Exhibit 10.2
NATIONAL SEMICONDUCTOR CORPORATION
2005 EXECUTIVE OFFICER INCENTIVE PLAN AGREEMENT
ARTICLE 1
Definitions
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Whenever used in the Agreement, unless otherwise indicated, the following
terms shall have the respective meanings set forth below:
Agreement: This Executive Officer Incentive Plan Agreement.
Award: The amount to be paid to a Plan Participant.
Award Date: The date set by the Committee for payment of Awards.
Annual Incentive
Base Salary: Generally, the annualized base remuneration received by a Participant from
the Company at the end of the fiscal year as reflected in the Company's
human resources information systems. Extraordinary items, including but not
limited to prior awards, relocation expenses, car allowances, international
assignment allowances and tax adjustments, sales incentives, amounts
recognized as income from stock, stock options or other stock based
compensation, disability benefits (whether paid by the Company or a third
party) and other similar kinds of extra or additional remuneration are
excluded from the computation of Annual Incentive Base Salary.
Company: National Semiconductor Corporation ("NSC"), a Delaware corporation, and any
other corporation in which NSC controls directly or indirectly fifty percent
(50%) or more of the combined voting power of voting securities, and which
has adopted this Plan.
Disability: Inability to perform any services for the Company and eligible to receive
disability benefits under the standards used by the Company's disability
benefit plan or any successor plan thereto.
Executive Officer: Any officer of the Company identified by the Company in its annual report on
Form 10-K filed with the Securities and Exchange Commission as an executive
officer of the Company.
Participant: An Executive Officer designated as a Participant in accordance with the
provisions of Article 3.
Performance
Goal: Factors considered and scored to determine the amount of a Participant's
Award, which shall be based on one or more of the business criteria listed
in Section 5(b) of the Plan.
Retirement: Permanent termination of employment with the Company, and (a) the
Participant's age is either sixty-five (65) or age is at least fifty-five
(55) and age plus years of service in the employ of the Company is
sixty-five (65) or more, and (b) the retiring Participant has confirmed to
the Chief Financial Officer of the Company that he or she does not intend to
engage in a full-time vocation.
Target Award: The Award, expressed as a percentage of Annual Incentive Base Salary that
may be earned by a Participant for achievement of the target level of
performance.
All capitalized terms used in this Agreement and not otherwise defined
herein have the meanings assigned to them in the Executive Officer Incentive
Plan.
ARTICLE 2
Effective Date
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The Agreement will become effective as of May 31, 2004, to be effective for
the Company's fiscal year 2005.
ARTICLE 3
Eligibility for Plan Participation
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A. Within ninety (90) days after the commencement of the Company's fiscal year,
the Committee shall designate those Executive Officers who shall be Plan
Participants for the fiscal year.
B. Participants will be notified once the Committee has designated Participants
for the fiscal year. Continued participation will be re-evaluated by the
Committee annually pursuant to Article 3A supra at the beginning of the fiscal
year.
C. Newly hired Executive Officers and persons who are promoted to Executive
Officers may be added as Participants to the Plan by the Committee during the
fiscal year. Such Participants will receive a prorated Award based on time of
participation in the Plan.
D. Participants may be removed from the Plan during the fiscal year at the
discretion of the Committee. Participants so removed will receive a prorated
Award based on length of participation in the Plan.
ARTICLE 4
Target Awards/Incentive Levels
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A. Each Participant will be assigned an incentive level which shall be expressed
as a percentage of the Participant's Annual Incentive Base Salary. Target Awards
will also be identified for each Participant, which shall constitute the Award
which can be earned for the target level of performance, taking into account the
assigned incentive level.
B. In the event that a Participant changes positions during the Plan Period and
the change results in a change in incentive level, whether due to promotion or
demotion, the incentive level will be prorated to reflect the time spent in each
position.
ARTICLE 5
Plan Performance Goals
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A. Performance Goals and associated weights will be established by the Committee
within ninety (90) days after the start of the fiscal year. Each Performance
Goal will define the source for scoring and the measurement metric. Performance
Goals and their associated weights may change from one fiscal year to another
fiscal year to reflect the Company's financial, operational and strategic goals,
but must be based on one or more of the business criteria listed in Section 5(b)
of the Plan.
B. Actual Award amounts may vary from the Target Award, depending on actual
achievement on Performance Goals.
ARTICLE 6
Calculation and Payment of Awards
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A. A Participant's Award will be calculated as a percentage of Annual Incentive
Base Salary at the end of the fiscal year as follows:
1) The Participant's Target Award is determined prior to the beginning of
the fiscal year.
2) The performance of each Participant on their assigned Performance
Goals is scored at the end of the fiscal year to determine a
performance level.
3) The total performance level shall be multiplied by the Participant's
assigned incentive level. No one individual Award may exceed the
lesser of 600% of the Participant's Annual Incentive Base Salary at
the end of fiscal 2005 or $6 million (six million dollars).
4) The Committee may adjust Awards to reflect discretion it deems
appropriate. As a result, some or all Award amounts may be adjusted to
reflect the exercise of the Committee's discretion.
B. The Committee will score the performance of the Plan Participants. Awards
will be paid only after the Committee certifies in writing that the ratings on
the Performance Goals have been attained and that the Committee has approved the
Awards.
