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Exhibit 10.53
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XXXXXXXXX EXECUTIVE INCENTIVE PLAN
OBJECTIVE AND STRUCTURE.
FSC established the 1997 Executive Officer Incentive Plan Agreement (the
"Plan") effective as of March 11, 1997. This document is an amendment and
complete restatement of the Plan, effective June 1, 1998. Benefits earned with
respect to any Award Period for which an Award is declared on or after that
June 1, 1998 effective date shall be determined and governed exclusively by the
Plan as set forth in this document, or as amended hereafter.
The Plan is designed to help retain executive officers of the Company and
to reward them for contributing to the success and profitability of the Company.
These objectives are accomplished by making incentive awards under the Plan and
providing Participants with a proprietary interest in the growth and performance
of the Company. The Plan is an unfunded plan for a select group of management or
highly compensated employees so as to be substantially exempt from ERISA.
ARTICLE I
Definitions
Whenever used in the Plan, unless otherwise indicated,
the following terms shall have the respective meanings
set forth below:
Award: The amount, if any, to be paid to a Plan Participant
for a particular Award Period.
Award Date: There are two Award Dates for each fiscal year of the
Company. The first is the later of:
(i) sixty (60) days after the end of the Company's
second fiscal quarter, or
(ii) fifteen (15) days after consolidated financial
statements for that fiscal quarter (and through
the first two fiscal quarters of the year) are
completed and accepted by the Company.
The second Award Date is the later of:
(i) sixty (60) days after the end of the Company's
fourth fiscal quarter, or
(ii) fifteen (15) days after consolidated financial
statements for that fiscal quarter (and through
the third and fourth fiscal quarters of the year)
are completed and accepted by the Company.
Award Period: The annual period of performance that precedes the
Award Date and on which the Award is based. Unless
otherwise provided in this Plan, the Award Period
is the Company's fiscal year.
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Base Salary:
The annualized rate of base remuneration payable to the
Participant from the Company as of the end of the applicable
Award Period, excluding all overtime, shift differentials,
bonuses, fringe benefits and extraordinary items.
Company:
FSC Semiconductor Corporation ("FSC") or any corporate
successor or assign which adopts or assumes the Plan. The term
"Employer," as used herein, shall refer to the Company, to
Xxxxxxxxx Semiconductor Corporation and to any other subsidiary
or affiliate of FSC which adopts the Plan with the approval of
FSC.
Committee:
The Plan administrator shall be a committee consisting of the
Chief Financial and Chief Administrative officers of the
Company. The Committee shall be responsible for the
administration of the Plan, as provided in Article 10 below,
but may delegate routine administrative or clerical duties to
one or more officers or employees of the Company. Only if and
to the extent required to satisfy Rule 16(b)-3 under the
federal Securities and Exchange Act of 1934, as amended, the
Committee shall be the entire Board of Directors of FSC or a
subcommittee designated by that Board consisting of at least
two non-employee members of that Board.
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Disability:
Inability to perform executive-level services for the
Company, combined with eligibility to receive disability
benefits under the standards used by the Company's long-term
disability benefit plan.
Executive:
An officer of the Company or of any Employer who is (or
would be if that employer had a publicly-traded class of
equity securities) subject to regulation under the reporting
and insider liability provisions of Section 16 of the
Securities and Exchange Act of 1934, as amended. Only
Executives shall be eligible to participate in the Plan and
only by selection in accordance with Article 4.
Extraordinary
Occurrence: Events that, in the opinion of the Committee, are beyond
the significant influence of Plan Participants or any
Employer and cause a significant unintended effect, positive
or negative, on Company or Employer operating and financial
results.
Participant:
An Executive who at the time shall be designated as a
Participant in accordance with the provisions of Article 4.
Performance
Goals: Levels of performance shall be set in accordance with one
or more financial and strategic goals developed by the
Committee with respect to any one or more Executives and, if
desired by the Committee, for any division, department, or
other business unit or management group within any Employer.
