exv10w3






Exhibit 10.3



MCAFEE, INC. EXECUTIVE BONUS PLAN




Adopted by the Board of Directors January 29, 2008

Approved by Stockholders July 28, 2008

Effective January 29, 2008





	1.	 	Purpose. The purpose of this Plan is to provide certain employees of the Company and its
subsidiaries with incentive compensation based upon the level of achievement of financial,
business and other performance criteria. This Plan is intended to permit the payment of
bonuses that may qualify as performance-based compensation under Code Section 162(m).






	2.	 	Definitions.






	 	(a)	 	“Affiliate” means any corporation or other entity (including, but not limited
to, partnerships and joint ventures) controlled by the Company.
	 
	 	(b)	 	“Award Setting Deadline” means, for a Performance Period, (i) the earlier of:
(a) ninety (90) days after commencement of the Performance Period or (b) the expiration
of twenty-five percent (25%) of the Performance Period, provided that the achievement
of targeted goals under the selected Performance Measures for the Performance Period is
substantially uncertain at such time; or (ii) such other date on which a performance
goal is considered to be pre-established pursuant to Code Section 162(m).
	 
	 	(c)	 	“Board” means the Board of Directors of the Company.
	 
	 	(d)	 	“Bonus” means a cash payment made pursuant to this Plan with respect to a
particular Performance Period, determined pursuant to Section 8 below; provided,
however, a Bonus shall not be greater than an amount equal to two hundred percent
(200%) of the Bonus Target.
	 
	 	(e)	 	“Bonus Target” shall mean a Bonus amount that may be paid if one hundred
percent (100%) of all the applicable Performance Measures are achieved at target in the
Performance Period. The Bonus Target shall be equal to a fixed percentage of the
Participant’s base salary for such Performance Period, and such fixed percentage shall
not exceed one hundred and fifty percent (150%) of a Participant’s base pay. Such
percentage shall be determined by the Committee prior to the Award Setting Deadline.
	 
	 	(f)	 	“Bonus Formula” means as to any Performance Period, the formula established by
the Committee pursuant to Section 6 in order to determine the Bonus amounts, if any, to
be paid to Participants based upon the level of achievement of targeted goals for the
selected Performance Measures. The formula may differ from Participant to Participant
or business group to business group. The Bonus Formula shall be of such a nature that
an objective third party having knowledge




 









 






	 	 	 	of all the relevant facts could determine whether targeted goals for the Performance
Measures have been achieved.
	 
	 	(g)	 	“Code” means the United States Internal Revenue Code of 1986, as amended.
	 
	 	(h)	 	“Company” means McAfee, Inc., a Delaware corporation.
	 
	 	(i)	 	“Committee” means the Committee as described in Section 5 that has been
designated to administer programs intended to qualify as “performance-based
compensation” within the meaning of Section 162(m).
	 
	 	(j)	 	“Fiscal Year” means the calendar year.
	 
	 	(k)	 	“Participant” means any senior executive of the Company or of an Affiliate who
has been selected by the Committee to participate in the Plan for a given Performance
Period.
	 
	 	(l)	 	“Performance-Based Compensation” means compensation that qualifies as
“performance-based compensation” within the meaning of Code Section 162(m).
	 
	 	(m)	 	“Performance Measure” means any one or more of the following performance
criteria, either individually, alternatively or in any combination, applied to either
the Company as a whole or to a business unit, Affiliate, region, or business segment,
either individually, alternatively or in any combination, and measured either on an
absolute basis or relative to a pre-established target, a previous period’s results or
a designated comparison group, in each case as specified by the Committee:






	 	i.	 	cash flow (including operating cash flows or free cash flow),
	 
	 	ii.	 	revenue (on an absolute basis or adjusted for currency effects),
	 
	 	iii.	 	gross margin,
	 
	 	iv.	 	operating expenses or operating expenses as a percentage of revenue,
	 
	 	v.	 	earnings (which may include: earnings before interest and
taxes; earnings before taxes; net earnings; earnings before interest,
depreciation and amortization (“EBITDA”); earnings before interest,
depreciation, amortization and equity compensation; and may be determined in
accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) or
adjusted to exclude any or all non-GAAP items),
	 
	 	vi.	 	earnings per share (on a GAAP or non-GAAP basis),
	 
	 	vii.	 	growth in any of the foregoing measures,
	 
	 	viii.	 	stock price,
	 
	 	ix.	 	return on equity or average stockholders’ equity,
	 
	 	x.	 	total stockholder return,




2









 






	 	xi.	 	growth in stockholder value relative to the moving average of
the Standard & Poor’s 500 Index or another index,
	 
