Executive Incentive Bonus Plan - Dell Computer Corp.
DELL COMPUTER CORPORATION
EXECUTIVE INCENTIVE BONUS PLAN
Dell Computer Corporation, a Delaware corporation (the 'Company') adopts this
Executive Incentive Bonus Plan (the 'Plan') for the purpose enhancing the
Company's ability to attract and retain highly qualified executives and to
provide additional financial incentives to such executives to promote the
success of the Company and its subsidiaries.
Remuneration payable under the Plan is intended to constitute 'qualified
performance-based compensation' for purposes of Section 162(m) of the Internal
Revenue Code of 1986, as amended, and Section 1.162-27 of the Treasury
Regulations promulgated thereunder, and the Plan shall be construed consistently
with such intention. The 'performance goal' necessary for the payment of
remuneration under the Plan will be the achievement of positive Consolidated Net
Income (as defined below).
1. Definitions. As used herein, the following terms shall have the respective
(a) 'Board' shall mean the Board of Directors of the Company.
(b) 'Code' shall mean the Internal Revenue Code of 1986, as amended,
or the corresponding provisions of any subsequent federal internal revenue
(c) 'Committee' shall mean the Compensation Committee of the Board or
such other committee appointed by the Board to administer the Plan;
provided, however, that in any event the Committee shall be comprised of
not less than two directors of the Company, each of whom shall qualify in
all respects as an 'outside director' for purposes of Section 162(m) of the
Code and Section 1.162-27(e)(3) of the Regulations.
(d) 'Company' shall mean Dell Computer Corporation, a Delaware
(e) 'Consolidated Net Income' shall mean, for any Fiscal Quarter or
Fiscal Year, the net income before extraordinary items reported in the
Company's quarterly or annual consolidated statement of income included in
the applicable Quarterly Report on Form 10-Q (in the case of a Fiscal
Quarter) or Annual Report on Form 10-K (in the case of a Fiscal Year), as
filed with the Securities Exchange Commission pursuant to the Securities
Exchange Act of 1934, as amended.
(f) 'Eligible Executive' shall mean the Company's Chief Executive
Officer and each other executive officer of the Company that the Committee
determines, in its discretion, is or may be a 'covered employee' of the
Company within the meaning Section 162(m) of the Code and Section
1.162-27(c)(2) of the Regulations.
(g) 'Incentive Bonus' shall mean, for each Eligible Executive, an
annual bonus opportunity amount determined by the Committee pursuant to
Section 3 below.
(h) 'Regulations' shall mean the Treasury Regulations promulgated
under the Code, as amended from time to time.
2. Administration of the Plan. The Plan shall be administered by the Committee,
which shall have full power and authority to construe, interpret and administer
the Plan and shall have the exclusive right to establish, adjust, pay or decline
to pay the Incentive Bonus for each Eligible Executive. Such power and authority
shall include the right to exercise discretion to reduce by any amount the
Incentive Bonus payable to any Eligible Executive; provided, however, that the
exercise of such discretion with respect to any Eligible Executive shall not
have the effect of increasing the Incentive Bonus that is payable to any other
Eligible Executive. All Committee actions under the Plan shall be taken in
accordance with the applicable provisions of the Company's By-laws and the
3. Eligibility. Eligibility under this Plan is limited to Eligible Executives
designated by the Committee in its sole and absolute discretion.
(a) Not later than the 90th day of each fiscal year of the Company, the
Committee, in its sole and absolute discretion, shall designate one or more
Eligible Executives as participants in the Plan for such fiscal year and shall
specify the terms and conditions for the determination and payment of an
Incentive Bonus to each such Eligible Executive for such fiscal year. After the
end of such 90-day period, the Committee may designate additional Eligible
Executives so long as, within 30 days following each such additional
designation, the Committee specifies the terms and conditions for the
determination and payment of an Incentive Bonus to such additional Eligible
(b) The Committee may condition the payment of an Incentive Bonus upon the
satisfaction of such objective or subjective standards as the Committee shall
determine to be appropriate, in its sole and absolute discretion, and shall
retain the discretion to reduce the amount of any Incentive Bonus that would
otherwise be payable to an Eligible Executive (including a reduction in such
amount to zero).
(c) The Incentive Bonus payable to an Eligible Executive with respect to any
fiscal year shall not exceed 0.5% of the Consolidated Net Income for such fiscal
year; provided, however, that the maximum Incentive Bonus payable to any
individual who becomes an Eligible Executive after the end of the 90-day period
referred to in subsection (a) of this Section shall be 0.5% of the Consolidated
Net Income for the fiscal quarters after the fiscal quarter in which such
individual became an Eligible Executive.