For each goal, up to five levels of performance may be set,
as follows:
(iii) Threshold--The minimum acceptable level of performance
for Award may be earned on a particular Performance Goal;
generally, achieving 50% or more of the Target level
performance.
which an
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(iv) Target--Good performance, usually set at a level equal to
the Strategic Business Plan for financial measures (i.e.,
achieving 100% of the goal), reflecting a degree of
difficulty which has a reasonable probability of
achievement.
(v) Stretch--Better than Target performance and reflecting a
degree of difficulty with only a moderate probability of
achievement; generally, achieving at least 150% of the
Target level of performance.
(vi) Best Expected--Exceptional performance far exceeding the
Target level because of the great degree of difficulty and
the limited probability of achievement; generally, achieving
at least 200% of the Target level of performance.
(vii) Beyond Best Expected--Extraordinary performance; generally
achieving at least 250% of the Target level of performance
or 125% of the Best Expected level, whichever is greater.
A Participant's Award shall be determined, when applicable, based on a
weighted average level of performance for all Performance Goals
applicable to that Participant for the Award Period, in accordance
with Articles 5 and 6.
Target Award:
The Award, expressed as a percentage of Base Salary, that may be
earned by a Participant for achievement of the Target level of
performance.
ARTICLE 2
Effective Date
The Plan was originally established effective on March 11, 1997, which was
the
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closing date of the reorganization of the three Xxxxxxxxx divisions of National
Semiconductor Corporation (the Discrete, Logic and Memory divisions) pursuant
to the Agreement and Plan of Recapitalization between Sterling Holding Company,
LLC and National Semiconductor Corporation, dated January 31, 1997. This
amendment and complete restatement of the Plan is effective June 1, 1998 and
applies to any Award declared on or after that date.
ARTICLE 3
Eligibility Conditions
A. Eligibility. Eligible Executives must be selected and approved by the
Committee as a condition for participation in the Plan. A list of Participants,
as in effect from time to time, shall be maintained as attached Schedule A to
the Plan.
The nomination and approval process shall apply anew for each Award
Period, but only Executives whose participation status has changed (i.e., new
Participants and dropped Participants) shall be notified of that change in
their status under the Plan. Participants will be notified of their Target
Award level during their initial Award Period and will be notified of
subsequent changes in that level as appropriate.
Newly hired and newly promoted Executives who are approved for
participation shall commence participation in the Plan as of the effective date
set by the Committee when their participation was approved. Participants who
commence participation effective after an Award Period has started shall
receive a prorated Award for that Award Period based on their relative length
of time of participation in the Plan for that Award Period.
A Participant who is no longer an Executive in a position covered by the
Plan, or who has been and remains dropped from participation in the Plan, as of
the last day of an Award Period will not be eligible for any Award under the
Plan for that Award Period, except as provided in Article 7 below.
B. Target Award Levels. Each Participant will be assigned one or more
Target Award levels, each expressed as a percentage of Base Salary. Target
Award levels may vary between Participants, regardless of their position.
Target Award levels shall be set forth in attached Schedule A, as in effect
from time to time.
In the event that a Participant changes positions during an Award Period
(whether due to promotion, demotion or other reasons) and the change causes a
change in his or her Target Award level, his or her Award Period shall be based
on the Target Award level attributable to his or her position as of the close
of the Award Period, without regard to any other levels in which he or she
participated during the Award Period, except as provided in Section 5.F. below.
The Committee has sole discretion to change any Participant's Target Award
level up or down, even absent a change in the Participant's position, to another
Target Award level. In that event, the Participant's Award for that Award
Period will be based on the Target Award level in effect for him or her as of
the close of the Award Period, without regard to any other Target Award level
is which he or she participated during the Award Period.
C. Calculation. Awards under the Plan will be calculated using the
Participant's Base Salary in effect at the end of the Award Period.
Participants who take an unpaid leave of absence during an Award Period will
have their Awards for that Award Period reduced on a prorata basis to reflect
the proportionate duration of that absence within the Award Period, except as
otherwise required by applicable law.
D. Payment. Awards under the Plan will be paid in cash on or about each
annual Award Date for which an Award is declared by the Committee. However,
Participants are eligible to elect to defer payment of their Award in
accordance with the terms of Article 8 below.
