8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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): November 21, 2007 (November 16, 2007)

BROCADE COMMUNICATIONS SYSTEMS, INC.

(Exact name of Registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization) 000-25601
(Commission File Number) 77-0409517
(I.R.S. Employer
Identification Number)

1745 Technology Drive
San Jose, CA 95110

(Address, including zip code, of principal executive offices)

(408) 333-8000

(Registrant’s telephone number, including area code)

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 (see General Instruction A.2. below):

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))

TABLE OF CONTENTS

EXHIBIT 10.1

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

Changes to Executive Officer Compensation and the Company’s Senior Leadership Compensation Plan

On November 16, 2007, following a regularly scheduled annual review of executive compensation, including market comparisons of compensation levels at peer companies led by an outside compensation consultant, the Compensation Committee approved an increase in the annual base salary of the Company’s Chief Executive Officer, Michael Klayko, from $680,000 to $725,000, effective as of November 1, 2007.

The Compensation Committee also amended the Company’s Senior Leadership Compensation Plan, effective as of fiscal year 2008. The criteria for Mr. Klayko’s annual incentive target was amended to consist of the Company’s performance against revenue targets (50%) and non-GAAP operating margin targets (50%), multiplied by the Company’s performance against non-GAAP operating profit targets. Mr. Klayko’s annual incentive target of 100% of his annual base salary under the Senior Leadership Compensation Plan was not changed. The criteria for other executives responsible for the Company’s business units was also amended to reflect a combination of overall Company performance and specific business unit performance based on revenue, operating margin and operating profit targets. A copy of the Senior Leadership Compensation Plan, as amended, is attached hereto as Exhibit 10.1.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

10.1 Amended and Restated Senior Leadership Plan.

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

	BROCADE COMMUNICATIONS SYSTEMS, INC.
Dated: November 21, 2007	By:	/s/ Richard Deranleau
		Richard Deranleau
		Chief Financial Officer and Vice President, Finance

Exhibits Index

Exhibits	Discription
10.1	Amended and Restated Senior Leadership Plan.

EX-10.1

Exhibit 10.1

BROCADE SENIOR LEADERSHIP PLAN

Revised: November 16, 2007 (effective as of fiscal year 2008)

PURPOSE

The Brocade Senior Leadership Plan is designed to link incentive compensation with Company performance.

PERFORMANCE PERIOD AND PAYOUT PERIOD

Performance against Company and individual objectives is measured annually (according to the Company’s fiscal year) (Plan Period), but will be reviewed semi-annually. Payout of earned cash bonuses, if any, occurs on an annual basis.

ELIGIBILITY

Regular full-time and part-time Vice President (VP) level employees are eligible to participate in the Senior Leadership Plan Program. To the extent a VP is eligible to and participates in the Company’s Sales Incentive Plan, then that VP shall not be eligible to participate in this Senior Leadership Plan.

Participants must be regular (full-time or part-time) employees at the end of the fiscal year to be eligible to receive a Senior Leadership Plan Payout.

PARTICIPANT PERFORMANCE

As each Plan Period begins, participants must complete a CEO or VP Performance Contract. Performance contracts should be tied to company and departmental goals as outlined by the board of directors (i.e., company priorities and initiatives). All goals must be tied to overall company objectives and have defined measurements.

Before Performance Contracts for Executive VPs are final, they are to be reviewed and approved by Finance, Human Resources, and the Chief Executive Officer (CEO). Performance Contracts for Functional VPs are reviewed and approved by the applicable Executive VP. The CEO’s Performance Contract shall be reviewed by the Chair of the Board of Directors and the Chair of the Compensation Committee.

At the end of each Plan Period, actual performance against the plan’s financial metric goals is determined by Finance and provided to the plan participants. Performance against goals is then assessed by the Participant and then reviewed and assessed by the VP’s manager, in order to determine each participant’s bonus payout for the period. The Compensation Committee reviews and approves all Section 16 Officers’ performance and bonus payouts annually. The CEO reviews and approves all other VP cash bonus payouts. The Compensation Committee shall review and approve the CEO’s bonus payouts.

COMPANY PERFORMANCE & SENIOR LEADERSHIP PLAN FUNDING

Each Plan Period, Brocade’s Board of Directors will set a Non-GAAP Operating Profit target for the Company to achieve during the Plan Period (Target OP).

At the end of each Plan Period, Brocade will determine amounts to be paid under the Senior Leadership Plan based on the actual performance achieved by Brocade during the Plan Period (Actual OP) relative to the Target OP (Actual Funding).

The Actual OP will be communicated following the end of each Plan Period.

PARTICIPANT INCENTIVE TARGET

A Participant’s Incentive Target is determined by the Participant’s pay grade at the end of the 12-month Plan Period, unless otherwise indicated in writing by Brocade.

Participant Pay Grade	Annual Incentive Target
CEO	100%
Section 16 Officers	60%
Other CEO Direct Reports and any VPs selected by the CEO	50%
Other VPs	40%

SENIOR LEADERSHIP PLAN PAYOUTS

On an annual basis, the Compensation Committee reviews and approves Section 16 Officers’ performance and cash bonus payouts. The CEO reviews and approves all other VP cash bonuses. Program payouts are made within eight (8) weeks following the conclusion of the 12-month Plan Period. Payouts will be pro-rated for Participants who are hired or transferred into the Senior Leadership Plan during any Plan Period.