5. Committee Certification. As soon as reasonably practicable after the end of
each fiscal year of the Company, the Committee shall determine whether the
stated performance goal as been achieved and the amount of the Incentive Bonus
to be paid to each Eligible Executive for such fiscal year and shall certify
such determinations in writing.
6. Payment of Incentive Bonuses. Subject to any election duty and validly made
by an Eligible Executive with respect to the deferral or all or a portion of his
or her Incentive Bonus or the payment of all or a portion of his or her
Incentive Bonus in some form other than cash, Incentive Bonuses shall be paid in
cash at such times and on such terms as are determined by the Committee in its
sole and absolute discretion.
7. No Right to Bonus or Continued Employment. Neither the establishment of the
Plan, the provision for or payment of any amounts hereunder nor any action of
the Company, the Board or the Committee with respect to the Plan shall be held
or construed to confer upon any person (a) any legal right to receive, or any
interest in, an Incentive Bonus or any other benefit under the Plan or (b) any
legal right to continue to serve as an officer or employee of the Company or any
subsidiary or affiliate of the Company. The Company expressly reserves any and
all rights to discharge any Eligible Executive without incurring liability to
any person under the Plan or otherwise. Notwithstanding any other provision
hereof and notwithstanding the fact that the stated performance goal has been
achieved or the individual Incentive Bonus amounts have been determined, the
Company shall have no obligation to pay any Incentive Bonus hereunder unless the
Committee otherwise expressly provides by written contract or other written
8. Withholding. The Company shall have the right to withhold, or require an
Eligible Executive to remit to the Company, an amount sufficient to satisfy any
applicable federal, state, local or foreign withholding tax requirements imposed
with respect to the payment of any Incentive Bonus.
9. Nontransferability. Except as expressly provided by the Committee, the rights
and benefits under the Plan are personal to an Eligible Executive and shall not
be subject to any voluntary or involuntary alienation, assignment, pledge,
transfer or other disposition.
10. Unfunded Plan. The Company shall have no obligation to reserve or otherwise
fund in advance any amounts that are or may in the future become payable under
the Plan. Any funds that the Company, acting in its sole and absolute
discretion, determines to reserve for future payments under the Plan may be
commingled with other funds of the Company and need not in any way be segregated
from other assets or funds held by the Company. An Eligible Executive's rights
to payment under the Plan shall be limited to those of a general creditor of the
11. Adoption, Amendment, Suspension and Termination of the Plan.
(a) Subject to the approval of the Plan by the holders of a majority of the
Company common stock represented and voting on the proposal at the annual
meeting of Company stockholders to be held on July 17, 1998 (or any adjournment
thereof), the Plan shall be effective for the fiscal year of the Company
commencing February 2, 1998 and shall continue in effect until the fifth
anniversary of the date of such stockholder approval, unless earlier terminated
as provided below. Upon such approval of the Plan by the Company's stockholders,
all Incentive Bonuses awarded under the Plan on or after February 2, 1998 shall
be fully effective as if the stockholders had approved the Plan on or before
February 2, 1998.
(b) Subject to the limitations set forth in this subsection, the Board may at
any time suspend or terminate the Plan and may amend it from time to time in
such respects as the Board may deem advisable; provided, however, that the Board
shall not amend the Plan in any of the following respects without the approval
of stockholders then sufficient to approve the Plan in the first instance:
(1) To increase the maximum amount of Incentive Bonus that may be paid
under the Plan or otherwise materially increase the benefits accruing to
any Eligible Executive under the Plan;
(2) To materially modify the requirements as to eligibility for
participation in the Plan;
(3) To change the material terms of the stated performance goal.
(c) No Incentive Bonus may be awarded during any suspension or after termination
of the Plan, and no amendment, suspension or termination of the Plan shall,
without the consent of the person affected thereby, alter or impair any rights
or obligations under any Incentive Bonus previously awarded under the Plan.
12. Governing Law. The validity, interpretation and effect of the Plan, and the
rights of all persons hereunder, shall be governed by and determined in
accordance with the laws of the State of Delaware, other than the choice of law
* * * * *
The foregoing Executive Incentive Bonus Plan was duly approved and adopted by
the Board of Directors of Dell Computer Corporation, a Delaware corporation (the
'Company), by Unanimous Written Consent dated May 28, 1998, and was duly
approved by the Company's stockholders for approval at the annual meeting of
stockholders held on July 17, 1998.
/s/ THOMAS B. GREEN
Thomas B. Green,