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ARTICLE 4
Plan Performance Goals
A. Purpose. While the Target Award level a Participant is eligible for
relates to the percentage of Base Salary the Participant may receive as a cash
Award under the Plan, the proportion of the Target Award level that becomes
payable as an Award depends upon financial performance relative to the
applicable Performance Goal(s) for the Award Period. Thus, the Company's Board
of Directors will establish Performance Goals for each Award Period. The
Performance Goals may include Employer-wide, multiEmployer-wide and business
unit-targeted goals for financial performance, which may vary between
Participants and between business units as such business units are selected and
defined for this purpose by that Board. Those Performance Goals, as established
from time to time, will be set forth in attached Schedule B, which is hereby
incorporated as part of the Plan.
B. Levels. Each Performance Goal will have a defined Threshold, Target and
Stretch level of performance. Best Expected and Beyond Best Expected levels of
performance may also be declared for one or more Performance Goals in the
discretion of the Committee. Generally speaking, achievement of a Threshold
level of performance will earn an Award of 50% of the Target Award level;
achievement of a Target level of performance will earn an Award of 100% of the
Target Award level; achievement of a Stretch level of performance will earn an
Award of 150% of the Target Award level; achievement of a Best Expected level of
performance will earn an Award of up to 200% of the Target Award level for that
Award Period; and achievement of a Beyond Best Expected level of performance
will earn an Award of up to 250% of the Target Award level for that Award
Period; subject to Plan conditions, limits and adjustments.
C. Multiple Goals and Weighting. A Participant may be subject to multiple
Performance Goals. The Committee will determine the weighting of each
Performance Goal in order to determine the overall level of performance such
Participant will be credited with for the Award Period. The weighted average of
the scoring on the applicable Performance Goals, as calculated by the Committee,
will determine the performance level for each Participant.
D. Interpolating Awards. As a general rule, a Threshold performance level
must be achieved in order for any Awards to be paid, but the Committee has
discretion both to declare Awards even if the Threshold level of performance is
not met and not to declare Awards even if the Threshold level of performance is
met. In the former case an Award of less than 50% of the Target Award level
could be declared. If performance falls between two established levels, the
Committee will decide how much of an Award to declare. For example, a level of
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performance that exceeded the Target level but did not reach the Stretch level
could generate an Award anywhere from 100% to 150% of the Target Award level,
to be determined in the Committee's discretion. If performance in excess of the
Stretch level is achieved, an Award may be declared at the Best Expected
performance level, which could be up to 200% of the Target Award level, but
payment of Awards beyond the Stretch (150% of Target Award) level is subject to
Committee discretion.
E. Extraordinary Events. Under exceptional circumstances, revisions to
Performance Goals may be made by the Committee, with Board approval, during the
Award Period if the business environment or key planning assumptions change
significantly from conditions assumed at the start of the Award Period. In
addition, Performance Goals, performance scales, and Awards may be adjusted in
the event the Committee determines there has been an Extraordinary Occurrence
during the Award Period that:
(i) affects one or more Performance Goals;
(ii) unreasonably distorts Award calculations; or
(iii) results in undue benefit or detriment to any Plan Participants.
Adjustments under the preceding sentence will be made solely for the purpose of
neutralizing the effect of the Extraordinary Occurrence.
F. Participant Moves. In the event that a Participant changes Employers
or business units during the Award Period, the Participant's goals will be
changed, if necessary, to reflect that of the new Employer or business unit. The
Participant's Award, if any, will then be prorated to reflect both:
(i) the performance achieved by and Targets assigned to each
Employer or business unit the Participant belonged to during the
Award Period, and
(ii) the length of time the Participant spent with each Employer or
business unit during the Award Period.
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ARTICLE 5
Calculation and Payment of Awards
A. Calculation of Awards. A Participant's Award will be calculated as a
percentage of his or her Base Salary.
B. Noteworthy Adjustments. For noteworthy cases the Committee has
discretion to adjust the Awards for selected individuals based on
recommendations of Company management that such individual(s) or group
contributed significantly more or less toward the performance score for the
Company or any other performance group.
