EXHIBIT 10.1
Ixia
2006 Employee Bonus Plan
The 2006 Employee Bonus Plan (“2006 Bonus Plan”) is designed to motivate
employees of Ixia (“Ixia” or the “Company”) and any subsidiaries and to reward
them for their continuing contributions to the Company’s business if Ixia
achieves certain financial results in 2006 and based on their individual
contributions to the Company during 2006. The Company believes that the
achievement of these results is essential for the Company’s success and for the
continued growth in shareholder value.

A.   Eligible Employees:

For purposes of the 2006 Bonus Plan, “Eligible Employees” are all full-time and
part-time employees of Ixia, and any subsidiaries, except those categories of
employees listed below:

  1.   Commissioned employees;     2.   Employees who are expressly covered by
any other Ixia 2006 bonus plans (e.g., employees of the Company’s Romanian and
Indian subsidiaries); and     3.   Casual, co-op or temporary employees

In order to earn and be eligible to receive a bonus pursuant to Part B of this
2006 Bonus Plan (an “Annual Bonus”), a person must be employed by Ixia or one of
its subsidiaries as an Eligible Employee (i) for some portion of fiscal 2006,
and (ii) on the date on which such bonuses are paid, unless such requirement(s)
is waived in writing by the Chief Executive Officer of the Company (the “CEO”),
in his sole discretion, provided, however, that any such waiver for any
Executive Officer of the Company shall be required to be approved by the
Compensation Committee of the Company’s Board of Directors (the “Compensation
Committee”). An employee who is on an approved leave of absence from the Company
during any part of fiscal 2006 will, for purposes of determining eligibility
under the 2006 Bonus Plan, be treated as being employed by the Company during
such leave of absence only if so determined by the CEO, in his sole discretion;
provided, however, that in the case of any Executive Officer of the Company, any
such determination shall be required to be made by the Compensation Committee.

B.   Annual Bonus Calculation:

The financial measures for calculating the Annual Bonuses will include bonus
rates based on (i) the Company’s Annual Revenue as determined in accordance with
U.S. generally accepted accounting principles (“GAAP”) and (ii) the Company’s
Modified GAAP Operating Income” (as defined herein) calculated on a consolidated
basis. Modified GAAP Operating Income is defined as GAAP income before income
taxes, interest and other income, and excluding stock based compensation. The
bonus rates based on Annual Revenues are referred to in this 2006 Bonus Plan as
the “Revenue Bonus Rates.” The bonus rates based on Modified GAAP Operating
Income are referred to in this 2006 Bonus Plan as the “Profit Bonus Rates.”
The amount allocated as an Annual Bonus to the “Bonus Pool” (as defined herein)
in which an Eligible Employee participates will be calculated by multiplying
(i) the Eligible Employee’s Qualified Earnings by (ii) the average of the
Revenue and Profit Bonus Rates listed below in Tables 1 and 2, and subtracting
(iii) any discretionary bonuses previously paid for fiscal 2006. Qualified
Earnings are the employee’s actual paid annual earnings per his or her W-2,
excluding payments for non-base compensation such as reimbursement for moving
expenses, bonus

 

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payments for the current or prior year, stock option compensation, disability
benefits, sign-on bonuses, vacation cash-outs, on call pay, and similar
payments.
Stated mathematically, the Annual Bonus allocated to the Bonus Pool in which an
Eligible Employee participates equals A * (B+C)/2 – D, where A = an Eligible
Employee’s Qualified Earnings; B = the applicable Profit Bonus Rate listed in
Table 1; C = the applicable Revenue Bonus Rate listed in Table 2; and D =
Bonuses relating to fiscal 2006 paid previously during the year.

C.   Bonus Pools:

All Annual Bonuses so calculated, except bonuses for Executive Officers, will be
pooled by functional department (e.g., Application Development, Customer
Support, Finance, etc.) into a bonus pool for that department (each a “Bonus
Pool”). The Vice Presidents of each department will then allocate their Bonus
Pools to individual employees based on their assessment of an employee’s
performance for the 2006 fiscal year.

D.   Review of Bonus Amounts:

Before payment of the Annual Bonuses, the Vice President of Human Resources and
the Chief Financial Officer will review the bonus allocations for all employees
for reasonableness, except for those payable to Executive Officers. If the Chief
Executive Officer recommends that a proposed Annual Bonus for an Executive
Officer be based on other than the formula described in Section B above,
Compensation Committee approval will be required before such bonus can be paid.

