Exhibit 10.1


 


MRV Communications, Inc.


Incentive Compensation Plan


 


You
have been selected to participate in the MRV Incentive Compensation Plan (the “Plan”).  The purpose of the Plan is to recognize and
reward key employees of MRV Communications, Inc. and its subsidiaries
(collectively, “MRV”), who contribute to the overall financial performance of
their area, business unit, and MRV.  By
rewarding the successful achievement of the operating plan, MRV provides a
competitive opportunity to enrich your annual cash compensation while driving
the behaviors needed to enhance performance. 
The terms set for below govern the Plan, except where in conflict, local
laws prevail.


 


The
following overview explains the guidelines of the Plan:


 


·                  The Plan year starts on January 1
and ends on December 31.


 


·                  While you are a participant of the Plan,
you are not eligible to participate in any other cash bonus incentive
compensation plan that may be offered by MRV.


 


·                  Your target bonus is established based on
your level of responsibility and market factors. Each participant will be
notified as to their target bonus.


 


·                  The components of your target bonus will
be weighted based on factors including MRV’s and your business unit’s
performance, and your individual objectives. 
Details regarding the composition of the factors contributing to your
target bonus are outlined in Exhibit A. Your individual objectives will be
established using the SMART (specific, measurable, attainable, realistic and
time bound) model.  No individual incentive
will be paid unless the written objectives are submitted to HR by May 1,
20    .  Guidelines
for developing objectives are attached as Exhibit B.


 


·                  The Plan includes two financial targets:
Revenue and Operating Income (each as defined below), and requires a minimum
threshold in order to trigger a payout.  If Operating Income falls below 75% of the Board-approved annual
operating plan, no bonus will be earned or paid.


 


·                  “Revenue” and “Operating Income” are
defined by US GAAP and based on audited results.


 


·                  You must be an employee in good standing
as of the end of the Plan year in order to receive a bonus payment.  To be clear, incentive payments are not
earned in full or in part unless you are actively employed as of the end of the
Plan year, regardless of reason for termination, voluntary or involuntary.


 


·                  Managers who are responsible for
conducting performance appraisals must complete them before he/she will earn or
be paid an incentive payment.


 


·                  Employees hired during the Plan year will
receive a pro rated bonus target based on months of service in the Plan year.
Employees hired after October 1st are not eligible to participate in the current
year’s Plan.


 

















 


·                  Employees who are promoted or change
positions during the Plan year are eligible for a pro rated bonus based on the
months of service in each position.


 


·                  Earned incentive payments will be paid
out no later than two and one-half months following the end of the Plan year.


 


Payout Scale


 


	
  Revenue

  	
   

  	
  85

  	
  %

  	
  90

  	
  %

  	
  95

  	
  %

  	
  100

  	
  %

  	
  105

  	
  %

  	
  110

  	
  %

  	
  115

  	
  %

  	
  120

  	
  %

  	
  125

  	
  %

  	
  150

  	
  %

  
	
  Target Payout

  	
   

  	
  25.0

  	
  %

  	
  50.0

  	
  %

  	
  75.0

  	
  %

  	
  100.0

  	
  %

  	
  107.5

  	
  %

  	
  115.0

  	
  %

  	
  122.5

  	
  %

  	
  130.0

  	
  %

  	
  137.5

  	
  %

  	
  175.0

  	
  %

  



 


	
  Operating Income

  	
   

  	
  85

  	
  %

  	
  90

  	
  %

  	
  95

  	
  %

  	
  100

  	
  %

  	
  105

  	
  %

  	
  110

  	
  %

  	
  115

  	
  %

  	
  120

  	
  %

  	
  125

  	
  %

  	
  150

  	
  %

  
	
  Target Payout

  	
   

  	
  25.0

  	
  %

  	
  50.0

  	
  %

  	
  75.0

  	
  %

  	
  100.0

  	
  %

  	
  107.5

  	
  %

  	
  115.0

  	
  %

  	
  122.5

  	
  %

  	
  130.0

  	
  %

  	
  137.5

  	
  %

  	
  175.0

  	
  %

  



 


Whenever
actual performance is between amounts shown above, the actual payout will be
determined based on a straight-line computation.  For example, the payout for 103% performance
would be 104.5%.


 


Individual Target Payout = % of MBO
Objectives Achieved


 


Example based on 5 objectives (with 3 out of 5
accomplished)


 


	
   

  	
   

  	
   

  	
   

  	
  Completed

  	
   

  
	
  Objective
  1

  	
   

  	
  20

  	
  %

  	
  Y

  	
   

  
	
  Objective
  2

  	
   

  	
  20

  	
  %

  	
  Y

  	
   

  
	
  Objective
  3

  	
   

  	
  20

  	
  %

  	
  N

  	
   

  
	
  Objective
  4

  	
   

  	
  20

  	
  %

  	
  N

  	
   

  
	
  Objective
  5

  	
   

  	
  20

  	
  %

  	
  Y

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Payout = 60%

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


MRV’s
Board of Directors has the authority to change the terms of this Plan at any
time as business needs require in its sole discretion.  Further, this Plan may be terminated at any
time, with or without prior notice.  The
Board or its Compensation Committee shall administer the Plan and has the
exclusive and final authority in each determination or interpretation affecting
the Plan and its participants.  All such
decisions made by the Board or its Compensation Committee are final and binding
on participants.  Participants
hereby waive trial by jury in connection with any action or suit arising under
or related to this Plan.  This
policy is not intended to create a contract of employment, either express or
implied, nor give any participant any right to be retained in the service of
MRV in any capacity.


 


This form must be accompanied by your written individual objectives and
returned to Joel Freedenberg in Corporate Human Resources no later than May 1,
20    .


 


I
have read, understand and agree to the terms and conditions of the MRV
Incentive Compensation Plan.


 

















 


	
   

  	
   

  	
   

  
	
  Plan
  Name

  	
   

  	
  Employee Title

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Target
  % of Base

  	
   

  	
  Employee Name

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Employee Signature/Date

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Manager Name

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Manager Signature/Date