Document:

exv10w6

Exhibit 10.6

BELK INC. 2010 INCENTIVE STOCK PLAN

2011-2013 Stretch Incentive Plan

CERTIFICATE

This CERTIFICATE and the attached Exhibit A set forth the terms and conditions under which Belk
will issue shares of Belk, Inc. Class B common stock (“Stock”) to Executive based on the extent to
which Belk meets or exceeds the Performance Goals for the Performance Period of the 2011-2013
Stretch Incentive Plan (“SIP”), all as defined in this Certificate and Exhibit A. All of the terms
used in this CERTIFICATE and in Exhibit A that begin with a capital letter are either defined in
this CERTIFICATE, in Exhibit A or in the Belk Inc. 2010 Incentive Stock Plan, which is incorporated
by reference.

	 	 	 	 	 	 	 

	Executive:
	 	 	 	 	 	 
	 

	 	 	 
	 	 
	Target Award:

	 	 	$	 	 	 
	 

	 	 	 	 	 	 

	 	 	 	 	 
	Performance Goals for the Performance Period	 
	Cumulative Sales Goal

($ in Million)
	 	 	 	 
	 
	 	 	 	 
	EBIT Goal
	 	 	 	 

	 	 	 	 	 
	 	BELK INC.

 	 
	 	BY:  	
 	 
	 	 	Adam Orvos, EVP Human Resources

	 
	 	DATE:	 
	 
	 

 

 

EXHIBIT A

Terms and Conditions

§ 1. Executive. The term “Executive” means the Belk executive who has been selected within
the first 90 days of the Performance Period by the Committee in its discretion to participate in
the SIP for the Performance Period.

§ 2. Target Award. The term “Target Award” means the dollar amount shown opposite such
term on the CERTIFICATE. Although the Target Award is expressed as a dollar amount, any amounts
owed pursuant to the SIP will be satisfied solely through the issuance of shares of Stock under the
Belk Inc. 2010 Incentive Stock Plan.

§ 3. Definitions.

     3.1 Business Criteria. The term “Business Criteria” for purposes of this Program
means (1) Belk’s cumulative sales, and (2) Belk’s cumulative normalized earnings before interest
and taxes.

     3.2 Committee. The term “Committee” means the Compensation Committee of the Board of
Directors of Belk, or, if all the members of such Committee fail to satisfy the requirements to be
an “outside director” under § 162(m) of the Code, a sub-committee of such committee which consists
solely of members who satisfy such requirements.

     3.3 Delayed Issuance Date. The term “Delayed Issuance Date” means the last day of
Belk’s fiscal year that immediately follows the Performance Period.

     3.4 Performance Period. The term “Performance Period” means the period of ten
consecutive Belk fiscal quarters that begins on the first day of the third quarter of Belk’s fiscal
year 2011 and ends on the last day of Belk’s fiscal year 2013.

 

 

§ 4. Performance Goals.

     4.1 General. The Committee shall set forth in writing the Performance Goals for each
Participant for the Performance Period no later than 90 days after the beginning of the Performance
Period based on such Business Criteria as the Committee deems appropriate under the circumstances.
The Committee shall have the right to use different Business Criteria for different Participants,
and the Committee shall have the right to set different Performance Goals for Participants whose
goals look to the same Business Criteria. The Business Criteria for each Participant may be based
on company-wide performance, division-specific performance, department-specific performance,
personal performance or on any combination of such criteria. No later than 90 days after the
beginning of the Performance Period, the Committee shall establish the general, objective rules
which the Committee will use to determine the extent, if any, that a Participant’s Performance
Goals have been met and the specific, objective rules, if any, regarding any exceptions to the use
of such general rules. Further, in determining whether the Performance Goals for the Performance
Period have been satisfied, the Committee may look at the performance of Belk on the first day of
the Performance Period, the last day of the Performance Period, or either such date if there is an
acquisition, disposition, or other corporate transaction involving Belk during the Performance
Period.

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     4.2 Specific Performance Goals. The Performance Goals for the Performance Period
shall be based on a Cumulative Sales Goal and/or a Cumulative EBIT Goal.

     4.3 Cumulative Sales Goal.

     (a) Goal and Goal Adjustments. The term “Cumulative Sales Goal” means
the cumulative sales (not including leased department sales) goal for Belk for the
Performance Period.

     (b) Target Award Subject to Goal. Fifty percent (50%) of the Target
Award shall be subject to the Cumulative Sales Goal, and no portion of the Target
Award shall be issuable to Executive for the Performance Period under this § 4.3 if
Belk’s cumulative sales for the Performance Period are less than or equal to 95% of
the Cumulative Sales Goal for such period.

     (c) Percentage of Target Award to be Issued. If Belk’s cumulative
sales for the Performance Period exceed 95% of the Cumulative Sales Goal for such
period, then the percentage of the Target Award issuable (subject to § 5 and § 6)
under this § 4.3 to Executive shall be based on the percentage of the Cumulative
Sales Goal which Belk reaches as outlined in Exhibit B — Sales Scale.

     4.4 EBIT Goal.

     (a) Goal and Goal Adjustments. The term “EBIT Goal” means the earnings
before interest and taxes goal for Belk for the Performance Period.

     (b) Target Award Subject to Goal. Fifty percent (50%) of the
Target Award shall be subject to the EBIT Goal, and no portion of the

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Target Award shall be issuable to Executive for the Performance Period under this §
4.4 if Belk’s earnings before interest and taxes for the Performance Period is less
than or equal to 74% of the EBIT Goal for such period.

