Exhibit
10.1


 


The SCO
Group


EMPLOYEE
INCENTIVE BONUS PROGRAM


 


2005
Fiscal Year


 


1.0                               PURPOSE


 


The Employee Incentive Bonus Program (Bonus Plan) is designed to reward
employees for their contributions to the successful achievement of certain
corporate goals and objectives and to share the success (and risks) of the
business with employees based upon successful achievement of quarterly business
goals.


 


2.0                               ADMINISTRATION


 


The Bonus Plan is approved annually by the Compensation Committee of
the Company’s Board of Directors and will be administered under the auspices of
the Company’s Management Incentive Committee (MIC), to consist of the CEO, the
CFO and the SVP of Operations.  The MIC
will be responsible for setting the performance objectives and administering the
Bonus Plan, provided the Compensation Committee shall set the performance
objectives of the CEO and the CEO shall approve the performance objectives of
the members of the MIC other than the CEO. 
The MIC will delegate specific administrative tasks to the Director of
Human Resources as Plan Administrator, who will have day-to-day responsibility
for the administration of the Plan.


 


3.0                               ELIGIBILITY


 


The Bonus plan will cover all regular employees, except that employees
who are covered by sales commission or any other incentive-eligible program
will not be eligible to participate in the Bonus Plan.


 


Temporary employees, interns, independent contractors, and authorized
agents are not eligible to participate in the Bonus Plan.


 


4.0                               BONUS
POOL


 


The Bonus Pool will be comprised of three
components:  1) 40% related to revenue;
2) 40% related to operating performance; and 3) 20% related to personal
objectives.


 


There will be no Bonus Pool established
unless the revenue and operating performance targets are attained at 100%.  Additionally, if the Bonus Pool and
subsequent payment of bonuses causes the UNIX business to have negative cash
flow for a particular quarter, the Bonus Pool will be pro-rated to ensure that
the UNIX business does not generate negative cash flow.


 





















 


The revenue and operating performance targets for each quarter of
fiscal year 2005 shall be established by the Compensation Committee.  The personal objectives shall be established
as set forth in Section 2.0 above.


 


The amount payable to any employee of the
Company will depend on a percentage of such employee’s annual base salary.  The applicable percentages of annual base
salary for all employees shall be established by the Compensation
Committee.  To the extent that revenue
and operating performance targets are attained at greater than 100% and up to
150%, accelerators may apply to increase the bonus pool from 101% of the
applicable percentages of annual base salary to 200% of such percentages
depending upon the extent by which the Company exceeds revenue and operating
performance targets.


 


5.0                               GENERAL
PROVISIONS


 


The Bonus Plan is designed to meet these key objectives:


 


•                  Reward achievement of specific
Company Revenue and Operating Loss objectives


•                  Align employee, Company, and
shareholder interests


•                  Improve Morale


 


5.1                               Other
Bonus Plans:  The Bonus Plan
supersedes all prior bonus plans and shall not be modified unless authorized in
writing by the CEO and the Chair of the Compensation Committee.


 


5.2                               Plan
Objectives:  Specific quarterly
financial or performance objectives will be established for each fiscal
quarter, and may include revenue, net income, gross margin, operating expenses,
and other criteria.


 


5.3                               Payment
of Bonus:  Bonus payouts will be paid
no later than 45 days following the end of each fiscal quarter for those on a
bi-weekly payroll.  Bonus payouts will be
paid no later than the end of the second month following the end of the fiscal
quarter for those on a monthly payroll.


 


5.4                               Benefits:  Bonus Plan awards are considered
compensation for purposes of benefit determination and eligibility under the
Company’s 401(k) plan.  Bonus Plan awards
are not compensation for purposes of benefit determination or eligibility under
the Company’s life, accidental death and dismemberment, short or long-term
disability insurance, or any other similar benefit plan in accordance with all
plan rules and limitations.  Subject to
local employment law, Bonus Plan awards are not considered compensation for
purposes of severance calculation.


 


5.5                               Deductions:  All Bonus Plan awards are subject to
statutory deductions and are taxable at the time of payment.  There shall be no Bonus Plan Awards under the
Plan deferred to any future years.


 





















 


5.6                               Exchange
Rates:  The exchange rates for Bonus
Plan awards will be those rates issued by the Company’s Finance Department at
the end of each accounting period.


 


5.7                               Transfer/Status
Change:  Participants must have been
hired and eligible to participate at the beginning of the fiscal quarter.  Employees transferring from another
incentive/commission plan during the fiscal quarter shall be compensated based
on the plan they were eligible for at the beginning of the quarter at a
pro-rated basis.  Employees whose
promotion bumps them to a higher percentage during the quarter will be
re-levelled at the beginning of the following quarter.


 


5.8                               Leave
of Absence:  Bonus Plan Awards are
pro-rated for employees who are on leave of absence more than three consecutive
weeks during any single quarter. 
Employees must be actively at work at the beginning of the quarter to be
eligible for that period.  Employees who
have been on an approved family or medical leave of absence under FMLA criteria
will be eligible for a pro-rated award, assuming all other criteria have been
met.


 


5.9                               Termination
of Employment:  In the event an
employee’s active employment terminates during the fiscal quarter by reason of
retirement, total and permanent disability, or death, the participant will
receive a pro-rated bonus, assuming all other criteria have been met.


 


Participants who are involuntarily terminated through no fault of their
own will be considered for a pro-rated payment based on MIC approval.


 


In the event an employee’s active employment terminates for any other
reason, including resignation and discharge for cause during the quarter, all
rights to an award will be forfeited.


 


5.10                        Amendment
and Termination of the Plan:  The MIC
and/or the Chair of the Compensation Committee may terminate, suspend, or amend
the Bonus Plan, in whole or in part, from time to time.


 


5.11                        Payment
from General Assets:  The payment of
a Bonus Plan award shall be from the general assets of the Company.  Employees shall have no greater rights to
payment than other general creditors of the Company.


 


5.12                        Participation:  Participation in the Bonus Plan does not
guarantee employment, nor does participation at any time guarantee ongoing
participation.


 


5.13                        Interpretation:  The Plan Administrator shall have full power
and authority to interpret and administer the Bonus Plan.  Disputes arising under the Bonus Plan
regarding the administration, interpretation or calculation of awards or any
other matter may be submitted in writing to the MIC, who shall render a final
and binding decision.


 





















 


6.0                               CONFIDENTIALITY


 


Participation in the Bonus Plan and all related discussion and
documentation is considered fully confidential between the Company and the
employee.  All employees are expected to
honor this confidentiality and not disclose or discuss Bonus Plan matters with
any persons other than his/her manager or Human Resources.  Failure to maintain confidentiality regarding
the Bonus Plan may jeopardize participation and/or award eligibility.


 


7.0                               ETHICS


 


Any participant who manipulates or attempts to manipulate the Bonus
Plan for personal gain at the expense of customers, other employees, or Company
objectives will be subject to appropriate disciplinary action, up to and
including termination of employment.


 


8.0                               PLAN
IS NOT A CONTRACT


 


The adoption and maintenance of the Bonus Plan shall not be deemed to
be a contract of employment between the Company and an employee.  Nothing herein contained shall be deemed to
give any employee the right to be retained in the employ of the Company or to
interfere with the right of the Company to discharge any employee at any time,
nor shall it interfere with the employee’s right to terminate employment at any
time.