exv10w3



 






Exhibit 10.3




BROCADE SENIOR LEADERSHIP PLAN




Revised: February 9, 2005




PURPOSE



The Brocade Senior Leadership Plan is designed to link incentive compensation with Company
performance.




TIMING



Performance against Company objectives is measured on six-month cycles (Plan Periods), which run
concurrently with the first and second halves of Brocade’s fiscal year. Payout of earned cash
bonuses, if any, occurs on an annual basis.




ELIGIBILITY



Regular full-time and part-time Vice President (VP) level employees are eligible to participate in
the Senior Leadership Plan Program.



Participants must be regular (full-time or part-time) employees at the end of the fiscal year to be
eligible to receive a Senior Leadership Plan Payout.




PARTICIPANT PERFORMANCE



As each Plan Period begins, participants must complete a VP Performance Contract. Performance
contracts should be tied to company and departmental goals as outlined by the board of directors
(i.e., company priorities and initiatives). All goals must be tied to overall company objectives
and have defined measurements.



Before Performance Contracts are final, they are to be reviewed and approved by Finance, Human
Relations, and the Chief Executive Officer (CEO).



At the end of each Plan Period, actual performance against the plan’s financial metric goals is
determined by Finance and provided to the plan participants. Performance against goals is then
assessed by the Participant and then reviewed and assessed by the VP’s manager, in order to
determine each participant’s bonus payout for the period. The Compensation Committee reviews and
approves all Section 16 Officers’ performance and bonus payouts annually. The CEO reviews and
approves all other VP cash bonus payouts.




COMPANY PERFORMANCE & SENIOR LEADERSHIP PLAN FUNDING



Each Plan Period, Brocade will set a target Operating Margin for the
company to achieve during the Plan Period (Target OM).




 









 







At the end of each Plan Period, Brocade will fund the Senior Leadership Plan based on the actual
Operating Margin achieved by Brocade during the Plan Period (Actual OM) relative to the Target OM
(Actual Contribution).



The Actual OM will be communicated following the end of each Plan Period.




PARTICIPANT INCENTIVE TARGET



A Participant’s Incentive Target is determined by the Participant’s pay grade at the end of the
12-month Plan Period, unless otherwise indicated in writing by Brocade.




	 	 	 	 	 	 
	 	Participant Pay Grade
	 	 	Annual Incentive Target	 
	 	X
	 	 	75%	 
	 	A&B
	 	 	50%	 
	 	C&D
	 	 	40%	 
	 





SENIOR LEADERSHIP PLAN PAYOUTS



On an annual basis, the Compensation Committee reviews and approves Section 16 Officers’
performance and cash bonus payouts. The CEO reviews and approves all other VP cash bonuses. Program
payouts are made within eight (8) weeks following the conclusion of the 12-month Plan Period.
Payouts will be pro-rated for Participants who are hired or transferred into the Senior Leadership
Plan during any Plan Period.



For each Participant, the cash bonus payout is calculated based on the following formula (less
applicable taxes and deductions):




Bonus Payout = (Actual Funding) x (Individual VP Goal Points Earned for the year) x
(Annual Incentive Target) x (Annual Salary)



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Participant
	 	 	Revenue
	 	 	Operating Margin
	 	 	Individual Goals
	 	 	Total	 
	 	CEO
	 	 	50%
	 	 	50%
	 	 	—
	 	 	100%	 
	 	VPs
	 	 	50%
	 	 	40%
	 	 	10%
	 	 	100%	 
	 




Bonuses will be calculated using the salary as of the last day of the Plan Period.



Departmental budgets are communicated at the beginning of each fiscal year and may be updated
quarterly throughout the year by the CEO and CFO. Adherence to the individual’s departmental budget
is a gate for the individual to qualify for the Senior Leadership Plan bonus. Failure to adhere to
the agreed upon budget disqualifies the individual from a bonus payout.





