<PAGE>

                                                                   EXHIBIT 10.3

                                     TEKELEC
                        2003 EXECUTIVE OFFICER BONUS PLAN
                                (Amended 7/31/03)



Tekelec ("Tekelec" or the "Company") believes that a portion of each executive
officer's annual compensation should be directly related to the Company's
financial performance and such officer's achievement of certain objectives. The
2003 Executive Officer Bonus Plan ("2003 Bonus Plan") is designed to motivate
Tekelec's executive officers and to reward them for their continuing
contributions to the Company's business if in 2003 the Company achieves certain
financial results and/or such officers achieve certain individual, business or
strategic objectives. The Company believes that the achievement of these results
and objectives is essential for the Company's success and for the continued
growth in shareholder value.

2003 Bonus Plan:

Each Eligible Officer (as defined below) who earns a bonus by virtue of his or
her continuing employment with Tekelec will be eligible to receive:

(i)   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 2003; and

(ii)  an annual bonus ("Annual Bonus") based on his/her achievement in 2003 of
      individual, business or strategic objectives that the Company's Chief
      Executive Officer (in the case of the Chief Executive Officer, the Board
      of Directors) approves during the first quarter of 2003.

The Quarterly Bonuses and Annual Bonus payable to an Eligible Officer under the
2003 Bonus Plan will be calculated as a percentage of such officer's actual
earnings paid during a calendar quarter or the calendar year, as the case may
be, excluding certain compensation and payments (e.g., reimbursement for moving
expenses, bonus payments received under the 2002 or 2003 Bonus Plan, stock
option compensation, disability benefits, sign-on bonuses, vacation cash-outs,
on call pay, and similar payments).

Eligible Officers:

Unless additional officers are expressly designated as Eligible Officers under
the 2003 Bonus Plan pursuant to a subsequent, duly adopted Board of Directors'
resolution, only the following executive officers shall be eligible to
participate in the 2003 Bonus Plan (all titles are positions with Tekelec unless
otherwise specified):

                      Chief Executive Officer
                      Chief Operating Officer
                      Chief Financial Officer
                      Vice President and General Manager, Network Systems
                      Division* Vice President and General Counsel Executive
                      Vice President, Global Sales and Marketing Group President
                      and General Manager, Network Signaling Division President
                      and General Manager, IEX Corporation Vice President and
                      General Manager, IEX Contact Center Division* Vice
                      President, Corporate Development Vice President, Human
                      Resources Vice President, Operations and Quality

------------
* through 6/30/03

<PAGE>
                                                                   EXHIBIT 10.3


In order to earn and be eligible to receive a Quarterly or an Annual Bonus, an
Eligible Officer must be employed by Tekelec or one of its subsidiaries as an
Eligible Officer on the date on which such bonuses are paid, unless such
requirement is waived in writing by the Company's Chief Executive Officer in the
case of an Eligible Officer other than the Chief Executive Officer, or by the
Board of Directors in the case of the Chief Executive Officer. An Eligible
Officer who is on an approved leave of absence from the Company during a
calendar quarter will, for purposes of determining eligibility under the 2003
Bonus Plan, be treated as being employed by the Company during such leave of
absence. In the event that an Eligible Officer's title changes during a calendar
quarter, the amount of Quarterly Bonus payable under the 2003 Bonus Plan to such
Eligible Officer commencing with such quarter and the amount of Annual Bonus
payable under the 2003 Bonus Plan to such Eligible Employee shall be determined
by reference to such Eligible Officer's new title and corresponding Quarterly
Bonus Percentage and Annual Bonus Percentage, as the case may be.

Quarterly Bonuses:

The Company's pro forma operating income before bonus (which excludes the
effects of acquisition-related amortization and other merger-related charges)
calculated on a consolidated basis ("Operating Income before Bonus") for each
calendar quarter will be the financial measure for the Quarterly Bonuses.

The amount of bonus payable as a Quarterly Bonus to an Eligible Officer will be
calculated by multiplying (i) the product of such Eligible Officer's actual
earnings paid in a calendar quarter and the Quarterly Bonus Percentage for such
calendar quarter listed opposite such officer's title in the Bonus Participation
Table below by (ii) the applicable Bonus Factor (as determined in accordance
with the matrix set forth in Schedule A attached hereto). Stated mathematically,
the amount of a Quarterly Bonus equals (AxB)xC, where A = an Eligible Officer's
actual earnings paid in a calendar quarter; B = the applicable Quarterly Bonus
Percentage; and C = the applicable Bonus Factor.