C. Payment. Awards, if any, will be paid in cash on or about each Award
Date for which an Award is declared, subject to deferral rights under Article 8
below. A Participant on leave of absence (whether paid or unpaid) on the Award
Date will not receive his or her Award unless and until he or she returns from
the leave of absence.
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ARTICLE 6
Termination of Employment
A. Effect of Termination. Termination of employment before the close of
an Award Period shall disqualify a Participant from eligibility for an Award
for that Award Period only if the termination is voluntary (done at the
Participant's behest, not at the Company's) or is "for cause" as described in
Section 7.C. below. Thus, a Participant who incurs an involuntary termination
that is not "for cause" will remain eligible for an Award for the Award Period
in which his or her employment ends. Termination of employment due to the
Participant's retirement, death or Disability shall be considered involuntary
for purposes of the Plan.
B. Surviving Beneficiaries. Unless local law or regulation provides
otherwise, payment of Awards made upon termination of employment by death, or
on behalf of a Participant who dies prior to receiving the Award, shall be made
on the Award Date to:
(i) any surviving beneficiaries designated by the Participant
(in equal shares to each, unless otherwise designated
by the Participant); if none, then
(ii) to a legal representative of the Participant; if none,
then
(iii) to the person(s) entitled thereto as determined by a
court of competent jurisdiction.
The written consent of the Participant's spouse shall be required before the
designation of a beneficiary other than that spouse will be valid.
C. Termination for Cause.
Notwithstanding any other provisions of the Plan to the contrary, the
right of a Participant to receive an Award under the Plan shall be forfeited if
the Participant's employment is terminated for cause. For this purpose, the
term "cause" shall mean that the Board of Directors of FSC (where the
President, Chief Financial Officer or Chief Administrative Officer of FSC is
being terminated) or the Committee (in all other cases) has determined, in its
sole judgment, that any one or more of the following has occurred:
(i) The Participant is considered to have engaged in conduct
that has had or could have an adverse effect on an Employer,
including (but not limited to): endangering the welfare of
the public or other employees; misappropriation or misuse of
Employer funds, property or confidential information;
interference with any of the Employer's relationships with
customers, suppliers and others; insubordination; gross
negligence; dishonesty or criminality;
(ii) The Participant is considered to have breached any material
terms and conditions of employment, such as any Employer
policy regarding safety, security, confidentiality,
courtesy, attendance, new ideas or inventions, other
business activity, or any other Employer policy deemed
material under the circumstances;
(iii) The Participant is considered to have breached, in any
material respect, any agreement with the Employer
(including affiliates and business units) regarding any
terms and conditions relating to his employment or
separation from employment; or
(iv) For reasons of poor job performance, attitude, lack of
skills or other inability to perform the duties expected
of him in a satisfactory manner, it is determined at an
appropriate level by the Employer that the Participant's
employment should not continue.
A Participant's Award will be forfeited for any of the reasons in (i) through
(iii) above regardless of whether such conduct by the Participant is discovered
prior to or subsequent to the Participant's termination of employment or
payment of an Award. If an Award has been paid in connection with a termination
for cause or under any other circumstances where the recipient was not entitled
to all or part of the Award, it shall be repaid (or the excess portion shall be
repaid) to the Company, upon request, by the Participant.
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ARTICLE 7
Deferral of Awards
A. Timing. Except to the extent prohibited by applicable law
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and regulations, a Participant may elect to make an irrevocable election to
defer receipt of all or any portion of any Award in accordance with this Article
8. Such Notice of Deferral Election must be completed at least thirty (30) days
before the end of the Award Period. Notices of Deferral Election are not
self-renewing and must be completed for each Award Period if deferral if desired
for the applicable Award Period.
B. Deferral Accounts. For each Participant who elects a deferral, the
Company will establish and maintain book entry accounts which will reflect the
deferred Award and any interest credited to the Participant's account. Each
Participant with a deferral account under this Article shall have an unsecured
claim for benefits from the Company, in accordance with Section 8.J. below. The
Company shall, if it so desires, be entitled to reimbursement from any Employer
for any benefits paid under this Plan to, or on behalf of, any Executive who is
or was employed by that Employer.