     (c) Percentage of Target Award to be Issued. If Belk’s earnings before
interest and taxes for the Performance Period exceed 74% of the EBIT Goal for such
period, then the percentage of the Target Award issuable (subject to § 5 and § 6)
under this § 4.4 to Executive shall be based on the percentage of the EBIT Goal as
outlined in Exhibit B -— EBIT Scale.

     4.5 Rounding and Interpolation. All percentage figures computed under this § 4 shall
be rounded down to the nearest one tenth (1/10th) of a percent, all dollar figures
computed under this § 4 shall be rounded to the nearest dollar, the number of shares of Stock
issuable under § 4.6 shall be rounded up to the nearest whole share and the Committee shall
(wherever the Committee deems appropriate) interpolate between the percentages shown in § 4.3 and §
4.4 to determine the amount of the Target Award to be issued to Executive.

     4.6 Certification. As soon as practical (and in any event within 75 days) after the
end of the Performance Period, the Committee shall certify the extent, if any, to which the
Performance Goals set for each Participant for the Performance Period have been met and shall
determine the percentage of the Target Award, if any, issuable to a Participant based on the
extent, if any, to which he or she met his or her Performance Goals. However, the Committee shall
have the right to reduce (but not to increase) the percentage of the Target Award determined under
this § 4 to the extent that the

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Committee acting in its discretion determines that the Performance Goals set for a Participant for
the Performance Period no longer were appropriate for such Participant at the end of such
Performance Period. If the Committee certifies that a percentage of the Target Award is issuable
to a Participant for any Performance Period, the Committee shall determine the dollar amount
represented by such percentage. The Committee will then convert such dollar amount into a number
of whole shares of Stock by dividing such dollar amount by the Fair Market Value of a share of
Stock on the date such shares are issued. Such shares of Stock shall be issued under the Belk Inc.
2010 Incentive Stock Plan with fifty percent of such shares of Stock to be issued as soon as
practical after such certification has been made and in any event no later than 21/2 months after the
end of the calendar year which includes the last day of the Performance Period, provided the
employment requirement under § 5 is satisfied on the last day of the Performance Period. The
remaining fifty percent of the number of shares of Stock issuable for the Performance Period shall
be issued under the Belk Inc. 2010 Incentive Stock Plan as soon as practical after the Delayed
Issuance Date (provided the employment requirement in § 5 is satisfied on the Delayed Issuance
Date) and in any event no later than 2 1/2 months after the Delayed Issuance Date.

     4.7 Maximum Shares of Stock. The maximum number of Shares of Stock issuable in any
calendar year under this § 4 to Executive for the Performance Period shall be equal to the maximum
number of shares permitted to be issued pursuant to a Stock Grant under § 6 of the Belk, Inc. 2010
Incentive Stock Plan for such calendar year.

§ 5. Employment Requirement.

     5.1 General Rule. Executive shall forfeit Executive’s right to the issuance of any
shares of Stock pursuant to § 4.3 or § 4.4 if Executive fails for any reason

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whatsoever to remain employed throughout the Performance Period by Belk, a Belk Affiliate or a
Belk Subsidiary or, for the issuance scheduled to be made on the Delayed Issuance Date, through the
Delayed Issuance Date, except to the extent provided in § 5.2.

	5.2	 	Exceptions.

     (a) Employed After Performance Period Started. If Executive is
employed by Belk, a Belk Affiliate or a Belk Subsidiary after the start of the
Performance Period and remains so employed through the end of the Performance
Period, Executive will (subject to 5.2(e)(1)) be treated as employed throughout the
Performance Period, but the number of shares of Stock issuable to Executive, if any,
shall be determined under § 5.2(e).

     (b) Death. No forfeiture shall be effected under § 5.1 if Executive’s
employment by Belk, a Belk Affiliate or a Belk Subsidiary terminates during the
Performance Period as a result of Executive’s death, but the number of shares of
Stock issuable on behalf of Executive, if any, shall be determined under § 5.2(e)
and such shares shall be issued to Executive’s estate.

     (c) Disability. No forfeiture shall be effected under § 5.1 if
Executive’s employment is terminated during the Performance Period by Belk, a Belk
Affiliate or a Belk Subsidiary because the Board deems that Executive is no longer
able even with reasonable accommodation to perform the essential functions of
Executive’s job as a result of a physical or mental impairment, but the number of
shares of Stock issuable to Executive, if any, shall be determined under § 5.2(e).

-7-

 

     (d) Retirement. No forfeiture shall be effected under § 5.1 if
Executive with the consent of the Board or the Committee retires or otherwise
separates from employment under circumstances which the Board or Committee
determines should be treated as the equivalent of retirement during the Performance
Period and Executive for the remainder of the Performance Period refrains from
engaging in any employment related activities which the Board or Committee deems
inconsistent with Executive’s status as a retired employee of Belk, a Belk Affiliate
or a Belk Subsidiary, but the number of shares of Stock issuable to Executive, if
any, shall be determined under § 5.2(e).

     (e) Two Year Minimum and Pro-Ration Rules.

     (1) Executive shall forfeit Executive’s right to the issuance of any
shares of Stock pursuant to § 4.3, § 4.4 and this § 5.2(e) unless Executive
was employed by Belk, a Belk Affiliate or a Belk Subsidiary for at least two
full years in the Performance Period.

     (2) If Executive was employed by Belk, a Belk Affiliate or a Belk
Subsidiary for at least two full years in the Performance Period, the number
of shares of Stock otherwise issuable to or on behalf of Executive shall be
reduced by the Committee pursuant to this § 5.2(e) to reflect the fact that
Executive was so employed for less than the full Performance Period. The
Committee shall determine the reduced number of shares of Stock to be issued
under the Plan to Executive by multiplying the number of shares of Stock
otherwise issuable to Executive pursuant to § 4 by a fraction,

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the numerator of which shall be the number of full fiscal months (rounding
down to the nearest fiscal month) that Executive was employed by Belk, a
Belk Affiliate or a Belk Subsidiary in such Performance Period and the
denominator of which shall be thirty (30), and then rounding up to the
nearest whole share of Stock.

