exv10w1



 





Exhibit 10.1




TEKELEC

2007 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 and such
officer’s achievement of individual objectives. The 2007 Officer Bonus Plan (“2007 Bonus Plan” or
“this Plan”) is designed to motivate Tekelec’s officers and to reward them for their continuing
contributions to the Company’s business if, in 2007, the Company achieves certain financial results
and such officers achieve their individual business or strategic objectives. The Company believes
that the achievement of these results and objectives is essential for the Company’s success. The
effective date of the 2007 Bonus Plan is May 18, 2007 (the “Effective Date”).




2007 Bonus Plan



Each Eligible Officer (as defined below), by virtue of his or her continuing employment with
Tekelec, will be eligible to receive:





	(i)	 	2007 1H Bonus: a bonus based on the Company’s financial performance as measured by
the degree to which the Company achieves a pre-set, Board of Directors (“Board”)
approved,1 consolidated operating income before bonus goal for the first six months
of 2007;






	(ii)	 	2007 2H Bonus: a bonus based on the Company’s financial performance as measured by
the degree to which the Company achieves a pre-set, Board approved, consolidated operating
income before bonus goal for the second six months of 2007;






	(iii)	 	2007 1H MBO Bonus: a bonus based on his/her achievement in the first half of 2007
of individual, business or strategic objectives approved by the Board; and






	(iv)	 	2007 2H MBO Bonus: a bonus based on his/her achievement in the second half of 2007
of individual, business or strategic objectives approved by the Board.




The 2007 1H Bonus and the 2007 2H Bonus are sometimes referred to herein individually as a
‘Semi-Annual Bonus,” and collectively as “Semi-Annual Bonuses.” The 2007 1H MBO Bonus and the 2007
2H MBO Bonus are sometimes referred to herein individually as an “MBO Bonus,” and collectively as
“MBO Bonuses.” For purposes of this Plan, “semi-annual period” means the period from January 1,
2007 through June 30, 2007 (the “First Semi-Annual Period”) and the period from July 1, 2007
through December 31, 2007 (the “Second Semi-Annual Period”).



The Semi-Annual Bonuses and the MBO 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 semi-annual
period for which the bonuses are payable. An Eligible Officer’s annualized actual earnings for a
semi-annual period will be used to calculate his/her bonus if an Eligible Officer is on a leave of
absence in excess of 30 days during a semi-annual 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 2006 Officer Bonus Plan or
this Plan, stock option or other equity incentive compensation, discretionary bonuses, disability
benefits, sign-on bonuses, vacation cash outs, on call pay, and similar payments) shall be
excluded.



If an executive officer commences his/her employment as an Eligible Officer in the first or third
calendar quarter of 2007, then for purposes of determining the amount payable as a Semi-Annual
Bonus or an MBO Bonus for the semi-annual period in which his/her employment commences, 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






 




			
	1	 	This and further references to 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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the semi-annual period to (ii) 180 (such ratio shall not be greater than one). An executive
officer who commences his/her employment during the second or fourth calendar quarter of 2007 will
not be eligible to receive either a Semi-Annual Bonus or an MBO Bonus for the semi-annual period in
which his/her employment commences.




Eligible Officers



The following executive officers have been designated by the Board as Eligible Officers for
purposes of the 2007 Bonus Plan and will be eligible to participate in the 2007 Bonus Plan (all
titles are positions with Tekelec unless otherwise specified):




Eligible Officers



Chief Executive Officer & President

Executive Vice President & Chief Financial Officer

Executive Vice President, Global Business Group Solutions

President & General Manager, NSG

President & General Manager, CSSG

Senior Vice President, Corporate Affairs & General Counsel

Chief Strategy & Corporate Development Officer

Senior Vice President, Operations

VP, Corporate Controller & Chief Accounting Officer

VP, Chief Information Officer



A person appointed as an Executive Officer of the Company after the Effective Date shall be
eligible to participate in the 2007 Bonus Plan if he/she is expressly designated by the Board as an
Eligible Officer under the 2007 Bonus Plan; provided, however, that notwithstanding anything to the
contrary in this Plan, an executive officer who commences his/her employment during the second or
fourth calendar quarter of 2007 will not be eligible to receive either a Semi-Annual Bonus or an
MBO Bonus for the semi-annual period in which his/her employment commences.