	 	xii.	 	return on capital,
	 
	 	xiii.	 	return on assets or net assets,
	 
	 	xiv.	 	return on investment,
	 
	 	xv.	 	economic value added,
	 
	 	xvi.	 	operating income,
	 
	 	xvii.	 	operating profit, controllable operating profit, or net operating profit,
	 
	 	xviii.	 	net profit,
	 
	 	xix.	 	net income,
	 
	 	xx.	 	operating margin,
	 
	 	xxi.	 	cash conversion cycle,
	 
	 	xxii.	 	market share,
	 
	 	xxiii.	 	contract awards or backlog,
	 
	 	xxiv.	 	overhead or other expense reduction,
	 
	 	xxv.	 	bookings,
	 
	 	xxvi.	 	performance against budget,
	 
	 	xxvii.	 	credit rating,
	 
	 	xxviii.	 	strategic plan development and implementation,
	 
	 	xxix.	 	succession plan development and implementation,
	 
	 	xxx.	 	improvement in workforce diversity, customer indicators and
metrics,
	 
	 	xxxi.	 	customer renewals,
	 
	 	xxxii.	 	customer satisfaction surveys,
	 
	 	xxxiii.	 	customer response time,
	 
	 	xxxiv.	 	resolution of customer complaints,
	 
	 	xxxv.	 	human resource metrics,
	 
	 	xxxvi.	 	employee attrition,
	 
	 	xxxvii.	 	new product invention or innovation,
	 
	 	xxxviii.	 	attainment of research and development milestones,
	 
	 	xxxix.	 	improvements in productivity, and
	 
	 	xl.	 	attainment of objective operating goals.






	 	(n)	 	“Performance Period” means any Fiscal Year or such other period as determined
by the Committee.




3









 






	 	(o)	 	“Plan” means this McAfee, Inc. Executive Bonus Plan.






	3.	 	Eligibility. The Committee, in its sole discretion, shall select the employees of the
Company who shall be Participants for any Performance Period. Participation in the Plan is in
the sole discretion of the Committee, and on a Performance Period by Performance Period basis.
Accordingly, an employee who is a Participant for a given Performance Period in no way is
guaranteed or assured of being selected for participation in any subsequent Performance
Period. 
	 
	4.	 	Plan Administration.






	 	(a)	 	Committee is the Administrator. The Plan shall be administered by the
Committee. The Committee shall consist of not less than two (2) members of the Board.
The members of the Committee shall be appointed from time to time by, and serve at the
pleasure of, the Board. Each member of the Committee shall qualify as an “outside
director” under Code Section 162(m). If it is later determined that one or more
members of the Committee do not so qualify, actions taken by the Committee prior to
such determination shall be valid despite such failure to qualify. The initial
Committee shall be the Compensation Committee of the Board.
	 
	 	(b)	 	Committee Authority. It shall be the duty of the Committee to administer the
Plan in accordance with the Plan’s provisions. The Committee shall have all powers and
discretion necessary or appropriate to administer the Plan and to control its
operation, including, but not limited to, the power to






	 	i.	 	determine which Employees shall be granted awards,
	 
	 	ii.	 	prescribe the terms and conditions of awards,
	 
	 	iii.	 	interpret the Plan and the awards,
	 
	 	iv.	 	adopt such procedures and subplans as are necessary or
appropriate to permit participation in the Plan by employees who are foreign
nationals or employed outside of the United States,
	 
	 	v.	 	adopt rules for the administration, interpretation and
application of the Plan as are consistent therewith, and
	 
	 	vi.	 	interpret, amend or revoke any such rules.






	 	(c)	 	Decisions Binding. All determinations and decisions made by the Committee, the
Board, and any delegate of the Committee pursuant to the provisions of the Plan shall
be final, conclusive and binding on all persons, and shall be given the maximum
deference permitted by law.
	 
	 	(d)	 	Delegation by the Committee. The Committee, in its sole discretion and on such
terms and conditions as it may provide, may delegate all or part of its authority




4









 






	 	 	 	and powers under the Plan to one or more directors and/or officers of the Company;
provided, however, that the Committee may delegate its authority and powers only
with respect to awards that are not intended to qualify as Performance-Based
Compensation.






	5.	 	Term. This Plan shall be effective as first stated above. Notwithstanding the foregoing,
this Plan shall terminate unless it is approved at the next Company annual stockholders
meeting following the date that the Board adopts this Plan. Once approved by the Company’s
stockholders, this Plan shall continue until the earlier of (i) a termination under Section 9
of this Plan, (ii) the date any stockholder approval requirement under Code Section 162(m)
ceases to be met or (iii) the date that is five years after the stockholder meeting in the
2008 Fiscal Year.
	 