§ 6. Stock Issuance and Minimum Tax Withholding. The Committee shall determine the number
of whole shares of Stock, if any, to be issued to Executive, the minimum income tax withholding due
on such shares and Executive’s deadline for making a payment to Belk equal to such minimum income
tax withholding. If Executive fails to make such payment by such deadline, Belk shall reduce the
total number of whole shares of Stock to be issued to or on behalf of Executive by a number
sufficient for Belk to pay the minimum income tax withholding due on all such shares of Stock based
on the value assigned by Belk to such shares of Stock and shall then issue the reduced number of
shares of Stock to or on behalf of Executive. If Executive makes such payment, there will be no
reduction in the total number of shares of Stock issued to Executive pursuant to this § 6, and the
total number of shares of Stock due shall be issued to or on behalf of Executive.

§ 7. 2010 Incentive Stock Plan. Any Shares of Stock issued to or on behalf of Executive
pursuant to the CERTIFICATE and this Exhibit A shall be issued subject to the terms and conditions
set forth in the Belk, Inc. 2010 Incentive Stock Plan.

§ 8. Reference. Unless otherwise specified, all references in this Exhibit A or the
Certificate to sections (§) shall be to sections (§) of this Exhibit A.

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§ 9. Administration, Amendment and Termination. The Committee shall have the power to
interpret and administer this SIP as the Committee in its absolute discretion deems in the best
interest of Belk and the Committee to the extent practicable shall do so to protect Belk’s right to
deduct, in light of § 162(m) of the Internal Revenue Code, any shares of Stock issuable under the
SIP to any participant who is Belk’s chief executive officer or one of its four other executive
officers who are treated under § 162(m) of the Internal Revenue Code as a “covered employee”. The
Committee shall have the power to amend this SIP from time to time as the Committee deems necessary
or appropriate and to terminate this SIP if the Committee deems such termination in the best
interest of Belk.

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EXHIBIT B

Belk Stretch Incentive Plan (SIP)

Sales Scale

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	% of Pln	 	% of	 	% of Pln	 	% of	 	% of Pln	 	% of	 	% of Pln	 	% of
	Attained	 	Payout	 	Attained	 	Payout	 	Attained	 	Payout	 	Attained	 	Payout
	 	 	 	 	 	 	 
	95.0
	 	0.0%	 	 	 	 	 	 	 	 	 	 	 	 
	95.1
	 	1.0%	 	97.1	 	21.0%	 	99.1	 	41.0%	 	101.1	 	59.2%
	95.2
	 	2.0%	 	97.2	 	22.0%	 	99.2	 	42.0%	 	101.2	 	60.0%
	95.3
	 	3.0%	 	97.3	 	23.0%	 	99.3	 	43.0%	 	101.3	 	60.8%
	95.4
	 	4.0%	 	97.4	 	24.0%	 	99.4	 	44.0%	 	101.4	 	61.7%
	95.5
	 	5.0%	 	97.5	 	25.0%	 	99.5	 	45.0%	 	101.5	 	62.5%
	95.6
	 	6.0%	 	97.6	 	26.0%	 	99.6	 	46.0%	 	101.6	 	63.3%
	95.7
	 	7.0%	 	97.7	 	27.0%	 	99.7	 	47.0%	 	101.7	 	64.2%
	95.8
	 	8.0%	 	97.8	 	28.0%	 	99.8	 	48.0%	 	101.8	 	65.0%
	95.9
	 	9.0%	 	97.9	 	29.0%	 	99.9	 	49.0%	 	101.9	 	65.8%
	96.0
	 	10.0%	 	98.0	 	30.0%	 	100.0	 	50.0%	 	102.0	 	66.7%
	96.1
	 	11.0%	 	98.1	 	31.0%	 	100.1	 	50.8%	 	102.1	 	67.5%
	96.2
	 	12.0%	 	98.2	 	32.0%	 	100.2	 	51.7%	 	102.2	 	68.3%
	96.3
	 	13.0%	 	98.3	 	33.0%	 	100.3	 	52.5%	 	102.3	 	69.2%
	96.4
	 	14.0%	 	98.4	 	34.0%	 	100.4	 	53.3%	 	102.4	 	70.0%
	96.5
	 	15.0%	 	98.5	 	35.0%	 	100.5	 	54.2%	 	102.5	 	70.8%
	96.6
	 	16.0%	 	98.6	 	36.0%	 	100.6	 	55.0%	 	102.6	 	71.7%
	96.7
	 	17.0%	 	98.7	 	37.0%	 	100.7	 	55.8%	 	102.7	 	72.5%
	96.8
	 	18.0%	 	98.8	 	38.0%	 	100.8	 	56.7%	 	102.8	 	73.3%
	96.9
	 	19.0%	 	98.9	 	39.0%	 	100.9	 	57.5%	 	102.9	 	74.2%
	97.0
	 	20.0%	 	99.0	 	40.0%	 	101.0	 	58.3%	 	103.0	 	75.0%

