directors must be met at a level of at least 90% of the target under the
Company’s operating plan (the “Revenue Threshold”).  For achievement between 90%
and 100% of the revenue target under the Company’s operating plan, the Revenue
Bonus will start at a payout of 50% of

 

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(1)         The non-GAAP EBITA targets and determination of achievement exclude
items the Company excludes from their non—GAAP EBITA calculations for their
financial reports, but include the impact of any bonuses determined under the
cash bonus plan.

 

(2)         The total bonus amount equals the aggregate of the Revenue Bonus (as
defined below), the Non-GAAP EBITA Bonus (as defined below), and the Quarterly
Revenue and Non-GAAP EBITA Supplemental Bonus (as defined below).  The Revenue
Bonus and Non-GAAP EBITA Bonus may each exceed 200% attainment individually;
provided, however, that the aggregate Annual Cash Bonus shall not exceed 200% of
the Executive’s Target Bonus Value.

 

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the target Revenue Bonus amount and will increase on a straight-line basis
according to the percentage of achievement up to 100%.(3)

 

Mr. Vaughan is also eligible to receive an increased Revenue Bonus if the
Company’s revenue exceeds the revenue target.  For revenue achievement in excess
of 100% of the annual revenue target the Revenue Bonus will start at a payment
of 100% and will increase on a straight-line basis according to the percentage
of achievement so that at 120% of the revenue target the Revenue Bonus shall be
calculated at 200%.(4)

 

A pro rata portion of the annual Revenue Bonus, if any is achieved, shall be
paid quarterly following each of the Company’s quarterly earnings announcements
based on the year-to-date achievement of the quarterly revenue plan.  If the
year-to-date revenue threshold is not met for particular quarter(s), but in a
subsequent quarter the cumulative year-to-date threshold is achieved, then the
pro rata annual Revenue Bonus payment shall be made based upon the year-to-date
percentage of attainment, with such payment not to exceed 100% of the
executive’s targeted year-to-date Revenue Bonus (less any Revenue Bonus already
paid).(5) Following the Company’s earnings announcement covering the full year
2013, Mr. Vaughan may receive a Revenue Bonus based on the criteria set forth in
the two prior paragraphs less the amount of any Revenue Bonus payments made
pursuant to this paragraph.

 

II.            Non-GAAP EBITA Bonus

 

A bonus of 30% of Mr. Vaughan’s Target Bonus Value is tied to non-GAAP EBITA
(the “Non-GAAP EBITA Bonus”).  In order for the Non-GAAP EBITA Bonus to be paid,
the Company must achieve the minimum Non-GAAP EBITA target as approved by the
Company’s Compensation Committee (the “Committee”) (the “Minimum Non-GAAP EBITA
Amount”)(6) .  Upon achievement of the Minimum Non-GAAP EBITA, the amount of the
Non-GAAP EBITA Bonus will be calculated on a straight line basis starting at 50%
of the target Non-GAAP EBITA Bonus upon achievement of the Minimum Non-GAAP
EBITA Amount and up to 100% of the target Non-GAAP EBITA Bonus upon achievement
of the fiscal Non-GAAP EBITA target under the Company’s operating plan (the
“Target Non-GAAP EBITA Amount”).(7)

 

Mr. Vaughan is also eligible to receive increased Non-GAAP EBITA Bonus if the
Company’s non-GAAP EBITA exceeds the Target Non-GAAP EBITA Amount.(8)  If the
Target Non-GAAP EBITA Amount is exceeded, the Non-GAAP EBITA Bonus amount will
be calculated on a straight line basis, such that the Non-GAAP EBITA Bonus will
be the target Non-GAAP EBITA Bonus multiplied by a multiplier equal to 100% of
the target Non-GAAP EBITA Bonus plus 5% of the target Non-GAAP

 

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(3)         For example, in the event that the annual revenue is achieved at the
95% of target level, the Revenue Bonuses will be paid at 75% of the target
Revenue Bonus amount such that the Revenue Bonus paid to Mr. Vaughan would equal
75% multiplied by 60% multiplied by Mr. Vaughan’s Target Bonus Value.

 

(4)         For example, in the event that the Company’s actual revenue is 110%
of the annual revenue target, the Revenue Bonus will be paid at 150% of the
target Revenue Bonus amount such that the Revenue Bonus paid to Mr. Vaughan
would equal 150% multiplied by 60% multiplied by Mr. Vaughan’s Target Bonus
Value.

 

(5)         For example, in the first quarter if the quarterly revenue goals is
achieved at 110%, Mr. Vaughan will receive a quarterly payment for the Revenue
Bonus equal to 25% multiplied by 100% multiplied by 60% multiplied by
Mr. Vaughan’s Target Bonus Value.

