exv10w18



 





Exhibit 10.18




ShoreTel Executive Bonus Plan




     The purpose of the ShoreTel Executive Bonus Plan is to incentivize executives, including
the CEO, to achieve key company objectives. Executives will have the opportunity to earn a cash
bonus based on their individual and departmental performance and the achievement of company
objectives. The bonus plan applies to all executives, except as set forth in “Exceptions” below.
To participate in the plan, an executive must be employed on a regular basis and meet other
requirements set forth below.



Company Objectives; Bonus Pool




     The key measurement metrics are revenues, non-GAAP operating profit and customer
satisfaction ratings (“Company Performance Targets”). The goals for these three metrics will be
established and approved by the Board of Directors near the beginning of each six-month fiscal
period (July-December and January-June). The six-month targets will be recommended by the CEO and
approved by the Board of Directors near the beginning of each six-month period. The Board of
Directors has discretion to modify the key measurement metrics and weighting thereof.



     The total amount of incentive compensation available for distribution to participants under
this bonus plan in each six-month period (the “Bonus Pool”) is equal to the product of (a)
percentage achievement of the Company Performance Targets (which may be subject to minimum and
maximum percentages), and (b) the sum of each participant’s base salary for the six-month period
multiplied by 45% (85% in the case of the CEO).



Individual Target Levels




     Payments to participants are based on the size of the Bonus Pool and each participant’s
individual performance rating. The actual amount paid to a participant is equal to the product of
(a) percentage achievement of the Company Performance Target (which may be subject to minimum and
maximum percentages), (b) the participant’s base salary for the six-month period, (c) 45% (85% in
the case of the CEO) and (d) the participant’s performance rating, as adjusted (which could be
zero, or could be subject to a maximum multiplier).



     The CEO will have the discretion to recommend bonus payment allocations for the executive
officers, up to a maximum of 150% of the Bonus Pool. However, to prevent total bonus payments
under this plan from exceeding the Bonus Pool, each participant’s performance rating is subject to
downward adjustment to reflect his/her achievement relative to the achievement of other
participants.



Exceptions




     VP Sales. The VP Sales bonus is not part of the Bonus Pool. The VP Sales bonus
arrangement is a target of $140,000 per year, instead of 45% of base salary. In addition, for the
VP Sales, performance targets are based on revenues, expenses, and customer satisfaction. VP Sales
bonus is paid quarterly.



     Former CFO. For the first half of fiscal 2008, John, Finegan, our former CFO, is
entitled to a bonus that provides for a payout at the 150% level so long as he remains employed by
the company at December 31, 2007.



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Plan Payout




     Based on company performance for each six-month period, the CFO will compute the overall
Bonus Pool for the executives. The CEO will recommend allocation of the Bonus Pool for all
executives other than himself. For the CEO, the Compensation Committee will review CEO performance
against strategic company goals and objectives and recommend a bonus to the Board. The
Compensation Committee of the Board of Directors will recommend to the Board all executive bonus
payments. The Board of Directors will approve the pool of funds payable to employees and directors
and will approve the specific bonus payments to the executive officers, including the CEO.



Other Provisions





	•	 	Participation in this plan is not an agreement (express or implied) between the plan
participant and ShoreTel that the participant will be employed by ShoreTel for any specific
period of time, nor is there any agreement for continuing or long-term employment. The plan
participant and ShoreTel each have right to terminate the employment relationship at any time
for any reason. This at-will employment relationship can only be modified by an agreement
signed by the participant and CEO or HR Manager.






	•	 	Any determination of performance, payment or other matter under this plan by the Board of
Directors or Compensation Committee is binding.






	•	 	This summary highlights the principle features of the ShoreTel Executive Bonus Plan, but
does not describe every situation that can occur. The Board of Directors retains the right to
interpret, revise, modify or delete the plan at its sole discretion at any time.






	•	 	The executive must be employed in a full time capacity for at least three consecutive
months in the six-month bonus period to be eligible to participate in the executive bonus
plan, and must be employed at the time bonuses are paid in order to receive a bonus.






	•	 	This plan is intended to be effective for at least fiscal year 2008, and shall remain in
effect until amended or terminated by the Board of Directors.






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