8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 23, 2010

MRV COMMUNICATIONS, INC.

(Exact name of Registrant as specified in its charter)

DELAWARE	001-11174	06-1340090
(State or other jurisdiction of Incorporation or organization)	(Commission file number)	(I.R.S. employer identification number)

20415 Nordhoff Street, Chatsworth, CA   91311

(Address of principal executive offices)      (Zip Code)

Registrant’s telephone number, including area code: (818) 773-0900

Not Applicable

Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(e)On March 23, 2010, the Board of Directors of MRV Communications, Inc. (the “Company”) approved discretionary bonuses for management of the Company based on 2009 performance, base salary adjustments, an Incentive Compensation Plan (the “Plan”), and bonus targets for management and other participants for 2010.  The Compensation Committee of the Board of Directors considered the contributions of its executive officers towards improving the profitability of the Company in light of the challenging economic and operating environment in its review, approval and recommendation to the full Board of the bonuses for 2009 performance.  Bonuses for 2009 performance were approved for the following named executive officers in a combination of cash and stock options as follows:

Name	Cash Amount		Number of Options
Noam Lotan			53,940
Near Margalit	$	80,000
Mary Jane Gruninger	$	15,750
Chris King	$	60,000	64,728
Jennifer Hankes Painter	$	44,000	47,467

For purposes of cash management, the stock options were approved for grant in lieu of an equivalent cash bonus based on a Black-Scholes valuation.  The stock options will vest over four years pro rata in annual installments from the grant date or upon a change of control, with an exercise price equal to the closing price of the Company’s Common Stock on the next available grant date in accordance with Company policy.

In addition to approving bonuses for 2009 performance, the Company’s Compensation Committee determined that it was essential to have performance – based compensation plan in place to incentivize and retain management and employees globally to achieve key Company objectives that benefit shareholder value.  The committee hired Farient Advisors, a compensation consultant, in order to provide a study of comparable fixed and variable compensation levels for the Company’s highly compensated employees.  The study helped the committee benchmark targets for performance – based compensation as well as base pay.  Taking the compensation study and personal performance into account, the Board approved salary increases for Mr. King of $20,000 and Ms. Painter of $30,000.  The Board has not yet made a determination of variable compensation in the form of equity grants, and will take that part of compensation under review at a later point in time.  However, the Compensation Committee and Board took the benchmarking study into consideration, and approved targets for 2010 for performance – based cash bonus compensation, which are calculated as percentages of base pay, and are as set forth for the following named executive officers:

Name	Bonus Target
Noam Lotan	75%
Near Margalit	60%
Mary Jane Gruninger	45%
Chris King	60%
Jennifer Hankes Painter	60%

The Plan, which sets forth the terms for which an annual bonus is earned, states that a majority of the individual’s bonus is based on the operating income and revenues of the business operating unit to which the participant of the Plan belongs.  The bonuses for participants are also based in part on pre-determined individual objectives.  For the named executive officers, this portion is weighted 20 percent.  The remaining 80% is allocated 75% to operating income targets and 25% to revenue targets.  For Mr. Margalit, CEO of Source Photonics, Inc., a significant subsidiary of the Company, however, a modified plan was approved.  Under his modified plan, 20% of the bonus is based on the Company’s operating income and revenues, and 80% is based on factors specific to Source Photonics, including revenue, operating income, working capital and quality.

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No bonus will be earned or paid under the Plan if operating income falls below 75% of the Board-approved annual operating plan, nor will a bonus be earned unless the participant is employed as of the end of the Plan year, regardless of the reason for termination. The target bonus percentages are based on the individual participant’s level of responsibility in the Company and market factors.  The foregoing description of the Plan is not complete and is qualified in its entirety by the full text of such document, which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference herein.

Item 9.01 Financial Statements and Exhibits

(d)       Exhibits

Exhibit 10.1   Registrant’s Incentive Compensation Plan

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, hereunto duly authorized.

Date: March 29, 2010

MRV COMMUNICATIONS, INC.
By:	/s/ Noam Lotan
	Noam Lotan
	Chief Executive Officer

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EX-10.1

Exhibit 10.1

MRV Communications, Inc.