	6.	 	Bonuses. Prior to the Award Setting Deadline for a Performance Period, the Committee shall
designate or approve in writing (which could be in minutes of the Committee), the following:






	 	(a)	 	Performance Period;
	 
	 	(b)	 	Employees who will be Participants for the Performance Period;
	 
	 	(c)	 	Targeted goals for selected Performance Measures during the Performance Period;
	 
	 	(d)	 	Bonus Target for each Participant or group of Participants; and
	 
	 	(e)	 	Applicable Bonus Formula for each Participant, which may be for an individual
Participant or a group of Participants.






In no event shall the Committee provide or any participant receive a payment pursuant
to the Plan that exceeds $5 million for any calendar year.




	7.	 	Determination of Amount of Bonus.






	 	(a)	 	Calculation. After the end of each Performance Period, the Committee
shall certify in writing (to the extent required under Code Section 162(m)) the extent
to which the targeted goals for the Performance Measures applicable to each Participant
for the Performance Period were achieved or exceeded. The Bonus for each Participant
shall be determined by applying the Bonus Formula to the level of actual performance
that has been certified by the Committee. Notwithstanding any contrary provision of
this Plan, the Committee, in its sole discretion, may eliminate or reduce the Bonus
payable to any Participant below that which otherwise would be payable under the Bonus
Formula.






The Committee may appropriately adjust any evaluation of performance under a
Performance Measure to exclude any of the following events that occurs during a
Performance Period:



5









 






	 	i.	 	the effects of currency fluctuations;
	 
	 	ii.	 	any or all items that are excluded from the calculation of
non-GAAP earnings as reflected in any Company press release or Form 8-K filing
relating to an earnings announcement;
	 
	 	iii.	 	asset write-downs;
	 
	 	iv.	 	litigation or claim judgments or settlements;
	 
	 	v.	 	the effect of changes in tax law, accounting principles or
other such laws or provisions affecting reported results;
	 
	 	vi.	 	accruals for reorganization and restructuring programs; and

	 
	 	vii.	 	any other extraordinary or non-operational items.






	 	(b)	 	Right to Receive Payment. Each cash portion of a Bonus under this Plan
shall be paid solely from general assets of the Company and its Affiliates. This Plan
is unfunded and unsecured; nothing in this Plan shall be construed to create a trust or
to establish or evidence any Participant’s claim of any right to, or form of, payment
of a Bonus other than as an unsecured general creditor with respect to any payment to
which he or she may be entitled. Except as may otherwise be provided for in Section 8
below, in the event a Participant terminates employment with the Company (or any
Affiliate) prior to the end of a Performance Period he or she shall not be entitled to
the payment of a Bonus for the applicable Performance Period.






	8.	 	Payment of Bonuses.






	 	(a)	 	Timing of Distributions. The Company and its Affiliates shall
distribute amounts payable to Participants as soon as is administratively practicable
following the determination and written certification of the Committee for a
Performance Period, but in no event later than two and one-half months after the end of
the Fiscal Year in which the Committee determine the Amount of the Bonus.
	 
	 	(b)	 	Payment. The payment of a Bonus, if any (as determined by the
Committee at the end of the Performance Period), with respect to a specific Performance
Period requires that the employee be an active employee on the Company’s or an
Affiliate’s payroll on the date that such Bonus is paid, subject to subsection (d),
below. Additionally, the Committee may make exceptions to the foregoing active
employment requirement in the case of retirement, death or disability, or in the case
of a corporate change in control, in each case as determined by the Committee.
	 
	 	(c)	 	Manner. The Bonus shall be payable in cash in a single lump sum.




6









 






	 	(d)	 	Change in Status. A Participant who has a change in status that
results in being ineligible to participate in this Plan in a Performance Period may
receive a prorated Bonus, if any (as determined by the Committee at the end of the
Performance Period, in its sole discretion), under this Plan; the method in which a
Bonus is prorated shall be determined by the Committee in its sole discretion and no
Participant shall have any right to a prorated Bonus.
	 
	 	(e)	 	Code Section 409A. It is the intent that this Plan comply with the
requirements of Code Section 409A so that none of the payments to be provided hereunder
will be subject to the additional tax imposed under Code Section 409A, and any
ambiguities herein will be interpreted to so comply.