The amount of the Company's quarterly Operating Income before Bonus will
determine the applicable Bonus Factor. As indicated on Schedule A, minimum
quarterly Operating Income before Bonus will result in a Bonus Factor of 25%;
mid-point Operating Income before Bonus will result in a Bonus Factor of 50%;
and maximum quarterly Operating Income before Bonus will result in a maximum
Bonus Factor of 100%. There will be a linear increase in the percentage amount
of the Bonus Factor between (i) the minimum quarterly Operating Income before
Bonus and the mid-point Operating Income before Bonus; and (ii) the mid-point
Operating Income before Bonus and the maximum quarterly Operating Income before
Bonus.

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 30 days after the Company's quarterly results are publicly
announced. An Eligible Officer who is on an approved leave of absence from the
Company on the date on which Quarterly Bonuses are paid by the Company and
thereafter returns to active status as an Eligible Officer upon the end of such
leave of absence, will be paid a Quarterly Bonus to which he/she is otherwise
entitled under this 2003 Bonus Plan within 30 days following his/her return to
active status as an Eligible Officer. An Eligible Officer who is on an approved
leave of absence from the Company on the date on which Quarterly Bonuses are
paid by the Company and thereafter fails to return to active status as an
Eligible Officer 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.


<PAGE>
                                                                   EXHIBIT 10.3


Annual Bonuses:

The percentage degree (0% to 100%) to which an Eligible Officer achieves his/her
objectives for 2003 will be the measure for the Annual Bonus. The determination
of the percentage degree to which an Eligible Officer (other than the Chief
Executive Officer) achieves his/her objectives will be made by the Chief
Executive Officer by February 15, 2004. The determination of the percentage
degree to which the Chief Executive Officer achieves his objectives will be made
by the Board of Directors by February 15, 2004.

The amount of a bonus payable as an Annual Bonus to an Eligible Officer will be
calculated by multiplying (i) the product of such officer's actual earnings paid
in 2003 and the Annual Bonus Percentage listed opposite such officer's title in
the Bonus Participation Table below by (ii) the percentage degree to which the
Chief Executive Officer or the Board of Directors, as the case may be,
determines that such Eligible Officer has achieved his/her objectives for 2003.

Except as otherwise provided herein, the Annual Bonus will be payable in one
lump sum (subject to applicable withholding taxes and other applicable
deductions) within 30 days of the Chief Executive Officer's or Board of
Directors' determination, as the case may be, of the percentage degree to which
the Eligible Officer has achieved his/her objectives for 2003. An Eligible
Officer who is on an approved leave of absence from the Company on the date on
which Annual Bonuses are paid by the Company and thereafter returns to active
status as an Eligible Officer upon the end of such leave of absence, will be
paid an Annual Bonus to which he/she is otherwise entitled under this 2003 Bonus
Plan within 30 days following his/her return to active status as an Eligible
Officer. An Eligible Officer who is on an approved leave of absence from the
Company on the date on which Annual Bonuses are paid by the Company and
thereafter fails to return to active status as an Eligible Officer upon the end
of such leave of absence, will forfeit his/her right to any Annual Bonus to
which he/she may otherwise be entitled for 2003.

Bonus Participation Levels:

For purposes of determining an Eligible Officer's Quarterly or Annual Bonus
under the 2003 Bonus Plan, the Quarterly Bonus Percentages (by calendar quarter)
and the Annual Bonus Percentages for the Eligible Officers shall be as follows:

<TABLE>
<CAPTION>
                            Bonus Participation Table

                                                                                                    Annual
                                                                                                     Bonus
        Title                                                      Quarterly Bonus Percentage      Percentage
        -----                                                      --------------------------      ----------
  2.                                                               Q1      Q2      Q3      Q4
                                                                   --      --      --      --

<S>                                                               <C>     <C>    <C>      <C>         <C>
  3. Chief Executive Officer                                      40.0%   80.0%  120.0%   160.0%      25%
Chief Operating Officer                                           32.0    64.0    96.0    128.0       20
Chief Financial Officer                                           22.4    44.8    67.2     89.6       14
Vice President and General Manager, NSD                           22.4    44.8     0.0      0.0        0
Vice President and General Counsel                                22.4    44.8    67.2     89.6       14
Executive Vice President, Global Sales and Marketing Group         0.0     0.0    67.2     89.6       14
President and General Manager, Network Signaling Division          0.0     0.0    57.6     76.8       12
President and General Manager, IEX Corporation                     0.0     0.0    57.6     76.8       12
Vice President and General Manager, IEX Contact Center Div        19.2    38.4     0.0      0.0        0
Vice President, Corporate Development                             16.0    32.0    48.0     64.0       10
Vice President, Human Resources                                   16.0    32.0    48.0     64.0       10
Vice President, Operations and Quality                            16.0    32.0    48.0     64.0       10
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</TABLE>


Discretionary Bonuses:

Discretionary bonuses may also be paid under the 2003 Bonus Plan but only upon
the express approval of the Board of Directors.

                                    * * * * *