Except as otherwise agreed upon by: (i) the Compensation Committee for the CEO and other Section 16 officers, and the CEO for all other VPs, and (ii) the Participant, for each Participant, the cash bonus payout is calculated based on the following formula (less applicable taxes and deductions):

Bonus Payout = (Actual Funding) x (Goal Points Earned for the year) x (Annual Incentive Target) x (Annual Salary)

	Goal Points
							Business Unit
				Company			Revenue
	Company			Non-GAAP			and
	Revenue			Operating Margin			Non-GAAP Operating			Individual
Participant	Targets			Targets			Margin Targets			Goals			Total
CEO		50	%		50	%		—			—			100	%
VPs		50	%		40	%		—			10	%		100	%
(non-Business Unit)
Business Unit		25	%		25	%		50	%		—			100	%
VPs

Bonuses will be calculated using the annual base salary and Annual Incentive Target as of the last day of the Plan Period, except as set forth above or otherwise indicated in writing by Brocade.

Departmental budgets are communicated at the beginning of each fiscal year and may be updated quarterly throughout the year by the CEO and CFO. Adherence to the individual’s departmental budget is a gate for the individual to qualify for the Senior Leadership Plan bonus. Failure to adhere to the agreed upon budget disqualifies the individual from a bonus payout.

ADMINISTRATIVE PROCEDURES

Compensation Committee Approval

The Compensation Committee reserves the right to decrease or eliminate bonus otherwise indicated.

New Hires and Promotions

Participants new to the company or who are promoted into the Senior Leadership Plan must complete a VP Performance Contract within 60 days of beginning in the new position.

Position/Salary Factor

Payout will be based on the Participant’s annual base salary and job position on the last day of the Plan Period. Bonuses may be pro-rated if Participant received a cash bonus under another bonus program.

Terminations: Anyone who is not on the payroll as of the end of the fiscal year is not eligible to receive a cash bonus payout.

Leaves of Absences, Disability or Death: In the event of the Participant’s death, disability time off, or leave of absence, Payouts will be made on a pro-rated basis, based on the number of days the Participant was actively working at Brocade. If the Participant is on a legally protected leave of absence (e.g. Family Medical Leave or Military Leave), the Participant’s eligibility for participation in Plan may be extended beyond the time above, in accordance with the laws governing the legally protected leave. In the event of death, any cash bonus payments will be paid to the Participant’s primary beneficiary as designated in the Participant’s Brocade life insurance plan documentation, if any, or will otherwise be paid to his or her estate.

Performance Improvement Plan/Disciplinary Situations (Development Needed): If a Participant, at anytime prior to the cash bonus payout 12-month Plan Period, is subject to a performance improvement plan, discipline or demotion, Brocade may, in its sole discretion, reduce or eliminate the cash bonus payment that the Participant would otherwise have been eligible to receive. If, at the time prior to the Payout for a 12-month Plan Period, it is determined that a Participant may be subject to corrective action, discipline or demotion, then Brocade may

withhold the entire cash bonus payout, or a portion thereof, until after a final decision on such corrective action has been made. If a Participant is given a performance rating of Development Needed, the Participant will not be eligible to receive a Payout. Only the VP of Human Resources or CEO may approve exceptions to this policy, except that the Compensation Committee must approve exceptions for Section 16 officers.

Other Provisions: Participation in the Senior Leadership Plan does not constitute an agreement (express or implied) between the Participant and Brocade that the Participant will be employed by Brocade for any specific period of time, nor is there any agreement for continuing or long-term employment. Terms and conditions regarding the Senior Leadership Plan and any participation therein, including but not limited to Senior Leadership Plan eligibility, Senior Leadership Plan funding, and performance and payout criteria and determinations, are subject to change by Brocade at any time in its sole discretion. Brocade and its Board of Directors retain the absolute right to interpret, revise, modify or terminate the Senior Leadership Plan at any time in its sole discretion.

ADDENDUM TO BROCADE SENIOR LEADERSHIP PLAN
(DATED OCTOBER 21, 2005)

Notwithstanding any terms to the contrary in the Brocade Senior Leadership Plan, the following terms shall apply to the Bonus Payout under the Senior Leadership Plan for fiscal 2006 and 2007:

	2006	2007
Executive Officers and Certain Other Officers
Cash Bonus Premium1	Up to 1.0x of 2006 Bonus Target	Up to 0.5x of 2007 Bonus Target3
Restricted Stock2	1.5x of 2005 Base Salary	N/A
Other Officers
Cash Bonus Premium1	Up to 0.35x of 2006 Bonus Target	Up to 0.35x of 2007 Bonus Target3

1	In addition to normal bonus and subject to achievement of revenue and operating margin/profit targets determined by the Board of Directors and other Company and departmental financial, strategic and operational metrics.
2	The number of shares of restricted stock to be issued is multiplied by such employee’s 2005 base salary, divided by then fair market value on the date of grant. The grants will be subject to 2-year cliff vesting. These grants will be in lieu of any 2006 focal option grants for such employees.
3	The Cash Bonus Premium for 2007 pursuant to this Addendum shall be calculated based on (i) the officer’s base salary as of the last day of the Plan Period and (ii) the Annual Incentive Target deemed to be in effect as of the beginning of the 2007 Plan Period (without any subsequent adjustments during the period, unless otherwise indicated in writing by Brocade).