An Eligible Officer whose title changes after the Effective Date shall be entitled to participate
in the 2007 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 2007 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 2007 Bonus Plan, an Eligible
Officer must be 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 2007 will, for
purposes of determining eligibility under the 2007 Bonus Plan, be treated as being employed by the
Company during such leave of absence.




Semi-Annual Bonuses



The Company’s consolidated operating income from continuing operations before any bonuses payable
under the 2007 Bonus Plan and the Company’s 2007 employee bonus plan (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”) for the First Semi-Annual Period and
the Second Semi-Annual Period will be the financial measure for calculating the amount of
Semi-Annual Bonuses under the 2007 Bonus Plan. If any of the Company’s existing business units
becomes a discontinued operation prior to January 1, 2008, then the Adjusted Operating Income
before Bonus amounts may be amended by the Board in its sole discretion.




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The amount of an Eligible Officer’s Semi-Annual Bonus will be calculated by multiplying (i) the
product of such Eligible Officer’s annual base salary of record at the end of the semi-annual
period (or annualized actual earnings for such semi-annual period, if applicable) and the
applicable 2007 Bonus Percentage listed opposite such Eligible Officer’s title in the Bonus
Participation Table below by (ii) the applicable Bonus Factor. Stated mathematically, the amount
of a Semi-Annual Bonus payable to an Eligible Officer equals ((AxB)xC), where A = an Eligible
Officer’s annual base salary of record at the end of a semi-annual period (or 2007 annualized
actual earnings, if applicable); B = the applicable Bonus Percentage for such Eligible Officer; and
C = the applicable Bonus Factor.



The amount of the Company’s Adjusted Operating Income before Bonus for the First Semi-Annual Period
or Second Semi-Annual Period will determine the applicable Bonus Factor. The Board will separately
approve levels of Adjusted Operating Income before Bonus for purposes of determining such Bonus
Factor. As indicated on example Schedule A, minimum Adjusted Operating Income before Bonus
will result in a Bonus Factor of 50%, while greater amounts of Adjusted Operating Income before
Bonus will result in higher Bonus Factors, up to a maximum Bonus Factor of 100%. There will be a
linear increase in the percentage amount of the Bonus Factor if the amount of Adjusted Operating
Income before Bonus falls between any two amounts. An Eligible Officer will not be entitled to
receive a Semi-Annual Bonus if at least the minimum Adjusted Operating Income before Bonus for the
applicable semi-annual period is not achieved.



Except as otherwise provided herein, a Semi-Annual Bonus will be payable in one lump sum (subject
to applicable withholding taxes and other deductions) within 30 days after the Company’s
consolidated financial results for a semi-annual period are publicly announced. An Eligible
Officer who is on an approved leave of absence from the Company on the date on which Semi-Annual
Bonuses are 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 Semi-Annual 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 Semi-Annual Bonuses are 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
Semi-Annual Bonus.




MBO Bonuses



The percentage (0% to 100%) to which an Eligible Officer achieves his/her objectives for the first
half or the second half of 2007 will be one of the measures for his/her MBO Bonus for such
semi-annual period. The determination of the percentage to which an Eligible Officer achieves
his/her objectives will be made by the Board within 45 days following the end of the applicable
semi-annual period.



The amount of a bonus payable as an MBO Bonus to an Eligible Officer will be calculated by
multiplying (i) the product of such officer’s annual base salary of record at the end of the
semi-annual period (or annualized actual earnings for such semi-annual period, if applicable) and
the applicable 2007 MBO Bonus Percentage listed opposite such Officer’s title in the Bonus
Participation Table below by (ii) the product of the percentage degree to which it is determined
that such Eligible Officer has achieved his/her objectives for the semi-annual period and the
applicable Bonus Factor.