C. Interest. For deferred Awards, Participant deferral accounts will be
credited on each Award Date with the annual rate of return earned by the
Fidelity U.S. Bond Index Fund for the most recent annual Fund year (or other
appropriate annual measuring period), ending on or before that Award Date, as
determined by the Committee based on such reports as it shall find acceptable
from time to time. If a Participant's Award is distributed on other than an
Award Date, the Participant's Account will be credited with interest until the
date of distribution.
D. Distribution. A Participant will become entitled to receive any deferred
Award, plus credited interest thereon, as of the earlier of the Participant's
termination of employment for any reason (including, but not limited to,
Disability, sale of the Participant's business unit, or death) or a date
pre-selected more than twelve (12) months in advance by the Participant. The
account balance will be paid in a lump sum in the month following the earlier of
the Participant's termination of employment for any
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reason or the pre-selected date, unless installment payments have been elected
by the Participant. To elect installment payments, a Participant who has
previously elected to defer an Award may irrevocably elect (such election to be
valid only if made more than twelve (12) months prior to the Participant's
termination of employment date) to have the balance of the deferred Award, plus
credited interest thereon, paid to the Participant in periodic annual
installments over a period of not more than ten (10) years. Payments shall
commence in the month following the Participant's termination of employment and
shall be made annually by the Company on a day each year that is within thirty
(30) days of the anniversary of the Participant's termination of employment. If
a Participant has requested installment payments and dies either before or
after distribution has begun, the unpaid balance will be paid in a lump sum in
the month following the Participant's death.
E. Hardship. Payment of part or all of any deferred Awards may be
accelerated in the case of severe hardship, which shall mean an emergency or
unexpected situation in the Participant's financial affairs, including, but not
limited to, illness or accident involving the Participant or any of the
Participant's dependents. All payments in case of hardship must be specifically
approved by the Committee.
F. Loans. No Participant may borrow against his or her account.
G. Beneficiaries. Except to the extent prohibited by applicable law and
regulations, the Participant may designate one or more beneficiaries to receive
distribution from the Participant's deferral account in the event of the
Participant's death. The Participant's beneficiary may be changed without the
consent of any prior beneficiary, except as follows: if the Participant is
married at the time of designation, the Participant's spouse must consent to the
beneficiary designation and the Participant's spouse must consent to any
subsequent change in beneficiary. If no
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beneficiary is chosen or the beneficiary does not survive the Participant, the
Award will be paid in accordance with Section 8.C. of the Plan or as otherwise
required by applicable law or regulation.
H. Status of Plan. This Plan constitutes an unfunded plan of deferred
compensation. As such, any amounts payable hereunder will be paid out of the
general corporate assets of the Company and shall not be transferred into a
trust or otherwise set aside. All accounts under the Plan will be for
bookkeeping purposes only and shall not represent a claim against specific
assets of the Company. The Participant will be considered a general creditor of
the Company and the obligation of the Company is purely contractual and shall
not be funded or secured in any way.
ARTICLE 8
INTERPRETATIONS AND RULE-MAKING
The Committee shall have the right and power to exercise the following
duties, in its sole discretion:
(i) interpret the provisions of the Plan,
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 it deems
necessary in its discretion; and
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(iii) generally take all action to administer the operation of the
Plan.
The Committee may delegate any of its rights and duties under this Plan to
one or more officers or employees of the Company, or to an outside service
provider, but Section 11.F. below shall not apply to any such outside service
provider.
ARTICLE 9
Declaration of Incentives, Amendment or Discontinuance
The Company's Board of Directors, acting within its sole discretion, may:
(i) determine, on or before an Award Date, not to make Awards,
and to modify the amount of any Award, to any or all
Participants for the related Award Period; provided such
action is taken only as needed to protect the Company's
financial position or to discipline a Participant for
work-related misconduct;
(ii) make any written modification or amendment to the Plan for
any or all Participants; or
(iii) discontinue the Plan for any or all Participants.
