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                                                                   EXHIBIT 10.01

                                   CREE, INC.

                    MANAGEMENT INCENTIVE COMPENSATION PROGRAM

                              FISCAL YEAR 2000 PLAN

1.0      INTENT

         The intention of the Cree, Inc. Management Incentive Compensation
         Program (the "Program") for Fiscal Year 2000 ("FY 2000") is to provide
         incentives to eligible members of the management team for achieving or
         surpassing established after-tax earnings per share ("EPS") goals for
         FY 2000.

2.0      MANAGEMENT PARTICIPANT QUALIFICATIONS

         2.1      Participation shall be limited to a small group of senior
                  management employees who have an important influence on the
                  operation, profits and future of the Company. Generally, only
                  executive officers and managers of major staff or line
                  functions shall be eligible to participate in the Program.

         2.2      Participation shall be determined by the CEO of the Company.

         2.3      An invitation to participate and the information divulged in
                  connection with the Program shall be considered private and
                  may not be discussed with others.

         2.4      Participants in the Program shall not be eligible to
                  participate in the Company's Employee Profit-Sharing Program
                  (the "Employee Program") or in any successor arrangement to
                  the Employee Program. Participants in the Program shall remain
                  eligible to receive other discretionary cash bonuses and to
                  participate in any retirement savings plans sponsored by the
                  Company for which they are otherwise eligible.

3.0      FUNDING OF THE INCENTIVE PLAN POOL

         3.1      General:

                  A pool (the "Pool") shall be funded upon the achievement of
                  the goals for after-tax EPS for FY 2000 as approved by the
                  Compensation Committee of the Board of Directors. The Pool
                  shall not be funded unless such goals are met at the
                  pre-established threshold level of achievement fixed by the
                  Compensation Committee. In addition, the Pool shall not be
                  funded to the extent that such funding would reduce the amount
                  of the Pool funded under the Employee Program for any fiscal
                  quarter of FY 2000.



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                  Upon admission to the Program, each participant shall be
                  assigned an individual target award percentage to be applied
                  to the individual's Base Salary for FY 2000 for calculating
                  funding of the Pool and payouts as described below.

         3.2      Calculation of Pool Funding:

                  The Pool at 100% of the target level shall be the aggregate
                  Base Salaries of the participants as of the end of FY 2000
                  times their respective target award percentages. (A
                  participant's Base Salary as of the end of FY 2000 times his
                  or her target award percentage shall be the participant's
                  "Target Payout Amount".) The Pool at 100% of the target level
                  shall be adjusted in two steps. In Step One, the Pool shall be
                  adjusted on the basis of the percentage of the EPS goal for FY
                  2000 actually achieved. Such adjustment shall be made
                  according to the schedule approved by the Compensation
                  Committee. In Step Two, the Pool as calculated in Step One
                  shall be reduced to the extent necessary to prevent any
                  reduction in the amount of the pool funded under the Employee
                  Program for any fiscal quarter during FY 2000 that would
                  otherwise result from funding the Pool at the level determined
                  in Step One.

         3.3      Calculation for Individual Payout:

                  Each participant's payout amount shall be a pro rata portion
                  of the Pool as funded under Section 3.2 above. Each payout
                  amount shall be determined by multiplying the Pool times a
                  fraction where (i) the numerator is the participant's Target
                  Payout Amount and (ii) the denominator is the aggregate sum of
                  all participants' Target Payout Amounts.

4.0      RULES

         4.1      EPS resulting from unusual or non-recurring charges or from
                  system changes shall be excluded for purposes of this Program.

         4.2      "Base Salary" shall mean a participant's total base
                  compensation as of the end of FY 2000, including any amounts
                  deferred under any deferred compensation plans of the Company
                  but excluding any incentive pay, bonus payments, commission
                  payments, income resulting from stock option exercises, etc.

         4.3      The Company recognizes that certain unforeseen events or
                  inequities could develop in the Program as established. The
                  Compensation Committee shall have the discretion to consider
                  unusual circumstances. Such consideration shall be given only
                  at the end of the Fiscal Year, and any decision of the
                  Compensation Committee shall be final.

         4.4      Payments shall be made based on final annual financial
                  statements as audited by


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                  the Company's independent certified public accountants.
                  Individual payouts shall be paid on or prior to August 1,
                  2000, or as soon thereafter as practicable.

         4.5      The Compensation Committee shall determine an individual
                  target award percentage for the Chief Executive Officer of the
                  Company (the "CEO"). The CEO shall determine the individual
                  target award for each other participant. No individual target
                  award percentage shall be greater than that of the CEO unless
                  approved by the Compensation Committee.

         4.6      Only those who remain employees of the Company and members of
                  the eligible management group through the date of payout will
                  receive payments. No amount shall be deemed earned under this
                  Program unless and until actually paid.

         4.7      As business conditions, participants' positions and the
                  Company's needs change, the Compensation Committee shall have
                  the sole and absolute discretion to modify or cancel this
                  Program, or any individual's participation in the Program, at
                  any time prior to payment upon notice to the affected
                  participants. Participants should not presume continued
                  participation in the Program.

         4.8      The Program shall not confer on any participant any right to
                  continued employment with the Company, nor shall it interfere
                  with the participant's right or the Company's right to
                  terminate the participant's employment at any time, with or
                  without cause.



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