exv10w2






EXHIBIT 10.2




TEKELEC

2010 Executive Officer Bonus Plan




     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.
The 2010 Officer Bonus Plan (“2010 Bonus Plan” or the “Plan”) is designed to
motivate Tekelec’s executive officers and to reward them for their continuing contributions to the
Company’s business if, in 2010, the Company achieves certain financial results. The effective date
of the 2010 Bonus Plan is February 26, 2010 (the “Effective Date”).



2010 Bonus Plan



Each Eligible Officer (as defined below), by virtue of his or her continuing employment with
Tekelec, will be eligible to receive a 2010 1H Bonus and a 2010 Full Year bonus (referred to herein
individually as “2010 Bonus” and collectively as “2010 Bonuses”) based on the
Company’s financial performance as measured by the degree to which the Company achieves the
following pre-set, Board of Directors-approved,1 financial targets for the 2010 1H,
consisting of the first and second fiscal quarters of 2010, and the full 2010 fiscal year: (i)
Adjusted Operating Income before Bonus, (ii) revenue, and (iii) orders.



The 2010 Bonuses payable to an Eligible Officer will be calculated as a percentage of such
Officer’s annual base salary of record in effect at the end of the period for which the bonuses are
payable (the “Salary”). If an Eligible Officer is on a leave of absence in excess of 30
days during the 1H period or 60 days during the Full Year period, the Eligible Officer’s Salary
will be calculated based on the Eligible Officer’s annualized actual earnings for the that period.
In determining an Eligible Officer’s annual base salary of record or actual earnings, certain
compensation and payments (e.g., reimbursement for moving expenses, bonus payments received under
the 2009 Executive Officer Bonus Plan or this Plan, stock option or other equity incentive
compensation, discretionary bonuses, disability benefits, sign-on bonuses, vacation cash outs, and
on call pay) shall be excluded.



For purposes of determining the amount payable as a 2010 1H Bonus for an executive officer who
commences his/her employment as an Eligible Officer in the first calendar quarter of 2010, an
Officer’s annual base salary will be prorated based on the ratio of (i) the number of days that an
executive officer serves as an Eligible Officer during the period to (ii) 180 (such ratio shall not
be greater than one). An executive officer who commences his/her employment during the second
calendar quarter of 2010 will not be eligible to receive a 2010 1H Bonus.



For purposes of determining the amount payable as a 2010 Full Year Bonus for an executive officer
who commences his/her employment as an Eligible Officer in the first, second or third calendar
quarters of 2010, an Officer’s annual base salary will be prorated based on the ratio of (i) the
number of days that an executive officer serves as an Eligible Officer during the period to (ii)
360 (such ratio shall not be greater than one). An executive officer who commences his/her
employment during the fourth calendar quarter of 2010 will not be eligible to receive a 2010 Full
Year Bonus.






 




			
	1	 	This and further references to Board of Directors
(“Board”) action or approval shall be interpreted as a duly adopted Board
resolution following consideration and a recommendation by the Compensation
Committee of the Board, if the Board accepts such recommendation, or
alternatively by a duly adopted resolution of the Board based on a vote by the
independent members of the Board as defined by NASDAQ rules.




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Eligible Officers



The following executive officers have been designated by the Board as “Eligible Officers”
for purposes of the 2010 Bonus Plan and will be eligible to participate in the 2010 Bonus Plan (all
titles are positions with Tekelec unless otherwise specified):




Eligible Officers List

Chief Executive Officer & President

Executive Vice President, Global Product Solutions

Senior Vice President, Chief Financial Officer

Senior Vice President, Corporate Affairs & General Counsel

Senior Vice President, Global Operations & Service

Vice President, Information Technology & Chief Information Officer



A person appointed as an Executive Officer of the Company after the Effective Date shall be
eligible to participate in the 2010 Bonus Plan if he/she is expressly designated by the Board as an
Eligible Officer under the 2010 Bonus Plan.



An Eligible Officer whose title changes after the Effective Date shall be entitled to participate
in the 2010 Bonus Plan on the same terms and conditions as applied immediately prior to such title
change unless either (i) the terms of such Eligible Officer’s participation in the 2010 Bonus Plan
are changed pursuant to a duly adopted resolution of the Board; (ii) the Board amends this Plan to
add the new title as an Eligible Officer in the Eligible Officer table above in which case such
Officer shall participate at the bonus participation level corresponding to such new title; or
(iii) as a result of the change in title, such individual is no longer an Eligible Officer.



In order to earn and be eligible to receive bonuses payable under the 2010 Bonus Plan, an Eligible
Officer must be actively 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 by the Board. An
Eligible Officer who is on an approved leave of absence from the Company at any time during 2010
will, for purposes of determining eligibility under the 2010 Bonus Plan, be treated as being
employed by the Company during such leave of absence provided, however, that an Eligible Officer
who is on an approved leave of absence from the Company on the date on which the 2010 Bonus is 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 his/her Company Bonus to which he/she is otherwise entitled 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 the 2010 Bonus is 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 not be eligible to receive a 2010 Bonus.




2010 Bonus Computation



The Company’s consolidated operating income from continuing operations before bonus (as adjusted to
exclude the effects of equity incentive compensation expense, restructuring charges, impairment
charges, acquisition-related amortization and other M&A-related charges or income, and similar
non-GAAP charges or income, “Adjusted Operating Income before Bonus”), revenue and orders
will be the financial measures for calculating the amount of the Company Bonuses under the 2010
Bonus Plan.