EBIT Scale

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	% of Pln	 	% of	 	% of Pln	 	% of	 	% of Pln	 	% of	 	% of Pln	 	% of	 	% of Pln	 	 	% of	 	 	% of Pln	 	 	% of	 	 	% of Pln	 	 	% of	 	 	% of Pln	 	 	% of	 
	Attained	 	Payout	 	Attained	 	Payout	 	Attained	 	Payout	 	Attained	 	Payout	 	Attained	 	 	Payout	 	 	Attained	 	 	Payout	 	 	Attained	 	 	Payout	 	 	Attained	 	 	Payout	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	74.0
	 	0.0%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	74.1
	 	0.2%	 	79.1	 	9.8%	 	84.1	 	19.4%	 	89.1	 	29.0%	 	 	94.1	 	 	 	38.7	%	 	 	99.1	 	 	 	48.3	%	 	 	104.1	 	 	 	60.2	%	 	 	109.1	 	 	 	72.7	%
	74.2
	 	0.4%	 	79.2	 	10.0%	 	84.2	 	19.6%	 	89.2	 	29.2%	 	 	94.2	 	 	 	38.8	%	 	 	99.2	 	 	 	48.5	%	 	 	104.2	 	 	 	60.5	%	 	 	109.2	 	 	 	73.0	%
	74.3
	 	0.6%	 	79.3	 	10.2%	 	84.3	 	19.8%	 	89.3	 	29.4%	 	 	94.3	 	 	 	39.0	%	 	 	99.3	 	 	 	48.7	%	 	 	104.3	 	 	 	60.7	%	 	 	109.3	 	 	 	73.2	%
	74.4
	 	0.8%	 	79.4	 	10.4%	 	84.4	 	20.0%	 	89.4	 	29.6%	 	 	94.4	 	 	 	39.2	%	 	 	99.4	 	 	 	48.8	%	 	 	104.4	 	 	 	61.0	%	 	 	109.4	 	 	 	73.5	%
	74.5
	 	1.0%	 	79.5	 	10.6%	 	84.5	 	20.2%	 	89.5	 	29.8%	 	 	94.5	 	 	 	39.4	%	 	 	99.5	 	 	 	49.0	%	 	 	104.5	 	 	 	61.2	%	 	 	109.5	 	 	 	73.7	%
	74.6
	 	1.2%	 	79.6	 	10.8%	 	84.6	 	20.4%	 	89.6	 	30.0%	 	 	94.6	 	 	 	39.6	%	 	 	99.6	 	 	 	49.2	%	 	 	104.6	 	 	 	61.5	%	 	 	109.6	 	 	 	74.0	%
	74.7
	 	1.3%	 	79.7	 	11.0%	 	84.7	 	20.6%	 	89.7	 	30.2%	 	 	94.7	 	 	 	39.8	%	 	 	99.7	 	 	 	49.4	%	 	 	104.7	 	 	 	61.7	%	 	 	109.7	 	 	 	74.2	%
	74.8
	 	1.5%	 	79.8	 	11.2%	 	84.8	 	20.8%	 	89.8	 	30.4%	 	 	94.8	 	 	 	40.0	%	 	 	99.8	 	 	 	49.6	%	 	 	104.8	 	 	 	62.0	%	 	 	109.8	 	 	 	74.5	%
	74.9
	 	1.7%	 	79.9	 	11.3%	 	84.9	 	21.0%	 	89.9	 	30.6%	 	 	94.9	 	 	 	40.2	%	 	 	99.9	 	 	 	49.8	%	 	 	104.9	 	 	 	62.2	%	 	 	109.9	 	 	 	74.7	%
	75.0
	 	1.9%	 	80.0	 	11.5%	 	85.0	 	21.2%	 	90.0	 	30.8%	 	 	95.0	 	 	 	40.4	%	 	 	100.0	 	 	 	50.0	%	 	 	105.0	 	 	 	62.5	%	 	 	110.0	 	 	 	75.0	%
	75.1
	 	2.1%	 	80.1	 	11.7%	 	85.1	 	21.3%	 	90.1	 	31.0%	 	 	95.1	 	 	 	40.6	%	 	 	100.1	 	 	 	50.3	%	 	 	105.1	 	 	 	62.7	%	 	 	 	 	 	 	 	 
	75.2
	 	2.3%	 	80.2	 	11.9%	 	85.2	 	21.5%	 	90.2	 	31.2%	 	 	95.2	 	 	 	40.8	%	 	 	100.2	 	 	 	50.5	%	 	 	105.2	 	 	 	63.0	%	 	 	 	 	 	 	 	 
	75.3
	 	2.5%	 	80.3	 	12.1%	 	85.3	 	21.7%	 	90.3	 	31.3%	 	 	95.3	 	 	 	41.0	%	 	 	100.3	 	 	 	50.8	%	 	 	105.3	 	 	 	63.2	%	 	 	 	 	 	 	 	 
	75.4
	 	2.7%	 	80.4	 	12.3%	 	85.4	 	21.9%	 	90.4	 	31.5%	 	 	95.4	 	 	 	41.2	%	 	 	100.4	 	 	 	51.0	%	 	 	105.4	 	 	 	63.5	%	 	 	 	 	 	 	 	 