C. Awards will be paid in cash on or about the Award Date.
D. Awards will reflect the Participant's Annual Incentive Base Salary in effect
at the end of the fiscal year. Participants who take a leave of absence during
the fiscal year for good cause shown to the satisfaction of the Committee will
have their Awards prorated to reflect actual pay earned during the fiscal year.
E. Any Awards that are prorated for any reason under the terms of the Plan or
this Agreement will be prorated based on the effective date of the change that
resulted in the proration.
ARTICLE 7
Termination of Employment
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A. To be eligible to receive an Award, the Participant must be employed by the
Company on the last working day of the fiscal year. A Participant whose
employment has terminated prior to that date will forfeit the Award, except as
otherwise provided in this Article 7.
B. If a Participant's employment is terminated during the fiscal year by
Disability, Retirement, or death, the Participant will receive an Award
reflecting the Participant's performance and actual period of full-time
employment during the fiscal year.
C. Unless local law or regulation provides otherwise, payments of Awards made
upon termination of employment by death shall be made on the Award Date to: (a)
beneficiaries designated by the Participant; if none, then (b) to a legal
representative of the Participant; if none, then (c) to the persons entitled
thereto as determined by a court of competent jurisdiction.
D. Participants whose employment is terminated by reduction in force during the
fiscal year will receive no Award. If a Participant's employment is terminated
by reduction in force after the fiscal year but before the Award Date, the
Participant will receive the Award on the Award Date.
E. The Committee reserves the right to reduce an Award to reflect a
Participant's absence from work during a fiscal year.
F. Notwithstanding any other provisions of this Agreement to the contrary, the
right of a Participant to receive an Award, including Awards deferred pursuant
to the provisions of Article 8, shall be forfeited if the Participant's
employment is terminated for good cause shown such as acts of moral turpitude, a
reckless disregard of the rights of other employees or because of or the
Participant is discovered to have engaged in fraud, embezzlement, dishonesty
against the Company, obtaining funds or property under false pretenses,
assisting a competitor without permission, or interfering with the relationship
of the Company with a customer. An Award may also be forfeited if a Participant
terminates employment by reason of Retirement and subsequently engages in
full-time employment or any activity in competition with the business of the
Company. A Participant's Award will be forfeited for any of the above reasons
regardless of whether such act is discovered prior to or subsequent to the
Participant's termination of employment or payment of an Award. If an Award has
been paid, such payment shall be repaid to the Company by the Participant. The
determination of whether an Award is forfeited or must be repaid under the
provisions of this Article 7 shall be made by the Committee in its sole
discretion.
ARTICLE 8
Deferral of Awards
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Participants eligible to participate in the Company's Deferred Compensation
Plan (the "Deferred Compensation Plan") may elect to make an irrevocable
election to defer receipt of all or any portion of any Award pursuant to and in
accordance with the terms of the Deferred Compensation Plan.
ARTICLE 9
Interpretations and Rule-Making
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The Committee shall have the sole right and power to: (i) interpret the
provisions of the Agreement, and resolve questions thereunder, which
interpretations and resolutions shall be final and conclusive; (ii) adopt such
rules and regulations with regard to the administration of the Plan as are
consistent with the terms of the Plan and the Agreement, and (iii) generally
take all action to equitably administer the operation of the Plan and this
Agreement.
ARTICLE 10
Declaration of Incentives, Amendment, or Discontinuance
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The Committee may on or before the Award Date: (i) determine not to make
any Awards to any or all Participants for any fiscal year; (ii) make any
modification or amendment to this Agreement for any or all Participants provided
such modification or amendment is in accordance with the terms of the Plan; or
(iii) discontinue this Agreement for any or all Participants provided such
modification or amendment is otherwise in accordance with the Plan.
ARTICLE 11
Miscellaneous
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A. Except as provided in the Deferred Compensation Plan, no right or interest in
the Plan is transferable or assignable except by will or the laws of descent and
distribution.
B. Participation in the Plan does not guarantee any right to continued
employment and the Committee and management reserve the right to dismiss
Participants for any reason whatsoever. Participation in one fiscal year does
not guarantee a Participant the right to participation in any subsequent fiscal
year.
C. The Company reserves the right to deduct from all Awards under this Plan any
sums due the Company as well as any taxes or other amounts required by law to be
withheld with respect to Award payments.
D. Maintenance of financial information relevant to measuring performance during
the fiscal year will be the responsibility of the Chief Financial Officer of the
Company.
E. The provisions of the Plan shall not limit, or restrict, the right or power
of the Committee to continue to adopt such other plans or programs, or to make
salary, bonus, incentive, or other payments, with respect to compensation of
Executive Officers, as in its sole judgment it may deem proper.
F. Except to the extent superseded by federal law, this Agreement shall be
construed in accordance with the laws of the State of California.
G. No member of the Company's board of directors or any officer, employee, or
agent of the Company shall have any liability to any person, firm or corporation
based on or arising out of this Agreement or the Plan.
H. Any dispute relating to or arising from this Agreement shall be determined by
binding arbitration by a three member panel chosen under the auspices of the
American Arbitration Association and acting pursuant to its Commercial Rules,
sitting in San Jose, California. The panel may assess all fees, costs and other
expenses, including reasonable counsel fees, as the panel sees fit.
Notwithstanding the parties' election to use arbitration to resolve disputes
under this Agreement, nothing contained in that election shall preclude either
party, if the circumstances warrant, from seeking extraordinary relief, such as
injunction and attachment, from any court of competent jurisdiction in
California.