E.   Determination of Annual Revenue and Modified GAAP Operating Income Targets:

The Annual Revenue and Modified GAAP Operating Income targets to be used in
determining the applicable Revenue Bonus Rates and Profit Bonus Rates shall be
established and approved by the Company’s Board of Directors and Compensation
Committee.

F.   Bonus Participation Levels:

Table 1 – Profit Bonus Rates

                                                                      % of
Modified   PROFIT BONUS RATES GAAP Operating                   Non-            
        Income Target           Exec.   Executive                     Attained  
CEO   Officer   VP   Sr. Dir.   Sr. Dir.*   Director   Manager   Staff   100 %  
  0.00 %     0.00 %     0.00 %     12.00 %     10.00 %     8.00 %     6.00 %    
4.00 %   110.02 %     0.00 %     0.00 %     0.00 %     14.25 %     11.88 %    
9.50 %     7.13 %     4.75 %   120.04 %     0.00 %     0.00 %     0.00 %    
16.50 %     13.75 %     11.00 %     8.25 %     5.50 %   130.06 %     20.00 %    
10.00 %     8.00 %     18.75 %     15.63 %     12.50 %     9.38 %     6.25 %  
140.08 %     40.00 %     20.00 %     16.00 %     21.00 %     17.50 %     14.00 %
    10.50 %     7.00 %   150.10 %     60.00 %     30.00 %     24.00 %     23.25
%     19.38 %     15.50 %     11.63 %     7.75 %   160.12 %     80.00 %    
40.00 %     32.00 %     25.50 %     21.25 %     17.00 %     12.75 %     8.50 %  
170.14 %     100.00 %     50.00 %     40.00 %     30.00 %     25.00 %     20.00
%     15.00 %     10.00 %   180.16 %     120.00 %     60.00 %     48.00 %    
32.25 %     26.88 %     21.50 %     16.13 %     10.75 %   190.18 %     140.00 %
    70.00 %     56.00 %     34.50 %     28.75 %     23.00 %     17.25 %    
11.50 %   200.19 %     160.00 %     80.00 %     64.00 %     36.75 %     30.63 %
    24.50 %     18.38 %     12.25 %

 

*   Special bonus grade for one senior director.

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Table 2 – Revenue Bonus Rates

                                                                             
REVENUE BONUS RATES                         Non-                     % of
Revenue           Exec.   Executive                     Target Attained   CEO  
Officer   VP   Sr. Dir.   Sr. Dir.*   Director   Manager   Staff   100 %    
0.00 %     0.00 %     0.00 %     12.00 %     10.00 %     8.00 %     6.00 %    
4.00 %   102 %     0.00 %     0.00 %     0.00 %     14.25 %     11.88 %     9.50
%     7.13 %     4.75 %   104 %     0.00 %     0.00 %     0.00 %     16.50 %    
13.75 %     11.00 %     8.25 %     5.50 %   106 %     20.00 %     10.00 %    
8.00 %     18.75 %     15.63 %     12.50 %     9.38 %     6.25 %   107 %    
40.00 %     20.00 %     16.00 %     21.00 %     17.50 %     14.00 %     10.50 %
    7.00 %   109 %     60.00 %     30.00 %     24.00 %     23.25 %     19.38 %  
  15.50 %     11.63 %     7.75 %   111 %     80.00 %     40.00 %     32.00 %    
25.50 %     21.25 %     17.00 %     12.75 %     8.50 %   113 %     100.00 %    
50.00 %     40.00 %     30.00 %     25.00 %     20.00 %     15.00 %     10.00 %
  115 %     120.00 %     60.00 %     48.00 %     32.25 %     26.88 %     21.50 %
    16.13 %     10.75 %   117 %     140.00 %     70.00 %     56.00 %     34.50 %
    28.75 %     23.00 %     17.25 %     11.50 %   119 %     160.00 %     80.00 %
    64.00 %     36.75 %     30.63 %     24.50 %     18.38 %     12.25 %

 

*   Special bonus grade for one senior director.

For performance between the listed data points, the Bonus Rates should be
interpolated in a linear manner.

G.   Discretionary Bonuses:

Discretionary bonuses may also be paid under the 2006 Bonus Plan but only if, in
Management’s view, the Company is able to pay a discretionary bonus without
materially adversely affecting the Company’s financial results and special
circumstances exist. Consideration for such bonuses may be given for special
circumstances or achievements by a division, group or individual, or the
Company. The Chief Executive Officer of the Company has the authority to award
discretionary bonuses to Eligible Employees other than Executive Officers, and
the Compensation Committee has the authority to award discretionary bonuses to
Eligible Employees who are Executive Officers, including the CEO.
*     *     *     *

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