Network Equipment Technologies
Fiscal 2006 Q3 Executive Bonus Plan
This Executive Bonus Plan is a subplan to the company-wide Fiscal 2006 Q3 Bonus Plan, which supersedes
and replaces the Fiscal 2006 Q2, Q3, Q4 Bonus Plan.
Eligible participants: All Executives in the Company who are not on a sales quota or other commission-based
compensation plan, and who are on active payroll status at least 50% of the quarter in which payment is made.
Form and Timing of Payment: Participant must be an active payroll employee of net.com on the official date of
payment in order to receive an award. Payments will be distributed quarterly in the month following the end of the
Company objectives: The bonus plan is based on three important Company objectives: total revenue, operating
income, and cash balance.
Base bonus amounts: The plan establishes three levels of achievement for each of the three key objectives:
“Gold,” “Silver,” and “Bronze.” Achievement of the bonus for each objective is independent from achievement of
the others. Depending on the achievement level for each objective, participants will receive a bonus payment as a
percentage of quarterly salary. The bonus payment will be adjusted by a factor, depending on position level. The
factor for this Executive Bonus Plan is 2.5.
Example: If the Total Revenue objective is “Gold”, and the VoIP objective is “Bronze” and the Profitability
objective is “Silver”, then the base bonus would be 6% (3 + 1 + 2) times the factor.
Bonus Targets: The bonus levels for each of the objectives are determined by the amount that actual
achievement improves upon a base amount (approved separately by the Board of Directors) as set forth in the table
below. Operating income shall be computed exclusive of restructure costs, expenses of unutilized facilities, and
strategic alliance payments (other than royalties), but inclusive of any payments to be made under this plan.
Percent of quarterly salary