	75.5
	 	2.9%	 	80.5	 	12.5%	 	85.5	 	22.1%	 	90.5	 	31.7%	 	 	95.5	 	 	 	41.3	%	 	 	100.5	 	 	 	51.3	%	 	 	105.5	 	 	 	63.7	%	 	 	 	 	 	 	 	 
	75.6
	 	3.1%	 	80.6	 	12.7%	 	85.6	 	22.3%	 	90.6	 	31.9%	 	 	95.6	 	 	 	41.5	%	 	 	100.6	 	 	 	51.5	%	 	 	105.6	 	 	 	64.0	%	 	 	 	 	 	 	 	 
	75.7
	 	3.3%	 	80.7	 	12.9%	 	85.7	 	22.5%	 	90.7	 	32.1%	 	 	95.7	 	 	 	41.7	%	 	 	100.7	 	 	 	51.8	%	 	 	105.7	 	 	 	64.2	%	 	 	 	 	 	 	 	 
	75.8
	 	3.5%	 	80.8	 	13.1%	 	85.8	 	22.7%	 	90.8	 	32.3%	 	 	95.8	 	 	 	41.9	%	 	 	100.8	 	 	 	52.0	%	 	 	105.8	 	 	 	64.5	%	 	 	 	 	 	 	 	 
	75.9
	 	3.7%	 	80.9	 	13.3%	 	85.9	 	22.9%	 	90.9	 	32.5%	 	 	95.9	 	 	 	42.1	%	 	 	100.9	 	 	 	52.3	%	 	 	105.9	 	 	 	64.7	%	 	 	 	 	 	 	 	 
	76.0
	 	3.8%	 	81.0	 	13.5%	 	86.0	 	23.1%	 	91.0	 	32.7%	 	 	96.0	 	 	 	42.3	%	 	 	101.0	 	 	 	52.5	%	 	 	106.0	 	 	 	65.0	%	 	 	 	 	 	 	 	 
	76.1
	 	4.0%	 	81.1	 	13.7%	 	86.1	 	23.3%	 	91.1	 	32.9%	 	 	96.1	 	 	 	42.5	%	 	 	101.1	 	 	 	52.7	%	 	 	106.1	 	 	 	65.2	%	 	 	 	 	 	 	 	 
	76.2
	 	4.2%	 	81.2	 	13.8%	 	86.2	 	23.5%	 	91.2	 	33.1%	 	 	96.2	 	 	 	42.7	%	 	 	101.2	 	 	 	53.0	%	 	 	106.2	 	 	 	65.5	%	 	 	 	 	 	 	 	 
	76.3
	 	4.4%	 	81.3	 	14.0%	 	86.3	 	23.7%	 	91.3	 	33.3%	 	 	96.3	 	 	 	42.9	%	 	 	101.3	 	 	 	53.2	%	 	 	106.3	 	 	 	65.7	%	 	 	 	 	 	 	 	 
	76.4
	 	4.6%	 	81.4	 	14.2%	 	86.4	 	23.8%	 	91.4	 	33.5%	 	 	96.4	 	 	 	43.1	%	 	 	101.4	 	 	 	53.5	%	 	 	106.4	 	 	 	66.0	%	 	 	 	 	 	 	 	 
	76.5
	 	4.8%	 	81.5	 	14.4%	 	86.5	 	24.0%	 	91.5	 	33.7%	 	 	96.5	 	 	 	43.3	%	 	 	101.5	 	 	 	53.7	%	 	 	106.5	 	 	 	66.2	%	 	 	 	 	 	 	 	 
	76.6
	 	5.0%	 	81.6	 	14.6%	 	86.6	 	24.2%	 	91.6	 	33.8%	 	 	96.6	 	 	 	43.5	%	 	 	101.6	 	 	 	54.0	%	 	 	106.6	 	 	 	66.5	%	 	 	 	 	 	 	 	 
	76.7
	 	5.2%	 	81.7	 	14.8%	 	86.7	 	24.4%	 	91.7	 	34.0%	 	 	96.7	 	 	 	43.7	%	 	 	101.7	 	 	 	54.2	%	 	 	106.7	 	 	 	66.7	%	 	 	 	 	 	 	 	 
	76.8
	 	5.4%	 	81.8	 	15.0%	 	86.8	 	24.6%	 	91.8	 	34.2%	 	 	96.8	 	 	 	43.8	%	 	 	101.8	 	 	 	54.5	%	 	 	106.8	 	 	 	67.0	%	 	 	 	 	 	 	 	 
	76.9
	 	5.6%	 	81.9	 	15.2%	 	86.9	 	24.8%	 	91.9	 	34.4%	 	 	96.9	 	 	 	44.0	%	 	 	101.9	 	 	 	54.7	%	 	 	106.9	 	 	 	67.2	%	 	 	 	 	 	 	 	 
	77.0
	 	5.8%	 	82.0	 	15.4%	 	87.0	 	25.0%	 	92.0	 	34.6%	 	 	97.0	 	 	 	44.2	%	 	 	102.0	 	 	 	55.0	%	 	 	107.0	 	 	 	67.5	%	 	 	 	 	 	 	 	 
	77.1
	 	6.0%	 	82.1	 	15.6%	 	87.1	 	25.2%	 	92.1	 	34.8%	 	 	97.1	 	 	 	44.4	%	 	 	102.1	 	 	 	55.2	%	 	 	107.1	 	 	 	67.7	%	 	 	 	 	 	 	 	 
	77.2
	 	6.2%	 	82.2	 	15.8%	 	87.2	 	25.4%	 	92.2	 	35.0%	 	 	97.2	 	 	 	44.6	%	 	 	102.2	 	 	 	55.5	%	 	 	107.2	 	 	 	68.0	%	 	 	 	 	 	 	 	 