 

(6)         The Minimum Non-GAAP EBITA Amount shall equal $1.190 million less
than the Target Non-GAAP EBITA Amount.

 

(7)         For example, in the event the non-GAAP EBITA is achieved at the
midway point between the Minimum non-GAAP EBITA Amount and the Target Non-GAAP
EBITA Amount, the Non-GAAP EBITA Bonus will be paid at 75% of the target
Non-GAAP EBITA Bonus amount such that the Non-GAAP EBITA Bonus paid to
Mr. Vaughan would equal 75% multiplied by 30% multiplied by Mr. Vaughan’s Target
Bonus Value.

 

(8)         After giving effect to (i) the Revenue Bonus, (ii) the Non-GAAP
EBITA Bonus, and (iii) the Quarterly Revenue and Non-GAAP EBITA Supplemental
Bonus, each as adjusted for any applicable accelerator.

 

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EBITA Bonus for each $121,150 of non-GAAP EBITA performance better than the
Target Non-GAAP EBITA Amount.

 

III.          Quarterly Revenue and Non-GAAP EBITA Supplemental Bonus

 

For each of the Company’s fiscal quarters of 2013, Mr. Vaughan will be able to
receive a quarterly bonus equal to 14% of his Target Bonus Value provided BOTH
the revenue target AND target Non-GAAP EBITA Amount are met for the quarter (the
“Supplemental Bonus” it being understood that in the event the annual Revenue
Bonus and Non-GAAP EBITA Bonus are achieved at 100%, and that the revenue target
and target Non-GAAP EBITA Amount were achieved in each quarter, Mr. Vaughan’s
Annual Cash Bonus would be 104% of Mr. Vaughan’s Target Bonus Value).  The
Supplemental Bonus, if any is achieved, shall be paid according to the
following:  5% of Mr. Vaughan’s Target Bonus Value shall be paid if BOTH the
quarterly revenue target AND target Non-GAAP EBITA Amounts (together, the
“Targets”) for the first fiscal quarter are achieved; 4% of Mr. Vaughan’s Target
Bonus Value shall be paid if the year-to-date Targets are achieved for the
second quarter; 3% of Mr. Vaughan’s Target Bonus Value shall be paid if the
Targets or year-to-date targets are achieved for the third quarter; and 2% of
Mr. Vaughan’s Target Bonus Value shall be paid if the year-to-date Targets are
achieved for the fourth quarter.  If either the year-to-date revenue targets or
target non-GAAP EBITA are not met in a quarter, no “Supplemental Bonus” will be
paid for the quarter.

 

B.            GENERAL

 

The Committee will be responsible for the general administration and
interpretation of this Plan and for carrying out its provisions, including the
authority to construe and interpret the terms of this Plan, determine the manner
and time of payment of any Annual Cash Bonuses, prescribe any necessary
procedures for distribution of Annual Cash Bonuses and adopt rules, regulations
and to take such actions as it deems necessary or desirable for the proper
administration of this Plan.  The Committee, in its sole discretion and on such
terms and conditions as it may provide, may delegate all or part of its
authority and powers under the Plan to one or more directors and/or officers of
the Company.

 

Any rule or decision by the Committee or its delegate(s) that is not
inconsistent with the provisions of this Plan shall be conclusive and binding on
all persons, and shall be given the maximum deference permitted by law.

 

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 Annual Cash Bonus awarded hereunder. 
Moreover, the Committee may pay up to 50% of any bonus described under this Plan
in fully vested restricted stock units (“RSUs”).  In the event the Committee
pays a portion of any bonus with fully vested RSUs, the Committee shall apply a
10% liquidity uplift to its calculations.(9)

 

Notwithstanding any other provision hereof or any other agreement between the
Company and any participant, the Company may, in its sole discretion, implement
any recoupment or clawback policies or make any changes to any of the Company’s
existing recoupment or clawback policies, as the Company deems necessary or
advisable in order to comply with applicable law or regulatory guidance
(including, without limitation, the Dodd-Frank Wall Street Reform and Consumer
Protection Act and any rules of the SEC or a stock exchange or similar body
implemented pursuant thereto that is applicable to the Company), and any Annual
Cash Bonuses (including, for avoidance of doubt, any quarterly portion) awarded
under this Plan is subject to the terms and conditions of any such recoupment or
clawback policies (as as may be adopted, amended or restated from time to time).

 

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(9)         For example, in the event Mr. Vaughan is to be paid a bonus of
$20,000, the Committee may instead issue $10,000 in cash and fully vested RSUs
equal to $11,000 at the time of issuance.

 

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