Exhibit 10.01

2014 MANAGEMENT BONUS PLAN

The President and CEO, all executives who report to the President and CEO of
Meru Networks, Inc. (the “Company”), and certain other executives who do not
otherwise receive variable compensation will be eligible to participate in this
cash bonus plan and who have been notified of their eligibility by the Committee
(as defined below) (this “Plan”).

 

A. ANNUAL CASH BONUS PLAN

The cash bonus available will be calculated annually based on a percentage of an
executive’s base salary upon the Company’s achievement of revenue targets and
non-GAAP EBITA targets1, as described below, as well as, for executives other
than the CEO, CFO and Senior Vice President of Worldwide Sales and Field
Operations (“SVP Sales”), individual performance against objectives
(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 the executive’s targeted
year-to-date revenue bonus, subject to the terms described below and
irrespective of whether the non-GAAP EBITA targets were met. 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 and non-GAAP EBITA1 compared
to the annual target objectives (without duplication of amounts previously paid
for revenue 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 (subtracting amounts previously paid for
the quarterly revenue achievement), and the Non-GAAP EBITA bonus will be awarded
irrespective of whether the revenue target is achieved. In addition, except for
the Company’s CEO, CFO and SVP Sales, a portion of the Annual Cash Bonus will be
awarded based upon executive’s performance against certain objectives as
reasonably determined by the Company’s CEO, and approved by the Company’s
Compensation Committee (the “Committee”). The executive may earn more or less
than his or her target bonus based on achievement of the performance goals;
provided, however that the total bonus amount2 shall not exceed 200% of the
executive’s targeted bonus value.

The following table provides the percentage of the executive’s base salary that
is such executive’s targeted annual bonus value.

 

Executive Officer

   Percentage of Annual Salary  

President and Chief Executive Officer (CEO)

     100 % 

Chief Financial Officer (CFO)

     50 % 

Senior Vice President Sales & Services

     118 % 

Senior Vice Presidents (includes GM’s and General Counsel)

     45 % 

Vice Presidents (Exec Level)

     40 % 

 

I. Revenue Bonus

50% of the overall target bonus award for the CEO and CFO, 60% of the overall
target bonus award for the SVP Sales, and 40% of the overall target bonus award
to the other executives, is tied to achievement

 

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 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 for executives other
than the CEO, CFO and SVP Sales, the Management Objective Bonus (as defined
below). The Revenue Bonus and Non-GAAP EBITA Bonus shall not exceed 200% of the
applicable target bonus value.

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of the revenue target as described in the Company’s operating plan as approved
by the board of directors (the “Revenue Bonus”). In order for any amounts to be
payable under the Revenue Bonus, the revenue target must be met at a level of at
least 96.3% of the target. For achievement between 96.3% and 100.0% of the
revenue target, the Revenue Bonus will start at a payout of 80% of the target
Revenue Bonus amount and will increase on a straight-line basis according to the
percentage of achievement up to 100%.3

The executives are also eligible to receive an increased Revenue Bonus if the
Company’s revenue exceeds the revenue target as follows: (a) for achievement
above 100.0% and up to 114.9% of the revenue target, the Revenue Bonus will
start at a payout of 100% of the target Revenue Bonus amount and will increase
on a straight-line basis according to the percentage of achievement up to 150%;
and (b) for achievement above 114.9% and up to 127.3% of the revenue target, the
Revenue Bonus will start at a payout of 150% of the target Revenue Bonus amount
and will increase on a straight-line basis according to the percentage of
achievement up to 200% of the target Revenue Bonus.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
2014, the executives 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

50% of the overall target bonus award for the CEO and CFO and 40% of the overall
target bonus award for each other executive, is tied to non-GAAP EBITA6 (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
Committee (the “Minimum Non-GAAP EBITA Amount”)7. 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 100.0% the fiscal Non-GAAP
EBITA target under the Company’s operating plan (the “Target Non-GAAP EBITA
Amount”).8

 

3  For example, in the event that the annual revenue is achieved at the 96.3% of
target level, the Revenue Bonuses will be paid at 80% of the target Revenue
Bonus amount such that the Revenue Bonus paid to the Company’s Chief Financial
Officer would equal 80% multiplied by 50% multiplied by 50% multiplied by the
Chief Financial Officer’s annual salary.

4  For example, in the event that the Company’s actual revenue is 114.9% 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 the Company’s Chief
Financial Officer would equal 150% multiplied by 50% multiplied by 50%
multiplied by the Chief Financial Officer’s annual salary.

5  For example, in the first quarter if the quarterly revenue goal is achieved
at 110.0%, the Company’s Chief Financial Officer will receive a quarterly
payment for the Revenue Bonus equal to 25% multiplied by 100% multiplied by 50%
multiplied by the Chief Financial Officer’s annual salary.

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

7  The Minimum Non-GAAP EBITA Amount shall equal $3.43 million less than the
Target Non-GAAP EBITA Amount.

8  For example, in the event that 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 the Company’s Chief Financial
Officer would equal 75% multiplied by 50% multiplied by 50% multiplied by the
Chief Financial Officer’s annual salary.

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The executives are also eligible to receive an increased Non-GAAP EBITA Bonus if
the Company’s non-GAAP EBITA exceeds the Target Non-GAAP EBITA Amount as
follows: (a) for achievement above 100.0% and up to 230.2% of the Target
Non-GAAP EBITA Amount, the Non-GAAP EBITA Bonus will start at a payout of 100%
of the target Non-GAAP EBITA Bonus and will increase on a straight-line basis
according to the percentage of achievement up to 150% target Non-GAAP EBITA
Bonus; and (b) for achievement above 230.2% and up to 382.1% of the Target
Non-GAAP EBITA Amount, the Non-GAAP EBITA Bonus will start at a payout of 150%
of the target Non-GAAP EBITA Bonus and will increase on a straight-line basis
according to the percentage of achievement up to 200% of the target Non-GAAP
EBITA Bonus.9

 

III. Management Objective Bonus

20% of the overall target bonus award for eligible executives other than the
CEO, CFO and SVP Sales shall be tied to performance by the executive against
management objectives as reasonably determined in writing by the Company’s CEO
and reported to the Chair of the Committee (each an “MBO Bonus”). The Company’s
CEO shall determine achievement against the specific objectives, with such
achievement to be approved by the Company’s Compensation Committee, and with
such achievement not to exceed 100% for this portion of the Annual Cash Bonus.10

 

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. For any bonus payment made under this
Plan, an executive officer shall be eligible to receive payment if the executive
officer is employed by the Company on the date such payment is actually made.

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).

 

9  For example, in the event that the Company’s actual non-GAAP EBITA is 230.2%
of Target Non-GAAP EBITA Amount, the Non-GAAP EBITA Bonus will be paid at 150%
of the target Non-GAAP EBITA Bonus, such that the Non-GAAP EBITA Bonus paid to
the Company’s Chief Financial Officer would equal 150% multiplied by 50%
multiplied by 50% multiplied by the Chief Financial Officer’s annual salary.

10  For example, in the event that the Management Objectives are reached at a
level of 75%, the Management Objective Bonus paid to the Company’s General
Counsel would equal 75% multiplied by 20% multiplied by 45% multiplied by the
General Counsel’s annual salary.