Exhibit 10.18
Chairman of the Board Bonus Terms
for FY09 Under the Section 162(m)
Executive Officer
Performance–Based Bonus Plan
Plan Objective
The Chairman of the Board Bonus
Terms for fiscal year 2009 under the Sun Microsystems, Inc.
(“Sun” or the “Company”)
Section 162(m) Executive Officer Performance-Based Bonus Plan
(the “Plan”) are designed to compensate the Chairman of
the Board (the “Chairman”) for contributions to Sun
during the Company’s fiscal year 2009. The Plan provides for
annual cash bonus compensation based on achievement of objectively
determinable performance goals against the Plan measures. The Plan
is intended to qualify as “performance-based
compensation” within the meaning of Section 162(m) of
the Internal Revenue Code (the “Code”).
Plan Year/Performance
Period
The Plan year is the Company’s
fiscal year 2009. The performance period is the Company’s
fiscal year 2009.
Eligibility
These terms apply to the person
serving as Sun’s Chairman as of July 1, 2008. In order
to receive a bonus payment with respect to the plan year, the
participant must be serving as Sun’s Chairman as of the last
business day of the fiscal year, except as provided
below.
If the Chairman retires, terminates
employment due to disability, or dies during the performance
period, the Chairman may receive a prorated bonus (subject to the
sole discretion of the Leadership Development and Compensation
Committee (the “LDCC”)) for the achievement of the
performance goals for the portion of the performance period that
the Chairman provided services to Sun. If the Chairman leaves Sun
prior to the end of a fiscal year for any other reason, including
but not limited to a reduction in force, voluntary resignation, or
termination by Sun the Chairman will be ineligible for a bonus
payment with respect to the performance period.
Annual Bonus Target
Percentage
The annual bonus target percentage
under the Plan is 150% of the Chairman’s Annual Base Salary
(as defined below) for fiscal year 2009, as set forth below (the
“Annual Bonus Target Percentage”).
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Fiscal Year
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Annual Bonus Target
Percentage
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FY09
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150%
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Company Performance
Measures
The Plan is based on the
Company’s performance against the following measures (the
“Company Performance Measures”):
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1.
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Fiscal Year
2009 Annual Revenue (weighted 50%); and
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2.
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Fiscal Year
2009 Annual Operating Income (weighted 50%).
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Additional funding shall be
allocated to the annual bonus payment if the Annual Strategic Goals
are met.
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Sun
Confidential: Internal Use Only
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Page 1 of 3
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July 2008
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Chairman of the Board Bonus Terms
for FY09 Under the Section 162(m)
Executive Officer
Performance–Based Bonus Plan
Company Performance Measure
Definitions
Revenue:
For purposes of calculating the
bonus payment under the fiscal year 2009 Plan,
“Revenue” is defined as net revenue
