Exhibit 10.55

MERCURY

Mercury Executive Annual Incentive Bonus Plan

Overview and Purpose

Mercury’s annual incentive Plan was created as a means to recognize and reward
the link between the achievement of Mercury’s corporate objectives and the
executive’s contribution to this success. The Plan is designed to actively
engage executives in achieving performance goals by placing compensation “at
risk” based on performance. The specific purpose of the Plan is to:

 

  •   Align the risks/rewards for the senior management team to achieve
Mercury’s top business priorities;

 

  •   Motivate and retain executives by providing above market compensation
opportunities linked to performance;

 

  •   Establish a direct link between operational performance that creates
shareholder value and individual performance and rewards; and

 

  •   Align interests and objectives of shareholders and executives to drive
Company growth that creates shareholder value.

Performance Period

Each year the Company established a new performance period tied to the fiscal
year. This Plan is effective for the Plan year January 1 to December 31, 20    .

Eligibility and Participation

Each year the CEO recommends to the Compensation Committee of the Board,
executive positions that are eligible to participate in the Annual Executive
Incentive Plan for that fiscal year. An executive must be rated “Solid” or
better through the regular performance review process for the fiscal year to be
eligible for consideration for an award under the Plan.

Performance Measures

Each year, the CEO presents to the Board, the overall operating Plan for the
fiscal year that is the basis for establishing the Company’s performance
objectives under the Plan. The Plan rewards performance as measured against
Mercury’s pre-defined financial objectives and individual performance (key
performance indicators or KPIs). The actual measures in the Plan may change from
year to year based on the business priorities and strategies of the Company. The
metrics may include, although are not limited to, the following:

 

  •   Bookings/revenue growth

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MERCURY

Mercury Executive Annual Incentive Bonus Plan

 

  •   Earnings per share

 

  •   Cash Flow

 

  •   Market cap growth

 

  •   Strategic imperatives

Award Pool Funding

The first step in the process for determining any awards is for the Company to
build a funding pool following the measurement of the Company’s performance.
This pool is the amount of total dollars available for incentive awards for the
executive team. The pool is based on Mercury’s financial performance for the
year against the pre-established goals approved by the Board.

Each executive position has a defined target incentive opportunity, expressed as
a percent of salary, based on the competitive assessment performed by the
Company, on behalf of the Compensation Committee, annually. This target is used
to determine the amount of funding contributed to the overall award pool. The
sum of all executive target award opportunities as a percent of earned salary is
then adjusted by the Company’s overall performance in determining the funding of
the pool.

For purposes of illustration, assume that there are 10 executives with identical
earned salaries of $200,000 for the fiscal year. Also assume that the target
award opportunity is 50% of base salary for each position, or $100,000.
Therefore, the executive bonus pool would be $1,000,000 at target Company
performance.

The Company must meet a minimum level of performance, referred to as the
threshold, to initiate funding in the pool. Threshold performance typically will
fund the Plan at 75% of target incentive opportunities with the maximum funding
under the Plan being 150% of target unless adjusted by the Compensation
Committee of the Board in their sole discretion.

Determining Individual Awards

Once the award pool is funded, the CEO or other senior management complete the
annual executive performance review process to determine the executive’s
individual performance versus their pre-established objectives. Individual award
payouts may range from 0% to 150% of target opportunity based on the

 

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MERCURY

Mercury Executive Annual Incentive Bonus Plan

executive’s performance as assessed in the review process. This approach is
consistent with Mercury’s commitment to a pay-for-performance philosophy and
culture.

Mercury’s Board of Directors maintains the discretion to determine any funding
of the Plan if the Company’s performance does not meet threshold levels or if
the Company significantly exceeds plan.

Administration

Incentive awards will be prorated for executives who join Mercury during the
year and are based on earned salary during the fiscal year.

Awards will typically be paid within the quarter following the close of the
fiscal year, once final financial results are known and approved by the Board.
Incentive awards are subject to all applicable payroll taxes consistent with
Mercury’s standard operating procedures.

Mercury reserves the right to modify the Plan, and individual awards, at any
time. Plan participants will be notified of any Plan changes.

Acknowledgement

My signature below indicates that I have received a copy of the Plan and that my
target incentive opportunity has been communicated to me.

 

 

 

 

   

 

  Signature     Date

 

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MERCURY

Participation Notice

Mercury Interactive Corporation

Annual Executive Incentive Plan

Name: Employee Name

Title: Employee Title

Performance Period:                                         January 1 through
December 31, 20    

Capitalized terms used in this Participation Notice (“Notice”) but not otherwise
defined shall have the respective meanings ascribed to them in the Annual
Incentive Plan (the “Plan”) attached hereto as Exhibit A and incorporated herein
by this reference.

Performance Goals and Program Funding:

 

•   The amount of funding in the plan is based on the Company’s achievement (as
determined by the Committee in its sole discretion) of the Performance Goals as
set forth in attached matrix as Exhibit B and incorporated herein by this
reference.

 

•   Individual performance goals will be set and determined as part of the
annual goal setting process and are attached as Exhibit C and incorporated
herein by this reference. These goals will be used in determining the
executive’s actual performance against goals in determining any award under the
Plan.

Performance measurement exceptions:

 

•   Non-GAAP Earnings per share (“EPS”) and Revenue Growth of the Company
(together, the “Criteria”), with the targets set based on the Company’s Business
Plan for the Performance Period approved by the Company’s Board of Directors.

 

•   Plan adjustments may be made each year as part of the goal setting process,
and as deemed to be reasonable and fair as assessed by the Compensation
Committee of the Board, in their sole discretion. Planned adjustments are
reflected in Exhibit B.

Payment of Cash Awards:

 

•   Payment of cash awards will typically be made in the first quarter following
the close of the fiscal year, once performance is known and approved by the
Board of Directors.

Examples:

 

•   If the Company achieves the minimum Performance Goal for each of the
Criteria, then the Participant is eligible for a cash award equal to 75% of the
total incentive opportunity, which will then be adjusted based on their actual
contribution based on the pre-established goals.

 

•   If the Company does not achieve the minimum Performance Goal for each of the
Criteria, then the plan will go un-funded and no individual awards will be made,
unless if the Compensation Committee, in their sole discretion, provided funding
to the program.

 

•   I hereby acknowledge and agree that my Mercury Interactive Corporation
Annual Incentive Plan is comprised of this Participation Notice listing my
Performance Goals and the Criteria on which they are based together with the
Plan attached hereto as Exhibit A and incorporated herein by this reference
(collectively, this “Notice/Plan”). I further acknowledge and agree that this
Notice/Plan is effective during the Performance Period, unless modified in
writing. Each new/modified Notice/Plan supersedes and cancels all previous
Notice/Plans and any other oral or written commitment with respect to the
subject matter of this Notice/Plan.

 

“Participant”     Mercury Interactive Corporation Signature:  

 

    By:  

 

Date:  

 

    Name:  

 

      Its: