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                                                                    EXHIBIT 10.2

                                   CREE, INC.

                    MANAGEMENT INCENTIVE COMPENSATION PROGRAM

                              FISCAL YEAR 2001 PLAN

1.0      INTENT

         The intention of the Cree, Inc. Management Incentive Compensation
         Program (the "Program") for Fiscal Year 2001 ("FY 2001") 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 2001.

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 goals for FY 2001 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 2001.

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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 2001 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 2001 times their
         respective target award percentages. (A participant's Base Salary as of
         the end of FY 2001 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 goals for
         FY 2001 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 2001 that would
         otherwise result from funding the Pool at the level determined 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 paid as of the end of FY 2001, 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 the Company's independent certified
                  public accountants. Individual payouts shall be paid on or
                  prior to August 1, 2001, or as soon thereafter as practicable.

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         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.