Except as otherwise provided herein, an MBO Bonus will be payable in one lump sum (subject to
applicable withholding taxes and other deductions) within 30 days of the determination of the
percentage degree to which the Eligible Officer has achieved his/her objectives. An Eligible
Officer who is on an approved leave of absence from the Company on the date on which MBO Bonuses
are 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 MBO Bonus to which he/she is otherwise entitled
under this 2007 Bonus Plan 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 MBO Bonuses are 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 forfeit his/her right to any MBO Bonus
to which he/she may otherwise be entitled for a semi-annual period.




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Bonus Participation Levels



For purposes of determining an Eligible Officer’s Semi-Annual Bonus or MBO Bonus under the 2007
Bonus Plan, the 2007 Bonus Opportunity, 2007 1H and 2H Bonus Percentages, and 2007 1H and 2H MBO
Bonus Percentages for each of the Eligible Officers identified below shall be as follows:




Bonus Participation Table




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	2007	 	 	 	 	 	2007
	 	 	 	 	 	 	2007	 	1H MBO	 	2007	 	2H MBO
	 	 	2007 Bonus	 	1H Bonus	 	Bonus	 	2H Bonus	 	Bonus
	Title	 	Opportunity	 	Percentage	 	Percentage	 	Percentage	 	Percentage
	Chief Executive Officer & President
	 	 	120	%	 	 	38.4	%	 	 	9.6	%	 	 	57.6	%	 	 	14.4	%
	Executive Vice President & Chief Financial Officer
	 	 	90	 	 	 	28.8	 	 	 	7.2	 	 	 	43.2	 	 	 	10.8	 
	Executive Vice President, Global Business Group Solutions
	 	 	80	 	 	 	25.6	 	 	 	6.4	 	 	 	38.4	 	 	 	9.6	 
	President & General Manager, NSG
	 	 	70	 	 	 	22.4	 	 	 	5.6	 	 	 	33.6	 	 	 	8.4	 
	President & General Manager, CSSG
	 	 	70	 	 	 	22.4	 	 	 	5.6	 	 	 	33.6	 	 	 	8.4	 
	Senior Vice President & General Counsel
	 	 	70	 	 	 	22.4	 	 	 	5.6	 	 	 	33.6	 	 	 	8.4	 
	Chief Strategy & Corporate Development Officer
	 	 	65	 	 	 	20.8	 	 	 	5.2	 	 	 	31.2	 	 	 	7.8	 
	Senior Vice President, Operations
	 	 	50	 	 	 	16.0	 	 	 	4.0	 	 	 	24.0	 	 	 	6.0	 
	VP, Corporate Controller & Chief Accounting Officer
	 	 	50	 	 	 	16.0	 	 	 	4.0	 	 	 	24.0	 	 	 	6.0	 
	VP, Chief Information Officer
	 	 	40	 	 	 	12.8	 	 	 	3.2	 	 	 	19.2	 	 	 	4.8	 






Discretionary Bonuses:



In addition to bonuses payable under the 2007 Bonus Plan, discretionary bonuses may also be paid by
the Company, but only upon the express approval of the Board in its sole discretion.




*      *      *       *




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Schedule A




SEMI-ANNUAL BONUSES/BONUS FACTOR MATRIX




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	First Semi-Annual Period	 	Second Semi-Annual Period	 	 
	 	 	Adjusted Operating Income	 	Adjusted Operating Income	 	 
	 	 	before Bonus	 	before Bonus	 	 
	 	 	(in thousands)	 	(in thousands)	 	Bonus Factor
	Maximum
	 	$	*	 	 	$	*	 	 	 	100	%
	 
	 	 	*	 	 	 	*	 	 	 	88	 
	 
	 	 	*	 	 	 	*	 	 	 	75	 
	 
	 	 	*	 	 	 	*	 	 	 	63	 
	Minimum
	 	 	*	 	 	 	*	 	 	 	50	 








 




			
	*	 	The Board will separately established levels of Adjusted Operating Income before Bonus for
purposes of this Schedule A.






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