Incentive Compensation Plan

You have been selected to participate in the MRV Incentive Compensation Plan (the “Plan”).  The purpose of the Plan is to recognize and reward key employees of MRV Communications, Inc. and its subsidiaries (collectively, “MRV”), who contribute to the overall financial performance of their area, business unit, and MRV.  By rewarding the successful achievement of the operating plan, MRV provides a competitive opportunity to enrich your annual cash compensation while driving the behaviors needed to enhance performance.  The terms set for below govern the Plan, except where in conflict, local laws prevail.

The following overview explains the guidelines of the Plan:

·The Plan year starts on January 1 and ends on December 31.

·While you are a participant of the Plan, you are not eligible to participate in any other cash bonus incentive compensation plan that may be offered by MRV.

·Your target bonus is established based on your level of responsibility and market factors. Each participant will be notified as to their target bonus.

·The components of your target bonus will be weighted based on factors including MRV’s and your business unit’s performance, and your individual objectives.  Details regarding the composition of the factors contributing to your target bonus are outlined in Exhibit A. Your individual objectives will be established using the SMART (specific, measurable, attainable, realistic and time bound) model.  No individual incentive will be paid unless the written objectives are submitted to HR by May 1, 20    .  Guidelines for developing objectives are attached as Exhibit B.

·The Plan includes two financial targets: Revenue and Operating Income (each as defined below), and requires a minimum threshold in order to trigger a payout.  If Operating Income falls below 75% of the Board-approved annual operating plan, no bonus will be earned or paid.

·“Revenue” and “Operating Income” are defined by US GAAP and based on audited results.

·You must be an employee in good standing as of the end of the Plan year in order to receive a bonus payment.  To be clear, incentive payments are not earned in full or in part unless you are actively employed as of the end of the Plan year, regardless of reason for termination, voluntary or involuntary.

·Managers who are responsible for conducting performance appraisals must complete them before he/she will earn or be paid an incentive payment.

·Employees hired during the Plan year will receive a pro rated bonus target based on months of service in the Plan year. Employees hired after October 1st are not eligible to participate in the current year’s Plan.

·Employees who are promoted or change positions during the Plan year are eligible for a pro rated bonus based on the months of service in each position.

·Earned incentive payments will be paid out no later than two and one-half months following the end of the Plan year.

Payout Scale

Revenue	85	%	90	%	95	%	100	%	105	%	110	%	115	%	120	%	125	%	150	%
Target Payout	25.0	%	50.0	%	75.0	%	100.0	%	107.5	%	115.0	%	122.5	%	130.0	%	137.5	%	175.0	%

Operating Income	85	%	90	%	95	%	100	%	105	%	110	%	115	%	120	%	125	%	150	%
Target Payout	25.0	%	50.0	%	75.0	%	100.0	%	107.5	%	115.0	%	122.5	%	130.0	%	137.5	%	175.0	%

Whenever actual performance is between amounts shown above, the actual payout will be determined based on a straight-line computation.  For example, the payout for 103% performance would be 104.5%.

Individual Target Payout = % of MBO Objectives Achieved

Example based on 5 objectives (with 3 out of 5 accomplished)

			Completed
Objective 1	20	%	Y
Objective 2	20	%	Y
Objective 3	20	%	N
Objective 4	20	%	N
Objective 5	20	%	Y
Payout = 60%

MRV’s Board of Directors has the authority to change the terms of this Plan at any time as business needs require in its sole discretion.  Further, this Plan may be terminated at any time, with or without prior notice.  The Board or its Compensation Committee shall administer the Plan and has the exclusive and final authority in each determination or interpretation affecting the Plan and its participants.  All such decisions made by the Board or its Compensation Committee are final and binding on participants.  Participants hereby waive trial by jury in connection with any action or suit arising under or related to this Plan.  This policy is not intended to create a contract of employment, either express or implied, nor give any participant any right to be retained in the service of MRV in any capacity.

This form must be accompanied by your written individual objectives and returned to Joel Freedenberg in Corporate Human Resources no later than May 1, 20    .

I have read, understand and agree to the terms and conditions of the MRV Incentive Compensation Plan.

Plan Name	Employee Title
Target % of Base	Employee Name
	Employee Signature/Date
	Manager Name
	Manager Signature/Date