 









 








ADMINISTRATIVE PROCEDURES




Compensation Committee Approval



The Compensation Committee reserves the right to decrease or eliminate bonus otherwise indicated.




New Hires and Promotions



Participants new to the company or who are promoted into the Senior Leadership Plan must complete a
VP Performance Contract within 60 days of beginning in the new position.




Grade/Salary Factor



Payout will be based on the Participant’s salary and pay grade on the last day of the Plan Period.
Bonuses will be pro-rated if Participant received a cash bonus on another bonus program.



Terminations: Anyone who is not on the payroll as of the end of the fiscal year is not eligible to
receive a cash bonus payout.



Leaves of Absences, Disability or Death: In the event of the Participant death, disability time
off, or leave of absence, Payouts will be made on a pro-rated basis, based on the number of days
the Participant was actively working at Brocade. If the Participant is on a legally protected leave
of absence (e.g. Family Medical Leave or Military Leave), the Participant’s eligibility for
participation in Plan may be extended beyond the time above, in accordance with the laws governing
the legally protected leave. In the event of death, any cash bonus payments will be paid to the
Participant’s primary beneficiary as designated in the Participant’s Brocade life insurance plan
documentation, if any.



Performance Improvement Plan/Disciplinary Situations (Development Needed): If a Participant, at
anytime prior to the cash bonus payout 12-month Plan Period, is subject to a performance
improvement plan, discipline or demotion, Brocade may, in its sole discretion, reduce or eliminate
the Cash Payment that the Participant would otherwise have been eligible to receive. If, at the
time prior to the Payout for a 12-month Plan Period, it is determined that a Participant may be
subject to corrective action, discipline or demotion, then Brocade may withhold the entire Cash
Bonus Payout, or a portion thereof, until after a final decision on such corrective action has been
made. If a Participant is given a performance rating of Development Needed, the Participant will
not be eligible to receive a Payout. Only the VP of Human Resources or CEO may approve exceptions
to this policy.



Other Provisions: Participation in the Senior Leadership Plan does not constitute an agreement
(express or implied) between the Participant and Brocade that the Participant will be employed by
Brocade for any specific period of time, nor is there any agreement for continuing or long-term
employment. Terms and conditions regarding the Senior Leadership Plan and any participation
therein, including but not limited to Senior Leadership Plan eligibility, Senior Leadership Plan
funding, and performance and payout criteria and determinations, are subject to
change by Brocade at any time in its sole discretion. Brocade and its Board of Directors retain the
absolute right to interpret, revise, modify or terminate the Senior Leadership Plan at any time in
its sole discretion.





 









 








ADDENDUM TO BROCADE SENIOR LEADERSHIP PLAN

(DATED FEBRUARY 9, 2005)



Notwithstanding any terms to the contrary in the Brocade Senior Leadership Plan, the following
terms shall apply to the Bonus Payout under the Senior Leadership Plan for fiscal 2005:





	 	•	 	Participants must continue to be regular employees as of December 15, 2005 to
be eligible to receive a Senior Leadership Plan Payout for fiscal 2005. In addition, any
references to the end of the 12-month Plan Period or fiscal year for purposes of the Senior
Leadership Plan for fiscal 2005 (including without limitation, the subsections entitled
“Termination” and “Performance Improvement Plan/Disciplinary Situations (Development
Needed)”) shall be deemed to refer to December 15, 2005.
	 
	 	•	 	The Bonus Payout shall be calculated as follows:





Bonus Payout = (Individual CEO/VP Goal Points Earned for the year) x (Annual
Incentive Target) x (Annual Salary)




	 	•	 	Each participant shall also be eligible to receive an additional cash
bonus (the “Additional Bonus”) equal to the amount of such individual’s actual
Bonus Payout for fiscal 2005. The Additional Bonus for Mr. Jaworski shall be
equal to the actual Bonus Payout for fiscal 2005, multiplied by 1.67.