exv10w14



 





Exhibit 10.14




2004 Employee Bonus Plan



The 2004 Employee Bonus Plan (“2004 Bonus Plan”) is designed to motivate employees of Ixia
(“Ixia” or the “Company”) and any U.S. subsidiaries and to reward them for their continuing
contributions to the Company’s business if Ixia achieves certain financial results in 2004. The
Company believes that the achievement of these results is essential for the Company’s success and
for the continued growth in shareholder value.



2004 Bonus Plan :



Each Eligible Employee (as defined below) who earns a bonus by virtue of his or her continuing
employment with Ixia will be eligible to receive a quarterly bonus (“Quarterly Bonus”) based on the
Company’s financial performance as measured by the degree of the Company’s attainment of a pre-set,
Board of Directors’ approved, operating income before bonus goal for each calendar quarter during
2004.



The Quarterly Bonuses payable to an Eligible Employee under the 2004 Bonus Plan will be calculated
as a percentage of such employee’s actual paid year to date earnings, excluding certain
compensation and payments (e.g., reimbursement for moving expenses, bonus payments received for
prior period, stock option compensation, disability benefits, sign-on bonuses, vacation cash-outs,
on call pay, and similar payments).



Eligible Employees:



All full-time and part-time employees of Ixia and any U.S. subsidiaries, other than Excluded
Employees (as defined below), are Eligible Employees for purposes of the 2004 Bonus Plan. The
following employees of the Company and any U.S. subsidiaries are Excluded Employees for purposes of
the 2004 Bonus Plan:



1. Commissioned employees;

2. Employees who are expressly covered by any other Ixia 2004 bonus plan; and

3. Casual, co-op or temporary employees


In order to earn and be eligible to receive a Quarterly Bonus, a person must be employed by Ixia or
one of its subsidiaries as an Eligible Employee (i) throughout the entire calendar quarter for
which the bonus is payable; 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, in his sole
discretion. An employee’s eligibility under the 2004 Bonus Plan shall be determined on a
quarter-by-quarter basis. An employee who is on an approved leave of absence from the Company
during a calendar quarter will, for purposes of determining eligibility under the 2004 Bonus Plan,
be treated as being employed by the Company during such leave of absence.



Quarterly Bonuses:



While the bonuses will be paid quarterly, they will be calculated on a year to date basis in
order to balance uneven results from quarter to quarter. The financial measure for calculating the
Quarterly Bonuses will be the Company’s year to date GAAP operating income calculated on a
consolidated basis. The amount of bonus payable as a Quarterly Bonus to an Eligible Employee will
be calculated by multiplying (i) the Eligible Employee’s actual year to date earnings by (ii) the
Bonus Percentage listed below in Table 1 and by (iii) the applicable Cumulative Weighting Factor
for such quarter as listed in Schedule A attached hereto, less any Quarterly Bonuses paid
for previous quarters during the year.



Stated mathematically, the amount of a Quarterly Bonus equals (AxBxC)-D, where A = an Eligible
Employee’s actual earnings paid year to date; B = the applicable Bonus Percentage listed in Table 1
below based on actual financial results (i.e., the percentage of budgeted GAAP income attained); C
= the Cumulative Weighting Factor (as




 









 







determined in accordance with the matrix set forth in
Schedule A attached hereto); and D = Bonuses paid previously during the year.



Except as otherwise provided herein, the Quarterly Bonus will be payable in one lump sum (subject
to applicable withholding taxes and other applicable deductions) within 45 days after the Company’s
quarterly results are publicly announced. An Eligible Employee who is on an approved leave of
absence from the Company on the date on which Quarterly Bonuses are paid and thereafter returns to
active status as an Eligible Employee upon the end of such leave of absence, will be paid a
Quarterly Bonus to which he/she is otherwise entitled under this 2004 Bonus Plan within 30 days
following his/her return to active status as an Eligible Employee. An Eligible Employee who is on
an approved leave of absence from the Company on the date on which Quarterly Bonuses are paid and
thereafter fails to return to active status as an Eligible Employee upon the end of such leave of
absence, will forfeit his/her right to any Quarterly Bonus to which he/she may otherwise be
entitled for such quarter.



