Exhibit 10.1

VMware, Inc.

2010 Executive Bonus Program

Executive Bonus Program Objectives

Among the objectives of the VMware Bonus Program – 2010 are to:

 

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motivate our executives to achieve our strategic, operational and financial
goals

 

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reward superior performance

 

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attract and retain exceptional executives; and

 

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reward behaviors that result in long term increased stockholder value

Overview

The Compensation and Corporate Governance Committee has adopted a cash bonus
program relating to performance in 2010 (the “2010 Program”) under the 2007
Equity and Incentive Plan (the “Plan”) providing for possible cash bonuses to
specified executives of VMware, Inc. and its consolidated subsidiaries (the
“Company”). Unless otherwise indicated herein, provisions of the Plan shall
apply to the 2010 Program.

In keeping with VMware’s philosophy of tying a substantial portion of our
executive compensation to the achievement of measurable achievements, a
goals-based cash bonus program has been developed and implemented. The
determination of bonus payout will be made semiannually after the conclusion of
the semi-annual measurement periods ending on June 30 and December 31 based on
results achieved by the company, as reported to the Compensation and Corporate
Governance Committee by the Chief Financial Officer, Chief Accounting Officer or
Corporate Controller. Bonuses will be determined by the Compensation and
Corporate Governance Committee of the Board of Directors (the “Administrator”).
Bonus payments will only occur if certain predetermined company and individual
(“MBO”) objectives are successfully achieved. Bonus amounts will be calculated
(“Calculated Bonus Amounts”) based upon the degree of achievement of the
predetermined objectives. The Compensation and Corporate Governance Committee
shall determine final bonus payouts and, in its discretion, taking into account
review and discussion of recommendations made by the Chief Executive Officer,
may reduce, but not increase, final bonus payouts from the Calculated Bonus
Amounts.

Bonus awards represent an unfunded, unsecured promise by the Company to pay a
bonus amount determined by the Compensation and Corporate Governance Committee
to each Participant, but only upon satisfaction of the performance criteria
determined by the Compensation and Corporate Governance Committee in accordance
with the provisions set forth below.

Eligibility

All senior executives are eligible to be considered for participation. However,
no person is automatically entitled to participate in the 2010 Program.
Participants will be approved solely at the discretion of the Compensation and
Corporate Governance Committee and may be amended at any time by the
Compensation and Corporate Governance Committee. Additionally, the executive
must be an employee of the Company at the time the bonus is paid out in order to
vest in right to receive payment.

Participants may include executive officers of the Company as defined under Rule
3b-7 of the 1934 Securities Exchange Act (“Executive Officers”) and other senior
executives who are not Executive Officers. At its discretion, the Compensation
and Corporate Governance Committee may delegate authority to the Chief Executive
Officer to add senior executives who are not Executive Officers to the 2010
Program.

 

 

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VMware, Inc.

2010 Executive Bonus Program

 

Administration

As Administrator, the Compensation and Corporate Governance Committee is
ultimately responsible for administering the 2010 Program. The Administrator has
all powers and discretion necessary or appropriate to review and approve the
2010 Program and its operation, including, but not limited to, the power to
(a) determine Participants, (b) interpret the provisions of the 2010 Program,
(c) adopt rules for the administration, interpretation and application of the
2010 Program consistent with the Plan, and (d) interpret, amend or revoke any
such rules. All determinations and decisions made by the Administrator and any
decision of the Administrator shall be final, conclusive, and binding on all
persons, and shall be given the maximum deference permitted by law. The
Administrator, in its sole discretion, may amend or terminate the 2010 Program,
or any part thereof, at any time and for any reason, subject to the limitations
set forth in Sections 3, 6(b)(iv) and 7 of the Plan.

The Administrator shall exercise full authority to make final determinations
with respect to bonuses granted under the 2010 Program to Executive Officers.
The Administrator may, in its discretion, delegate authority over bonuses to
Participants who are not Executive Officers to the Chief Executive Officer of
the Company.

Target Percentage

The Administrator shall establish target bonuses (“Bonus Targets”) and bonus
formulas for the 2010 Program.

Target bonus amounts will be a percentage of a Participant’s semi-annual base
salary as of the date the target bonus percentage is established (the “Target
Bonus Percentage”).

The Calculated Bonus Amount, if any, may range 0% to 200% of the Target Bonus
Percentage depending upon performance achievement. Minimum bonus thresholds are
described below.

Performance Period

Unless otherwise indicated, the performance periods for bonuses granted under
the 2010 Program shall run from January 1, 2010 to June 30, 2010 and from
July 1, 2010 to December 31, 2010. (each, a “Performance Period”). Participants
are rewarded during the period that they are actively employed by VMware.