Any amendment or termination of the Plan shall be in writing and adopted by
action of that Board, approved by a majority of its members.
ARTICLE 10
Miscellaneous
A. Except through beneficiary designations, no right or interest in the
Plan is transferable or assignable except by will or the laws of descent and
distribution.
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B. Participation in this Plan does not guarantee any right to
continued employment, and the Employers reserve the right to dismiss
Participants for any reason whatsoever. Participation in the Plan for any Award
Period does not guarantee the Participant the right to participation in the
Plan for any subsequent Award Period.
C. The Company shall deduct from all Awards under this Plan any taxes
or other amounts required by law to be withheld with respect to Award payments.
Employment taxes, such as FICA and FUTA, shall be deducted from Participants'
deferred accounts as of the close of each taxable year as and to the extent
required by applicable law and regulations.
X. Xxxxxxxxxxx of financial information relevant to measuring
performance during the Award Period 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 Company's Board of Directors to adopt such other plans or
programs, or to make salary, bonus, incentive, or other payments, with respect
to compensation of Executives, as in its sole judgment it may deem proper.
F. No member of the Committee or the Company's Board of Directors, nor
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 Plan.
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G This Plan shall be governed by the laws of the State of Maine.
IN WITNESS WHEREOF, this amendment and complete restatement of the
Xxxxxxxxx Executive Incentive Plan, having been first duly adopted, is hereby
executed below on this day of , 1998, to take effect on June 1,
1998 as provided herein.
FSC SEMICONDUCTOR CORPORATION
By:
----------------------------------------
ADMINISTRATIVE COMMITTEE
By:
----------------------------------------
By:
----------------------------------------
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XXXXXXXXX EXECUTIVE INCENTIVE PLAN
Schedule A--As Effective June 1, 1998
List of Participants and Target Award Levels
List of Participants and Target Award Levels
Name of Participant Title Target Award Level*
------------------- ----- -------------------
Xxxx X. Xxxx President and CEO 90%
Xxxxxx X. Xxxxxx Executive Vice President and 65%
Chief Financial Officer
Xxxxxx X. Xxxxx Executive Vice President, 60%
Chief Administrative Officer,
General Counsel and Secretary
X. Xxxxx Xxxxxxx General Manager and 50%
Executive Vice President
Xxxxx Xxxxx General Manager and 50%
Executive Vice President
Xxxxx Xxxxxxx General Manager and 50%
Executive Vice President
Xxxxxxx Xxxxxx Senior Vice President- 50%
Worldwide Sales
* As a percentage of Base Salary
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XXXXXXXXX EXECUTIVE INCENTIVE PLAN
Schedule B--As Effective June 1, 1998
Performance Goals
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XXXXXXXXX
EXECUTIVE INCENTIVE PLAN
Amended and Restated Effective June 1, 1998
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TABLE OF CONTENTS
Page
Objective and Structure 1
Article 1. Definitions 1
Article 2. Effective Date 4
Article 3. Eligibility Conditions 4
A. Eligibility 4
B. Target Award Levels 4
C. Calculation 5
D. Payment 5
Article 4. Performance Goals 5
A. Purpose 5
B. Levels 6
C. Multiple Goals and Weighting 6
D. Interpolating Awards 6
E. Extraordinary Events 6
F. Participant Moves 7
Article 5. Calculation and Payment of Awards 7
A. Calculation of Awards 7
B. Noteworthy Adjustments 7
C. Payment 7
Article 6. Termination of Employment 8
A. Effect of Termination 8
B. Surviving Beneficiaries 9
C. Termination for Cause 9
Article 7. Deferral of Awards 10
X. Xxxxxx 10
B. Deferral Accounts 10
C. Interest 10
D. Distribution 10
E. Hardship 11
F. Loans 11
G. Beneficiaries 11
H. Status of Plan 12
Article 8. Interpretations and Rule-Making 12
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Article 9. Declaration of Incentives, Amendment or Discontinuance 12
Article 10. Miscellaneous 13
Schedule A - List of Participants and Target Award Levels
Schedule B - Performance Goals
