Exhibit 10.1
Red Hat,
Inc.
2006 PERFORMANCE COMPENSATION
PLAN
As Amended and Restated Effective
June 19, 2008
Red Hat, Inc. (the
“Company”), a Delaware corporation, hereby establishes
and adopts the following 2006 Performance Compensation Plan, as
amended from time to time (the “Plan”), to provide
incentive awards that are intended to qualify as
“performance-based compensation” within the meaning of
Section 162(m) of the Internal Revenue Code of 1986, as
amended.
The purposes of the Plan are to
advance the interests of the Company and its stockholders and
assist the Company in attracting and retaining executive officers
of the Company and its Affiliates who, because of the extent of
their responsibilities can make significant contributions to the
Company’s success by their ability, industry, loyalty and
exceptional services, by providing incentives and financial rewards
to such executive officers.
2.1. “ Affiliate ” shall mean any
corporation, partnership or other organization of which the Company
owns or controls, directly or indirectly, not less than 50% of the
total combined voting power of all classes of stock or other equity
interests.
2.2. “ Board ” shall mean the
board of directors of the Company.
2.3. “ Code ” shall mean the
Internal Revenue Code of 1986, as amended from time to time, and
any successor thereto.
2.4. “ Committee ” shall mean the
Compensation Committee of the Board or any subcommittee thereof
formed by the Compensation Committee to act as the Committee
hereunder. For purposes of satisfying the requirements of
Section 162(m) of the Code and the regulations thereunder, the
Committee is intended to consist solely of “outside
directors” as such term is defined in Section 162(m) of
the Code.
2.5. “ Disability ” shall mean any
physical or mental condition of a Participant that in the opinion
of the Committee renders the Participant incapable of continuing to
be an employee of the Company and its Affiliates.
2.6. “ Participant ” shall mean
the Company’s Chief Executive Officer and each executive
officer of the Company selected by the Committee pursuant to
Section 4.1 to participate in this Plan.
2.7. “ Performance Award ” shall
mean an award under the Plan which shall be subject to the
achievement of one or more objective Performance Goals established
by the Committee.
2.8. “ Performance Goal ” shall
mean the attainment of specified levels of one or any combination
of the following: revenue growth, net revenues, gross margins, net
margins, operating income, pre-tax income, after-tax income, net
income, net earnings, EPS (basic and diluted), earnings before
taxes, earnings before interest and taxes, EBITDA, return on
invested capital, return on equity, return on assets, economic
value added, (or an equivalent metric), cash flow from operations,
cash flow
per share, changes in deferred revenues, share
price performance, total shareholder return, improvement in or
attainment of expense levels, improvement in or attainment of
working capital levels, attainment of strategic and operational
initiatives, market share, gross profits, comparisons with various
stock market indices, and/or implementation, completion or
attainment of measurable objectives with respect to research,
development, products or projects. Performance Goals also may be
based solely by reference to the Company’s performance or the
performance of an Affiliate, division or business unit of the
Company for or within which the Participant is primarily employed,
or based upon the relative performance of other companies, or upon
comparisons of any of the indicators of performance relative to
other companies.
2.9. “ Performance Period ” shall
mean the Company’s fiscal year or such other period that the
Committee, in its sole discretion, may establish, provided no
Performance Period shall be more than five years in
length.
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3.
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ELIGIBILITY
AND ADMINISTRATION
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3.1. Eligibility. The individuals eligible to participate in the
Plan shall be the Company’s Chief Executive Officer and any
other executive officer of the Company or an Affiliate selected by
the Committee to participate in the Plan (each, a
“Participant”).
3.2. Administration .
(a) The Plan shall be administered
by the Committee. The Committee shall have full power and
authority, subject to the provisions of the Plan and subject to
such orders or resolutions not inconsistent with the provisions of
the Plan as may from time to time be adopted by the Board, to:
(i) select the Participants to whom Performance Awards may
from time to time be granted hereunder; (ii) establish
Performance Goals and determine the terms and conditions of each
Performance Award in compliance with the requirements of Code
Section 162(m); (iii) determine whether a Performance
Goal or Performance Award should be adjusted to eliminate the
effects of charges for restructurings, discontinued operations,
extraordinary items and other unusual or non-recurring items, as
well as the cumulative effect of accounting changes, in each case
as determined in accordance with generally accepted accounting
principles or identified in the Company’s financial
statements, notes to the financial statements, management’s
discussion and analysis or other filings with the U.S. Securities
and Exchange Commission; (iv) determine the time when
Performance Awards will be granted and paid and the Performance
Period to which they relate; (v) certify the achievement of
the Performance Goals underlying the Performance Award and the
amount of the Performance Award payable to each Participant in
respect of each Performance Period; (vi) determine whether
payment of Performance Awards may be deferred by Participants;
(vii) interpret and administer the Plan and any instrument or
agreement entered into in connection with the Plan;
(viii) correct any defect, supply any omission or reconcile
any inconsistency in the Plan or any Award in the manner and to the
extent that the Committee shall deem desirable to