	77.3
	 	6.3%	 	82.3	 	16.0%	 	87.3	 	25.6%	 	92.3	 	35.2%	 	 	97.3	 	 	 	44.8	%	 	 	102.3	 	 	 	55.7	%	 	 	107.3	 	 	 	68.2	%	 	 	 	 	 	 	 	 
	77.4
	 	6.5%	 	82.4	 	16.2%	 	87.4	 	25.8%	 	92.4	 	35.4%	 	 	97.4	 	 	 	45.0	%	 	 	102.4	 	 	 	56.0	%	 	 	107.4	 	 	 	68.5	%	 	 	 	 	 	 	 	 
	77.5
	 	6.7%	 	82.5	 	16.3%	 	87.5	 	26.0%	 	92.5	 	35.6%	 	 	97.5	 	 	 	45.2	%	 	 	102.5	 	 	 	56.2	%	 	 	107.5	 	 	 	68.7	%	 	 	 	 	 	 	 	 
	77.6
	 	6.9%	 	82.6	 	16.5%	 	87.6	 	26.2%	 	92.6	 	35.8%	 	 	97.6	 	 	 	45.4	%	 	 	102.6	 	 	 	56.5	%	 	 	107.6	 	 	 	69.0	%	 	 	 	 	 	 	 	 
	77.7
	 	7.1%	 	82.7	 	16.7%	 	87.7	 	26.3%	 	92.7	 	36.0%	 	 	97.7	 	 	 	45.6	%	 	 	102.7	 	 	 	56.7	%	 	 	107.7	 	 	 	69.2	%	 	 	 	 	 	 	 	 
	77.8
	 	7.3%	 	82.8	 	16.9%	 	87.8	 	26.5%	 	92.8	 	36.2%	 	 	97.8	 	 	 	45.8	%	 	 	102.8	 	 	 	57.0	%	 	 	107.8	 	 	 	69.5	%	 	 	 	 	 	 	 	 
	77.9
	 	7.5%	 	82.9	 	17.1%	 	87.9	 	26.7%	 	92.9	 	36.3%	 	 	97.9	 	 	 	46.0	%	 	 	102.9	 	 	 	57.2	%	 	 	107.9	 	 	 	69.7	%	 	 	 	 	 	 	 	 
	78.0
	 	7.7%	 	83.0	 	17.3%	 	88.0	 	26.9%	 	93.0	 	36.5%	 	 	98.0	 	 	 	46.2	%	 	 	103.0	 	 	 	57.5	%	 	 	108.0	 	 	 	70.0	%	 	 	 	 	 	 	 	 
	78.1
	 	7.9%	 	83.1	 	17.5%	 	88.1	 	27.1%	 	93.1	 	36.7%	 	 	98.1	 	 	 	46.3	%	 	 	103.1	 	 	 	57.7	%	 	 	108.1	 	 	 	70.2	%	 	 	 	 	 	 	 	 
	78.2
	 	8.1%	 	83.2	 	17.7%	 	88.2	 	27.3%	 	93.2	 	36.9%	 	 	98.2	 	 	 	46.5	%	 	 	103.2	 	 	 	58.0	%	 	 	108.2	 	 	 	70.5	%	 	 	 	 	 	 	 	 
	78.3
	 	8.3%	 	83.3	 	17.9%	 	88.3	 	27.5%	 	93.3	 	37.1%	 	 	98.3	 	 	 	46.7	%	 	 	103.3	 	 	 	58.2	%	 	 	108.3	 	 	 	70.7	%	 	 	 	 	 	 	 	 
	78.4
	 	8.5%	 	83.4	 	18.1%	 	88.4	 	27.7%	 	93.4	 	37.3%	 	 	98.4	 	 	 	46.9	%	 	 	103.4	 	 	 	58.5	%	 	 	108.4	 	 	 	71.0	%	 	 	 	 	 	 	 	 
	78.5
	 	8.7%	 	83.5	 	18.3%	 	88.5	 	27.9%	 	93.5	 	37.5%	 	 	98.5	 	 	 	47.1	%	 	 	103.5	 	 	 	58.7	%	 	 	108.5	 	 	 	71.2	%	 	 	 	 	 	 	 	 
	78.6
	 	8.8%	 	83.6	 	18.5%	 	88.6	 	28.1%	 	93.6	 	37.7%	 	 	98.6	 	 	 	47.3	%	 	 	103.6	 	 	 	59.0	%	 	 	108.6	 	 	 	71.5	%	 	 	 	 	 	 	 	 
	78.7
	 	9.0%	 	83.7	 	18.7%	 	88.7	 	28.3%	 	93.7	 	37.9%	 	 	98.7	 	 	 	47.5	%	 	 	103.7	 	 	 	59.2	%	 	 	108.7	 	 	 	71.7	%	 	 	 	 	 	 	 	 
	78.8
	 	9.2%	 	83.8	 	18.8%	 	88.8	 	28.5%	 	93.8	 	38.1%	 	 	98.8	 	 	 	47.7	%	 	 	103.8	 	 	 	59.5	%	 	 	108.8	 	 	 	72.0	%	 	 	 	 	 	 	 	 
	78.9
	 	9.4%	 	83.9	 	19.0%	 	88.9	 	28.7%	 	93.9	 	38.3%	 	 	98.9	 	 	 	47.9	%	 	 	103.9	 	 	 	59.7	%	 	 	108.9	 	 	 	72.2	%	 	 	 	 	 	 	 	 
	79.0
	 	9.6%	 	84.0	 	19.2%	 	89.0	 	28.8%	 	94.0	 	38.5%	 	 	99.0	 	 	 	48.1	%	 	 	104.0	 	 	 	60.0	%	 	 	109.0	 	 	 	72.5	%	 	 	 	 	 	 	 	 

