Zhone Technologies (ZHNE)

Philosophy and Objectives

Zhone operates in the highly competitive and rapidly changing telecommunications industry. Our compensation program for executive officers is designed to focus their activities and energies on the achievement of our short term and long term objectives and to attract and retain executive officers who possess the skills, knowledge and experience required to effectively manage the company. The Compensation Committee seeks to attract, retain and motivate executive officers through a total compensation package that consists primarily of:

Additional components of our compensation program for executive officers include the participation in benefit plans that are generally available to all employees, severance provisions and, on a case-by-case basis, change in control benefits.

The Compensation Committee’s executive compensation determinations are based on a review of many factors including market information consisting of executive compensation data for our peer group of companies, which are discussed below, the company’s financial and strategic achievements over the past year, expectations for the current year, and the compensation practices of companies in the company’s industry. Each of these factors is weighed to determine whether the company’s compensation structure:

The Compensation Committee’s goal is to set executive officer total compensation at levels that are generally comparable to executives with similar roles and responsibilities at our peer group of companies, consistent with our goals, and appropriate in light of the executive’s experience level and expected contribution . The Compensation Committee typically targets total compensation for executive officers at or above the median of the market data from our peer group of companies, although actual compensation for an executive officer may be higher or lower than the targeted position depending on such factors as the individual performance of the executive, our actual financial performance during the year, intensity of competition and general market conditions, the experience level, responsibilities and expected future contribution of the executive, and the importance of each position. The Compensation Committee typically does not rely solely upon rigid, pre-determined formulas for determining executive compensation and may consider any factor that is deemed pertinent to its executive compensation decisions.

Philosophy and Objectives

Zhone operates in the highly competitive and rapidly changing telecommunications industry. The company’s compensation program for executive officers is designed to focus the activities and energies of executive officers on the achievement of short term and long term objectives of the company and to attract and retain executive officers who possess the skills, knowledge and experience required to effectively manage the company. The Compensation Committee seeks to attract, retain and motivate executive officers through a total compensation package that consists primarily of (i) base salary, (ii) annual variable cash incentive arrangements and (iii) long-term, equity based incentives in the form of stock options. Additional components of the company’s compensation program for executive officers include the participation in benefit plans that are generally available to all employees, severance provisions and, on a case-by-case basis, change in control benefits.

The Compensation Committee’s executive compensation determinations are based on a review of many factors including market information consisting of executive compensation data for our peer group of companies, which are discussed below, the company’s financial and strategic achievements over the past year, expectations for the current year, and the compensation practices of companies in the company’s industry. Each of these factors is weighed to determine whether the company’s compensation structure: (a) is competitive in the industry; (b) motivates executive officers to achieve the company’s business objectives; and (c) sufficiently aligns the interests of the executive officers with the long-term interests of the stockholders. The Compensation Committee’s goal is to set executive officer total compensation at levels that are generally comparable to executives with similar roles and responsibilities at our peer group of companies, consistent with the goals of the company, and appropriate in light of the executive’s experience level and expected contribution to the company. The Compensation Committee typically targets total compensation for executive officers at or above the median of the market data from our peer group of companies, although actual compensation for an executive officer may be higher or lower than the targeted position depending on such factors as the individual performance of the executive, the company’s actual financial performance during the year, intensity of competition and general market conditions, the experience level, responsibilities and expected future contribution of the executive, and the importance of each position to the company. The Compensation Committee typically does not rely solely upon rigid, pre-determined formulas for determining executive compensation and may consider any factor that is deemed pertinent to its executive compensation decisions.

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Philosophy and Objectives

Zhone operates in the highly competitive and rapidly changing telecommunications industry. The company’s compensation program for executive officers is designed to focus the activities and energies of executive officers on the achievement of short term and long term objectives of the company and to attract and retain executive officers who possess the skills, knowledge and experience required to effectively manage the company. The Compensation Committee seeks to attract, retain and motivate executive officers through a total compensation package that consists primarily of (i) base salary, (ii) annual variable cash incentive arrangements and (iii) long-term, equity based incentives in the form of stock options. Additional components of the company’s compensation program for executive officers include the participation in benefit plans that are generally available to all employees, severance provisions and, on a case-by-case basis, change in control benefits.

The Compensation Committee’s executive compensation determinations are based on a review of many factors including market information consisting of executive compensation data for our peer group of companies, which are discussed below, the company’s financial and strategic achievements over the past year, expectations for the current year, and the compensation practices of companies in the company’s industry. Each of these factors is weighed to determine whether the company’s compensation structure: (a) is competitive in the industry; (b) motivates executive officers to achieve the company’s business objectives; and (c) sufficiently aligns the interests of the executive officers with the long-term interests of the stockholders. The Compensation Committee’s goal is to set executive officer total compensation at levels that are generally comparable to executives with similar roles and responsibilities at our peer group of companies, consistent with the goals of the company, and appropriate in light of the executive’s experience level and expected contribution to the company. The Compensation Committee typically targets total compensation for executive officers at or above the median of the market data from our peer group of companies, although actual compensation for an executive officer may be higher or lower than the targeted position depending on such factors as the individual performance of the executive, the company’s actual financial performance during the year, intensity of competition and general market conditions, the experience level, responsibilities and expected future contribution of the executive, and the importance of each position to the company. The Compensation Committee typically does not rely solely upon rigid, pre-determined formulas for determining executive compensation and may consider any factor that is deemed pertinent to its executive compensation decisions.

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