Participants are not eligible to participate in any other Company bonus or
incentive plan during a Performance Period. This exclusion does not apply,
however, to applicable employee referral bonuses, spot bonuses, equity awards,
or Company contributions to qualified retirement or savings plans.

New Hires: Calculated Bonus Amounts will be prorated for newly hired
participants based on the number of days they are employed during the
Performance Period.

Leaves of Absence: Calculated Bonus Amounts will be prorated for any time during
the Performance Period that a Participant is on an unpaid leave of absence
status. Unpaid leaves of absence exclude those absences for which vacation, sick
leave or other compensation is paid directly by the Company. Unpaid absences
include those absences for which compensation is received from any source other
than directly from the Company.

Changes in Position: Participants who move from one 2010 bonus-eligible position
to a different 2010 bonus-eligible position with a different target bonus
percentage may earn a target bonus prorated on base pay and bonus at the start
of each period.

Termination: In order to vest and the right to receive a bonus under the 2010
Program, an employee must be in an active employment status or on approved leave
at the day the bonus is paid out. An employee whose employment ends for any
reason prior to that date will not earn and will not be paid any bonus under
this 2010 Program.

The Compensation and Corporate Governance Committee shall have the exclusive
discretion to determine when a Participant is no longer actively employed for
purposes of the 2010 Program. Participants have no right or interest in any
bonus and such bonus is not earned unless the Administrator determines a bonus
payout is due.

 

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VMware, Inc.

2010 Executive Bonus Program

 

Performance Metrics

The Calculated Bonus Amount will depend on both a company component (“Corporate
Financial Metric”) and an individual component (“MBO”) selected from the
performance goals from the 2007 Plan. The Company must meet a threshold of 80%
of the Corporate Financial Metric in order for any bonus payouts to be made. If
the 80% threshold is not achieved, the 2010 Program shall not be funded and no
bonus payouts shall be made. The Corporate Financial Metrics, the MBO’s and
their relative weighting shall be determined by the Committee within 45 days of
the commencement of the performance period.

Corporate Financial Metric Component

The Corporate Financial Metric shall be determined by calculating success
against company-wide financial metrics and, as applicable, business unit
performance metrics, as determined by the Compensation and Corporate Governance
Committee.

MBO (Individual) Component

Each Participant will be assigned individual performance goals by the
Compensation and Corporate Governance Committee that are appropriate to the
Participant’s role at the Company. If threshold achievement of 80% of the
Corporate Financial Metric is met, then the MBO component is funded at the same
percentage as the Corporate Financial Metric. The Compensation and Corporate
Governance Committee can exercise negative discretion to reduce the bonus for
the MBO component. In making its determination whether to reduce the bonus for
the MBO component, the Committee’s shall review and discuss the Chief Executive
Officer’s assessment of each Participant’s achievement of his or her individual
performance goals.

Bonus Determination and Payment

The Compensation and Corporate Governance Committee shall determine final bonus
payouts to Participants based upon achievement of the foregoing metrics and
goals. The Committee reserves the right to reduce bonus payouts below Calculated
Bonus Amounts or not make any bonus payouts in its sole discretion.

Cancellation, Rescission and Recoupment of Awards

Any bonus granted under this 2010 Program to a Participant shall be subject to
cancellation, rescission, repayment or other action at the discretion of the
Compensation Committee as set forth in Section 7(d) of the Plan in the event
that such Participant engages in “Detrimental Activity” as such term is defined
in Section 7(d)

Additionally, the Compensation and Corporate Governance Committee shall have the
discretion to require that each Participant reimburse the Company for all or any
portion of any bonuses paid under the 2010 Program if –

(a) the payment was predicated upon the achievement of certain financial results
that were subsequently the subject of a material financial restatement,

(b) in the Board’s view, the Participant engaged in fraud or misconduct that
caused or partially caused the need for a material financial restatement by the
Company or any substantial affiliate, and

(c) a lower payment, award, or vesting would have occurred based upon the
restated financial results.

In each such instance, upon the determination of the Compensation and Corporate
Governance Committee to require recoupment of a previously paid bonus awarded
under the 2010 Program, the Company will, to the extent practicable and
allowable under applicable laws, require reimbursement of any bonus awarded for
the relevant period exceeded the lower payment that would have been made based
on the restated financial results, provided that the Company will not seek to
recover bonuses compensation paid more than three years prior to the date the
applicable restatement is disclosed.

 

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VMware, Inc.

2010 Executive Bonus Program

 

At-Will Employment (US Only)

This Plan does not affect the terminable-at-will status of the employment
relationship. Neither the attainment of goals nor the continuous service
requirement necessary to earn a bonus alters the ability of an employee or the
Company to terminate employment at any time, with or without reason and with or
without advance notice.

 

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