Bonus Participation Levels:



For each calendar quarter, the bonus rate is determined by reference to the following matrix.
The bonus rate is adjusted downward by a factor of 2x for performance below Target. For
performance at or above the Target, the bonus increases by the ratio of actual GAAP operating
income divided by Budgeted GAAP Operating Income. For results between the listed values, the Bonus
Percentage should be interpolated ratably.




Table 1 - Bonus Participation Table




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	% of Base Salary Paid as Bonus	 	 
	 	% of	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Budgeted	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	GAAP	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Operating	 	 	 	 	 	 	Exec	 	 	Non-Exec	 	 	Sr.	 	 	 	 	 	 	 	 
	 	Income	 	 	CEO	 	 	Officers	 	 	VPs	 	 	Directors	 	 	Directors	 	 	Staff	 	 
	 	 	 	 	 	 
	 	< 75%
	 	 	 	0	%	 	 	0	%	 	 	0	%	 	 	0	%	 	 	0	%	 	 	0	%	 
	 	75%
	 	 	 	50	%	 	 	25	%	 	 	20	%	 	 	15	%	 	 	8	%	 	 	5	%	 
	 	80%
	 	 	 	60	%	 	 	30	%	 	 	24	%	 	 	18	%	 	 	9	%	 	 	6	%	 
	 	90%
	 	 	 	80	%	 	 	40	%	 	 	32	%	 	 	24	%	 	 	12	%	 	 	8	%	 
	 	100%
	 	 	 	100	%	 	 	50	%	 	 	40	%	 	 	30	%	 	 	15	%	 	 	10	%	 
	 	110%
	 	 	 	110	%	 	 	55	%	 	 	44	%	 	 	33	%	 	 	17	%	 	 	11	%	 
	 	120%
	 	 	 	120	%	 	 	60	%	 	 	48	%	 	 	36	%	 	 	18	%	 	 	12	%	 
	 	130%
	 	 	 	130	%	 	 	65	%	 	 	52	%	 	 	39	%	 	 	20	%	 	 	13	%	 
	 	 	 	 	 	 





Weighting Factor:




To recognize the fact that Operating Income is not earned evenly over the year, the Cumulative
Weighting Factor (as determined in accordance with the matrix set forth in Schedule A
attached hereto) will be applied when calculating bonuses payable for a given quarter.




Discretionary Bonuses:




Discretionary bonuses may also be paid under the 2004 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.
With the advice and counsel of the Board of Directors, the Chief Executive Officer of the Company
has the authority to award discretionary bonuses to Eligible Employees.




* * * *





 









 








Schedule A - Weighting Factor




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Cumulative	 	 
	 	 	 	Operating	 	 	Earned	 	 	Cumulative	 	 	Weighting	 	 	Weighting	 	 
	 	QTR	 	Income	 	 	per QTR	 	 	Earned	 	 	Factor	 	 	Factor	 	 
	 	 	 
	 	Q1
	 	 	3,483	 	 	 	18.7	%	 	 	18.7	%	 	 	75.0	%	 	 	75.0	%	 
	 	Q2
	 	 	4,077	 	 	 	21.9	%	 	 	40.7	%	 	 	87.8	%	 	 	81.4	%	 
	 	Q3
	 	 	4,740	 	 	 	25.5	%	 	 	66.2	%	 	 	102.1	%	 	 	88.3	%	 
	 	Q4
	 	 	6,278	 	 	 	33.8	%	 	 	100.0	%	 	 	135.2	%	 	 	100.0	%	 
	 	Total
	 	 	18,578	 	 	 	100.0	%	 	 	 	 	 	 	100.0	%	 	 	100.0	%