All payouts under the 2010 Bonus Plan are contingent upon the company performing at or above a
threshold percentage of the Adjusted Operating Income before Bonus target established by the Board
(“OI Target”). The threshold percentage is 90% of the OI Target, and thus for performance
below 90%




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of the OI Target, there is no funding of a pool for payouts of a bonus. The Board will also
establish performance targets for Orders and Revenue (“Orders Target” and “Revenue
Target”, respectively, and together with the OI Target or individually, “Targets”).



Upon Tekelec’s achievement of 90% of the Operating Income Target, the 2010 Bonuses shall be
calculated as the sum of the result of one of the following computations applied to each of the
Targets:





	 	•	 	If 1H and Full Year Performance Relative to Target is equal to or greater than 90% but
all are individually less than 100%, the product of A (x) B (x) C (x) T, where “A” is the
Eligible Officer’s Salary, “B” is the Payout Percentage corresponding to the Performance
Relative to Target in the Payout Percentage Table below, “C” is the 2010 1H or 2010
Full-Year Bonus Opportunity, as applicable, in the Bonus Participation Table below, and “T”
is the Target Weighting corresponding to the Target, and the performance against such
Target, in the Target Weighting Table below, provided that the calculated payment for 1H
performance is capped at 100% of the 2010 1H Bonus Opportunity from the Bonus Participation
Table below.
	 
	 	•	 	If both 1H and Full Year Performance Relative to Target for all Targets is 100% or
greater, the product of A (x) B (x) C (x) T, as each is defined above with the exception of
“C” which in such case “C” is the 2010 Total Bonus Opportunity in the Bonus Participation
Table below.
	 
	 	•	 	If any one of the targets is not equal to or greater than 100%, then all targets are
individually capped at 100%.





Payout Percentage Table




	 	 	 	 	 	 
	 	Performance Relative to Target

(OI, Orders, and Revenue)
	 	 	Payout Percentage	 
	 	<90%
	 	 	0%	 
	 	90%
	 	 	50%	 
	 	95%
	 	 	75%	 
	 	100%
	 	 	100%	 
	 	 
	 	 	 	 
	 	Performance Relative to Target

(OI and Orders)
	 	 	Additional Payout Percentage	 
	 	105%
	 	 	25%	 
	 	3110%
	 	 	50%	 
	 




The Payout Percentages in the above table increase in a linear manner between each performance
level relative to each target.




Target Weighting Table




	 	 	 	 	 	 	 	 	 
	 	Target
	 	 	Target Weighting for Performance

390% £100%
	 	 	Target Weighting for Performance

>100%	 
	 	OI
	 	 	50%
	 	 	75%	 
	 	Orders
	 	 	25%
	 	 	25%	 
	 	Revenue
	 	 	25%
	 	 	0%	 
	 




Any bonus earned for 1H performance will be accrued and paid with any earned Full Year bonus.



Except as otherwise provided herein, the 2010 Bonuses will be payable in one lump sum (subject to
applicable withholding taxes and other deductions) within 30 days after all the Company’s
consolidated financial results covering the annual period are filed with the Securities and
Exchange Commission.




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Bonus Participation Levels



For purposes of determining an Eligible Officer’s 2010 Bonus, the 2010 Bonus Opportunity for each
of the Eligible Officers identified below shall be as follows:




Bonus Participation Table




	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
 
Title
	 	 	2010
Total
Bonus

Opportunity
	 	 	2010
1H
Bonus

Opportunity
	 	 	2010 Full Year Bonus

Opportunity	 
	 	Chief Executive Officer & President
	 	 	120%
	 	 	40.0%
	 	 	80.0%	 
	 	Executive Vice President, Global Product Solutions
	 	 	90%
	 	 	30.0%
	 	 	60.0%	 
	 	Senior Vice President & General Counsel
	 	 	70%
	 	 	23.3%
	 	 	46.7%	 
	 	Senior Vice President, Global Operations & Service
	 	 	60%
	 	 	20.0%
	 	 	40.0%	 
	 	Vice President, Corporate Controller & Chief Accounting Officer
	 	 	50%
	 	 	16.7%
	 	 	33.3%	 
	 	Vice President, Information Technology & Chief Information Officer
	 	 	40%
	 	 	13.3%
	 	 	26.7%	 
	 





Discretionary Bonuses



In addition to bonuses payable under the 2010 Bonus Plan, discretionary bonuses may also be paid by
the Company, but only upon the express approval of the Board in its sole discretion.




Amendment, Termination, and Administration



The Board reserves the right to amend, modify or terminate the Plan, or any payment owed
thereunder, at any time without prior notice to participants in its sole discretion; provided, that
the Company may not amend, modify or terminate the Plan or such payments once they become Vested to
an eligible employee. A payment becomes “Vested” upon the filing of the Company’s
financial statements with the Securities and Exchange Commission covering the annual period for
which such bonus amount is earned under the terms of the Plan. The Plan shall be administered by
the Board, and the Board shall have the authority to interpret the Plan with such interpretation
being binding and final. The Plan shall be governed by the laws of North Carolina.




*      *      *      *




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Target Amounts under the 2010 Executive Officer Bonus Plan




	 	 	 	 	 	 	 	 	 
	 	Targets
	 	 	1H 2010
	 	 	2010	 
	 	Orders
	 	 	 
	 	 	 	 
	 	Revenue	 	 	 	 	 	 	 
	 	OI	 	 	 	 	 	 	 
	 




To the extent that during the 2010 Performance Period, the independent members of the Company’s
Board of Directors approve any forecasted Orders, Revenue, or incremental OI for all or any portion
of the 2010 Performance Period related to acquisitions completed during the 2010 Performance
Period, then such amounts shall be automatically added to each of the respective Objectives set
forth in this Exhibit.





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