-11-exv10w1

Exhibit 10.1

2011 SALES COMPENSATION PLAN FOR WOLRAD CLAUDY

General

The purpose of this plan is to outline the sales compensation plan for 2011 for the Company’s
Executive Vice President, Global Sales (the “EVP, Global Sales”). The plan is designed to reward
the achievement of sales goals in support of Tekelec’s strategic objectives with an uncapped cash
incentive.

Plan Period

This plan is in effect as of January 1, 2011 and will remain in effect until replaced or amended.

Plan Administration

This plan will be administered by the Company’s President and CEO, CFO, and VP of Human Resources
(the “Plan Committee”) and with oversight, to the extent required, by the Compensation Committee of
the Company’s Board of Directors (the “Compensation Committee”). Decisions of the Plan Committee
on any questions regarding content, interpretation, or administration of the plan will be final and
binding. The Plan Committee reserves the right to apply, modify or waive application of any
provision of this plan to any contracts that contain modified or special products or special
pricing considerations of non-standard terms and conditions.

No changes to the plan and no exceptions to its provisions will be authorized without the approval
of the Plan Committee and, when required, the Compensation Committee. The Plan Committee retains
the discretion to review exceptional situations and determine the outcome that best represents the
intent of the plan. Written requests to the Plan Committee for exceptions may be made by the EVP,
Global Sales. Any approved plan deviation or exception must be confirmed in writing and unless
otherwise stated will only apply to the transaction being excepted. The President and CEO (or
Compensation Committee, if a decision of the Compensation Committee is required) has final approval
and authority over all decisions and rulings under, and alterations of, this plan. All changes to
this plan will be made in writing and will be effective within thirty (30) days of notice or
following as much notice as is possible under the circumstances.

Sales Objectives

The key objective of the plan is to provide a means of rewarding outstanding sales achievement.
The EVP, Global Sales is responsible for seeking out and successfully closing, and overseeing the
Company’s sales organization in seeking out and successfully closing, high-quality orders that meet
Tekelec’s financial objectives. The EVP, Global Sales is also responsible for building and
maintaining, and overseeing the Company’s sales organization in building and maintaining, positive,
long-term relationships with current and potential customers.

Quota

The quota is an annual sales target. For 2011, the EVP, Global Sales is assigned a single sales
quota inclusive of all Tekelec products. The quota may be adjusted at any time in the event
circumstances warrant modification. When possible, written notification will be provided thirty
(30) days prior to the effective date.

Page 1

 

Quotes

It is a requirement that every quote presented to a customer, distributor, representative, or end
user is prepared by the Tekelec quoting function. If discounts or special terms apply then a
document such as a letter or quote review form completed using the RFQ tool must be attached which
clearly describes the nature of the discount or special terms.

It is the responsibility of the EVP, Global Sales to use the proper tools and procedures for
quoting products and/or services to customers. This includes, but is not limited to, using the
automated quote tools for Generally Available (GA) products, obtaining pre-GA quotes directly from
the Quote and/or Product Management functions as appropriate, and entering these business
opportunities in the sales forecasting tools with a high degree of completeness and accuracy. This
information is vital to Tekelec’s operation from a manufacturing, as well as financial,
perspective.

Orders

An order may be booked on the basis of a Purchase Order, a Contract, or any other document that
satisfies the requirements of the Corporate Order Policy. Additionally, an order must be approved
based on Tekelec’s Approval Authority Matrix, also available from Tekelec’s Finance team. The
Corporate Order Policy and the Approval Authority Matrix are incorporated by reference into this
plan. Note that there may be differences between what Tekelec is required to book as an order
based on the Corporate Order Policy and the treatment of that order booking for commission purposes
under this plan.

Debookings/Chargebacks

For product-related orders, debookings due to Tekelec’s inability to deliver the requested product
on time or a subsequent decline in the customer’s credit profile will generally not reduce approved
commissions. Debookings that are the result of changes in the booked order due to customer
requested changes will generally be immediately charged back. The Plan Committee will review each
debooking/chargeback situation and retains the discretion to consider the pertinent facts in making
decisions on how best to exercise this provision of the plan. Tekelec will consider repayment of
approved commissions that had previously been paid on a debooked order over time, depending on the
timing of the original payment. However, all charge backs must be recovered within a twelve (12)
month period and in accordance with the appropriate state, federal and country laws.

Any debooking on which commissions are charged back will also restore quota previously retired
within the same calendar year. For significant amounts, the impact to quota retirement may be
recognized over time, but in no case over a period longer than twelve (12) months. Any negative
quota not reconciled within the same calendar year will be taken into consideration in the
following year’s quota setting. Negative quotas will have an impact on accelerator qualification.

In the event the EVP, Global Sales terminates employment with Tekelec prior to Tekelec recovering
debooked commissions, these monies will be deducted from his final paycheck subject to the approval
of the VP of Human Resources and the President and CEO and in accordance with local law.

Page 2

 

Corporate Order Policy and Plan Differences

There may be differences between what Tekelec is required to book as an order based on the
Corporate Order Policy and the treatment of that order booking for commission purposes under this
plan. Examples of those differences are highlighted below:

	 	•	 	Offers made without the full binding commitment of the corporation as evidenced by
the proper application of the Authority Approval Matrix and/or offers that knowingly and
intentionally misrepresent the capabilities of the product are not eligible for
commissions even though they may result in a financial obligation to Tekelec. Examples
of these differences include orders agreed to outside of the defined approval process
that Tekelec agrees to accept or offers that state transaction volume capabilities that
are beyond Tekelec’s standard specifications.
	 
	 	•	 	In the event an order is renegotiated or cancelled, a full adjustment may result for
financial reporting purposes. For commission purposes, whether the commission will be
recovered using the Debooking approach indicated above will depend on whether: 1) the
change in the order is due to changes in customer requests — commissions will generally
be recovered for changes in customer requests (i.e. delivery timing) or 2) the change in
the order is due to company performance delays — commissions will generally not be
recovered due to a Company delay in meeting shipment dates. Changes in contract
structure as discussed in the Discounts section below may result in the return of
commissions without time limitation (i.e. unlimited “clawback” provisions).
	 
