Exhibit 10.28
Description
of the Fiscal Year 2008 Executive Bonus Plan
Eligibility. Participants in the Bonus Plan
are chosen solely at the discretion of the Compensation
Committee. Our Chairman, Chief Executive Officer, our
Presidents, all of our Executive Vice Presidents and certain of
our Senior Vice Presidents are eligible to be considered for
participation in the Bonus Plan. As of
August 23, 2007,
there were 12 persons chosen to participate for fiscal year
2008. No person is automatically entitled to participate in the
Bonus Plan in any bonus plan year. We may also pay discretionary
bonuses, or other types of compensation, outside the Bonus Plan
which may or may not be deductible. However, no employee has a
guaranteed right to such discretionary compensation as a
substitute for a performance award in the event that performance
targets are not met or that stockholders fail to approve the
material terms of the Bonus Plan.
History. The Compensation Committee approved
the adoption of the Bonus Plan, which is part of the overall
compensation program for our executives, on
August 23, 2007.
Purpose. The purpose of the Bonus Plan is to
motivate the participants to achieve our financial performance
objectives and to reward them when those objectives are met with
bonuses that are intended to be deductible by us to the maximum
extent possible as “performance-based compensation”
within the meaning of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the “Code”).
Administration. The Bonus Plan will be
administered by the Compensation Committee, consisting of no
fewer than two members of the Board, each of whom qualifies as
an “outside director” within the meaning of
Section 162(m) of the Code.
Determination of Awards. Under the Bonus Plan,
participants will be eligible to receive awards based upon the
attainment, in fiscal year 2008, and certification of certain
performance criteria established by the Compensation Committee.
For fiscal year 2008:
(a) |
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Mr. Ellison, our Chief Executive Officer;
Mr. Henley, our Chairman of the Board; Ms. Catz, a
President and our Chief Financial Officer; and
Mr. Phillips, a President, will each receive an award based
on Oracle’s improvement in its pre-tax profit on a non-GAAP
basis from fiscal year 2007 to fiscal year 2008; |
(b) |
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each Executive Vice President and two Senior Vice
Presidents directly responsible for sales and consulting
(collectively, the “Sales and Consulting
Participants”) will receive an award based upon growth in
license revenues, customer relationship management On Demand
revenues and outsourcing bookings (i.e., contracts signed
associated with our On Demand business) in their respective
areas of responsibility from fiscal year 2007 to fiscal year
2008 and upon reaching and exceeding targets with respect to
licensing, outsourcing and consulting margins in their
respective areas of responsibility for fiscal year 2008; and
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(c) |
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each Executive Vice President and one Senior Vice
President not directly responsible for sales or consulting will
receive an award based on the amount by which revenue growth in
their respective areas of responsibility from fiscal year 2007
to fiscal year 2008 exceeded the expense growth of their
respective areas of responsibility from fiscal year 2007 to
fiscal year 2008. |
The Compensation Committee adopted the performance measures on
August 23, 2007, within 90 days after the start of
fiscal year 2008. Each Sales and Consulting Participant’s
total bonus amount under the Bonus Plan is calculated by summing
the applicable individual bonuses for each performance measure.
For all participants, the applicable individual bonus for their
performance measure or measures is related to the amount by
which the target for each performance measure is exceeded or
missed. If the individual performance target bonus calculation
results in a negative number, the individual bonus for such
performance measure is zero. The details of each of the formulas
with respect to the criteria have not been included in this
proxy statement in order to maintain the confidentiality of our
revenue, profit, expense
and/or
margin expectations, which we believe are confidential
commercial or business information, the disclosure of which
would adversely affect Oracle. In the event of the termination
or resignation of a participant during fiscal year 2008, we may
have the person who assumes the responsibilities of that
participant assume the same bonus structure as that participant,
but adjusted, as determined by the Compensation Committee, to
take into account that such person did not serve in that
capacity for the entire fiscal year.
Payment of Awards. All awards will be paid by
August 15, 2008, unless a participant has requested to
defer receipt of an award in accordance with the Oracle’s
Deferred Compensation Plan.
Maximum Award. The amounts that will be paid
pursuant to the Bonus Plan are not currently determinable. The
maximum bonus payment that our Chief Executive Officer may
receive under the Bonus Plan for fiscal year 2008 would be
$10,893,000. The maximum bonus payment that any other
participant may receive under the Bonus Plan for fiscal year
2008 is based on a fixed multiple of a target bonus for such
participant and would be less than the maximum bonus payment
that our Chief Executive Officer may receive under the Bonus
Plan.
Amendment and Termination. The Compensation
Committee may terminate the Bonus Plan, in whole or in part,
suspend the Bonus Plan, in whole or in part from time to time,
and amend the Bonus Plan, from time to time, including the
adoption of amendments deemed necessary or desirable to correct
any defect or supply omitted data or reconcile any inconsistency
in the Bonus Plan or in any award granted thereunder, so long as
stockholder approval has been obtained, if required in order for
awards under the Bonus Plan to qualify as
“performance-based compensation” under
Section 162(m) of the Code. The Compensation Committee may
amend or modify the Bonus Plan in any respect, or terminate the
Bonus Plan, without the consent of any affected participant.
However, in no event may such amendment or modification result
in an increase in the amount of compensation payable pursuant to
any award.
Termination of Employment. In order to be
eligible for an award under the Bonus Plan, a participant must
be actively employed by us through the date of payment. If a
participant’s employment with us terminates for any reason
prior to such date of payment, the participant will not be
eligible for any award under the Bonus Plan, and no award under
the Bonus Plan will be paid to the participant (determined
without regard to any election by a participant to defer receipt
of an award).
Federal Income Tax Consequences. Under present
federal income tax law, participants will realize ordinary
income equal to the amount of the award received in the year of
receipt. That income will be subject to applicable income and
employment tax withholding by Oracle. In the event that a
participant has requested to defer receipt of an award, FICA
taxes will be applied in the year the award is deferred, and
income tax withholding will be collected in the year of ultimate
payment. We will receive a deduction for the amount constituting
ordinary income to the participant, provided that the Bonus Plan
satisfies the requirements of Section 162(m) of the Code,
which limits the deductibility of nonperformance-related
compensation paid to certain corporate executives, and otherwise
satisfies the requirements for deductibility under federal
income tax law.