	9.	 	Amendment and Termination.






	 	(a)	 	The Committee may amend, modify, suspend or terminate this Plan, in whole or in
part, at any time, including the adoption of amendments deemed necessary or desirable
to correct any defect or to supply omitted data or to reconcile any inconsistency in
this Plan or in any Bonus granted hereunder; provided, however, that no amendment,
alteration, suspension or discontinuation shall be made which would (i) increase the
amount of compensation payable pursuant to such Bonus, or (ii) cause compensation that
is, or may become, payable hereunder to fail to qualify as Performance-Based
Compensation. Notwithstanding the foregoing, the Committee may amend, modify, suspend
or terminate this Plan if any such action is required by law. To the extent deemed
necessary and appropriate by the Committee, Plan amendments shall be subject to
stockholder approval. At no time before the actual distribution of funds to
Participants under this Plan shall any Participant accrue any vested interest or right
whatsoever under this Plan except as otherwise stated in this Plan.
	 
	 	(b)	 	In the case of Participants employed outside the United States, the Company or
its Affiliate may vary the provisions of this Plan as deemed appropriate to conform
with, as required by, or made desirable by, local laws, practices and procedures.






	10.	 	General.






	 	(a)	 	Withholding. Distributions pursuant to this Plan shall be subject to
all applicable taxes and contributions required by law to be withheld in accordance
with procedures established by the Company.
	 
	 	(b)	 	Beneficiary Designations. If permitted by the Committee, a Participant under
the Plan may name a beneficiary or beneficiaries to whom any vested but unpaid award
shall be paid in the event of the Participant’s death. Each such designation shall
revoke all prior designations by the Participant and shall be effective only if given
in a form and manner acceptable to the Committee. In the absence of any such
designation, any vested benefits remaining unpaid at the Participant’s death shall be
paid to the Participant’s estate.




7









 






	 	(c)	 	Nontransferability of Awards. No award granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by
will, by the laws of descent and distribution, or to the limited extent provided in the
prior subsection. All rights with respect to an award granted to a Participant shall
be available during his or her lifetime only to the Participant.
	 
	 	(d)	 	No Additional Participant Rights. The selection of an individual for
participation in this Plan shall not give such Participant any right to be retained in
the employ of the Company or any of its Affiliates, and the right of the Company and
any such Affiliate to dismiss such Participant or to terminate any arrangement pursuant
to which any such Participant provides services to the Company, with or without cause,
is specifically reserved. No person shall have claim to a Bonus under this Plan,
except as otherwise provided for herein, or to continued participation under this Plan.
There is no obligation for uniformity of treatment of Participants under this Plan.
The benefits provided for Participants under this Plan shall be in addition to and
shall in no way preclude other forms of compensation to or in respect of such
Participants.
	 
	 	(e)	 	Successors. All obligations of the Company or its Affiliates under
this Plan, with respect to awards granted hereunder, shall be binding on any successor
to the Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially all of
the business or assets of the Company.
	 
	 	(f)	 	Indemnification. Each person who is or shall have been a member of the
Committee, or of the Board, shall be indemnified and held harmless by the Company
against and from (i) any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by him or her in connection with or resulting from any claim,
action, suit, or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan or any
award, and (ii) from any and all amounts paid by him or her in settlement thereof, with
the Company’s approval, or paid by him or her in satisfaction of any judgment in any
such claim, action, suit or proceeding against him or her, provided he or she shall
give the Company an opportunity, at its own expense, to handle and defend the same
before he or she undertakes to handle and defend it on his or her own behalf. The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company’s Certificate
of Incorporation or Bylaws, by contract, as a matter of law, or otherwise, or under any
power that the Company may have to indemnify them or hold them harmless.
	 
	 	(g)	 	Legal Construction.






	 	i.	 	Gender and Number. Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular and the singular shall include the plural.




8









 






	 	ii.	 	Severability. In the event any provision of the Plan shall be
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective only to the extent of such prohibition or unenforceability
without invalidating or affecting the remaining provisions hereof in such
jurisdiction, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction. Furthermore, if any provision of this Plan would cause
Bonuses not to constitute Performance-Based Compensation, that provision
shall be severed from, and shall be deemed not to be a part of, the Plan, but
the other provisions hereof shall remain in full force and effect.
	 
	 	iii.	 	Requirements of Law. The granting of awards under the Plan
shall be subject to all applicable laws, rules and regulations, and to such
approvals by any governmental agencies or national securities exchanges as may
be required.
	 
	 	iv.	 	Governing Law. The validity, interpretation, construction and
performance of the Plan and awards under it shall be governed by the laws of
the State of California. The Superior Court of Santa Clara County and/or the
United States District Court for the Northern District of California shall have
exclusive jurisdiction and venue over all controversies in connection with this
Plan. Any provision in this Plan which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating or affecting the
remaining provisions hereof in such jurisdiction, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
	 
	 	v.	 	Captions. Captions are provided herein for convenience only,
and shall not serve as a basis for interpretation or construction of the Plan.






9