	 	•	 	Credit reductions may be required under the Corporate Order Policy after the order is
booked due to a decline in the customer’s credit position. For commission purposes,
provided Tekelec’s Credit department approved the customer at the time of the order,
there will generally be no commission reduction for a subsequent change in the credit
rating of the customer that may require a financial reporting adjustment. Every new
customer must be approved by Credit without exception per the Approval Authority Matrix.
	 
	 	•	 	Penalties due to performance criteria within the order (delivery dates, KPI’s) after
the order was accepted by Tekelec will impact the order for financial reporting, but
will not impact or reduce commissions approved for payment. As an example, an accepted
order with a 12-week delivery lead-time that is not delivered for 20-weeks due to
non-performance by Tekelec and results in a financial penalty to Tekelec would reduce
the financial reporting value of the order, but would not reduce approved commissions.
Penalties, credit memos, or other concessions that are not due per the contract but
paid/issued at the recommendation of the sales organization will impact commissions.
Penalties known at order booking will impact commissions unless otherwise approved by
the Plan Committee.

The examples above are not intended to be all-inclusive. Cash collections often dictate the true
intent of the customer arrangements. Any potential difference between the Corporate Order Policy
and this plan will be subject to review and confirmation as to equitable treatment by the Plan
Committee to ensure the intent of rewarding for performance is met while meeting Tekelec’s
strategic and tactical objectives.

Page 3

 

Commissions

The commission base rate and Quota will be determined by the Board or as delegated otherwise to the
Compensation Committee, and may change from time to time. The base rate is calculated as
the EVP, Global Sales’ targeted commission divided by his total annual quota.

Commissions for the EVP, Global Sales are calculated based on the month-end reports showing the
EVP, Global Sales’ booking totals where commissions are paid. The commission will be paid
following approval by the Plan Committee. Commission sheets are valid only if created by the Sales
Compensation Analyst.

Special Sales Bonuses and/or incentives may be paid for a variety of purposes, such as the
achievement of a specific quarterly objective or achievement in response to a specific program.
Special Sales Bonuses will be under the discretion of the Plan Committee and must be documented in
writing. All payments made on orders subsequently debooked may be clawed back per the
Debookings/Chargebacks section of this policy.

For 2011, the EVP, Global Sales shall be eligible, at the discretion of the Board or its delegate,
for SPIF/Incentive programs available to other sales employees.

Commission Payments

Under the plan, commissions will be calculated after the close of every fiscal month based on
reconciled orders and paid on a monthly basis. Commissions earned on sales made in fiscal January
and February will be paid in April. Commissions earned on sales in fiscal March will be paid in
May. Thereafter, commissions will be calculated for every fiscal month and will be paid following
approval with the regular paycheck two fiscal months after the order is booked or as soon as
administratively feasible thereafter.

50% of the base commissions payable will be deemed earned at order and paid per the schedule
defined in the preceding paragraph. The remaining 50% of the base commissions payable will be
deemed earned upon receipt by Tekelec of the cash related to the order and be paid on a pro-rata
basis as cash is received. Payments based on cash receipts will be made per the schedule defined
in the preceding paragraph provided the EVP, Global Sales is still employed with Tekelec at the
time of the second payment.

All earned SPIFs (i.e., the amount in excess of the base commission rate) will be 100% paid along
with commissions payable upon order in the same fiscal month as the payment of the base commission.
Thus, no portion of the amount in excess of the base commission will be deferred until cash
collection.

Discounts

All discounts should be reflected on an official Tekelec quote. Discounting beyond a published
discount schedule without approvals as defined in the Tekelec Authority Approval Matrix may make
the EVP, Global Sales subject to termination and the President and CEO may reduce or deny
commission for the order in question.

Page 4

 

Other Adjustments

Commission payments will be calculated on the booked value of the order with the following
modifications:

	•	 	Commissions will not be paid on re-stocking charges.
	 
	•	 	Commissions will not be paid on out-of-warranty technical support (TAC) services.

Commissions on Revenue — From Prior Sales Compensation Policies

To the extent there are outstanding commissions not yet paid pending revenue recognition from prior
years, Tekelec will make all pending payments with Q4 2010 commission payments based on the
following approach to active sales employees:

	 	•	 	Tekelec has taken a snapshot of the organizational structure as of 12/31/2006 (“frozen
structure”) and will approve and pay commissions on pending revenue to the sales person
and sales team in place as of 12/31/2006 to the extent possible by Tekelec’s financial
incentive compensation module.
	 
	 	•	 	To the extent the frozen structure cannot be tracked by Tekelec’s new financial
incentive compensation module, Tekelec will pay the run out of recognized revenue based on
the current organizational structure adjusted by the recommendation of the President and
CEO.

In the event of the termination of the EVP, Global Sales, he will not be eligible for further
approved commissions from any prior Tekelec Sales Compensation Policy.

Commissions on Termination

In the event employment of the EVP, Global Sales is terminated, whether on a voluntary basis by the
EVP, Global Sales or involuntarily by Tekelec, commissions not yet approved by the Plan Committee
at the time of separation will be forfeited, including the 50% of commissions due upon cash
receipts.

TekelecCare Commissions

TekelecCare orders and extensions to TekelecCare orders will retire quota on a dollar for dollar
basis with 50% of commissions deemed earned upon order and 50% upon cash collections. Multi-year
TekelecCare orders that are not paid in the current year will be paid under future commission
policies if the EVP, Global Sales is the sales person of record for that account as of the
subsequent year’s cash recognition for the extension.

Accelerator Incentive

The EVP, Global Sales is eligible for an accelerator for exceeding annual total quota target as
indicated below:

	 	•	 	200% multiplier for exceeding total quota

The accelerator only applies to commissions earned on the portion of excess quota attainment.

Page 5

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