1
Exhibit 10.1
NATIONAL SEMICONDUCTOR CORPORATION
2001 EXECUTIVE OFFICER INCENTIVE PLAN AGREEMENT
ARTICLE 1
Definitions
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,
usually approximately forty days after the Company
makes public its consolidated financial statements for
the fiscal year.
Base Salary: Generally, the annualized base remuneration received
by a Participant from the Company at the end of the
fiscal year. Extraordinary items, including but not
limited to prior awards, relocation expenses,
international assignment allowances and tax
adjustments, sales incentives, amounts recognized as
income from stock or stock options, 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 Base Salary.
Company: National Semiconductor Corporation ("NSC"), 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.
Committee: A committee comprised of directors of National who
are not employees of the Company, as more fully defined
in the Executive Officer Incentive 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 pla
or any successor plan thereto.
Executive
Officer: An officer of the Company who is subject to the
reporting and liability provisions of Section 16 of
the Securities and Exchange Act of 1934.
Incentive
Levels: Percentage of Base Salary assigned to a Participant as a
Target Award.
Participant: An Executive Officer designated as a Participant i
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. Individual Performance Goals may have two
levels of performance as follows:
(i) Target -- Expected performance, as established by
the Committee,reflecting a degree of difficulty which
has a reasonable probability of achievement.
(ii) Stretch -- Better than Target performance and
reflecting a greater degree of difficulty.
Corporate financial Performance Goals will also have a
Threshold level of performance, which will be a minimum
acceptable level of performance.
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 certifies to the Vice President-Finance of
the Company that he or she does not intend to engage i
a full-time vocation.
Target Award: The Award, expressed as a percentage of Base Salary at
the assigned Incentive Level, 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 define
herein have the meanings assigned to them in the Executive Officer Incentive
Plan.
ARTICLE 2
Effective Date
The Agreement will become effective as of May 29, 2000, to be
effective for the Company's fiscal year 2001.
ARTICLE 3
Eligibility for Plan Participation
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 and their respective Incentive Levels.
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 each 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 Committe 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
A. Each Participant will be assigned an Incentive Level with associated
Target Awards expressed as percentages of the Participant's Base Salary.
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 tim spent in each
position.
ARTICLE 5
Plan Performance Goals
A. Performance Goals and associated weights will be established by the Committee
within ninety (90) days after the start of the fiscal year. Each individual
Performance Goal will have a defined Target level of performance and may have
defined Stretch levels as well. Corporate financial Performance Goals will have
defined Threshold, Target and Stretch levels of performance. All Participants
will be given the same corporate financial Performance Goals. Performance Goals
and their associated weights may change from one fiscal year to another fiscal
year to reflect the Company's operational and strategic goals, but must be based
on one or more of the business criteria listed in Section 5(b) of the Plan.
Actual Award amounts may range between 0% and 200% of Target based on
actual achievement on Performance Goals. Each Performance Goal will be scored at
the end of the fiscal year. The sum of the scoring on the Performance Goals will
determine the total performance level for the year.
ARTICLE 6
Calculation and Payment of Awards
A. A Participant's Award will be calculated as a percentage of 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 is scored at the
end of the fiscal year, with the sum of the scoring on
each Performance Goal determining the total performance
level.
3) The total performance level shall be multiplied by the
Participant's Incentive Level. No one individual Award
may exceed 200% of the Participant's Target Award
amount.
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.
C. Awards will be paid in cash on or about the Award Date.
D. Awards will reflect the Participant's 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
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. 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. 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.
ARTICLE 8
Deferral of Awards
A. If permitted by local law and regulations,a Participant is entitled to make
an irrevocable election to defer receipt of all or any portion of any Award. For
any fiscal year, the Notice of Election must be completed prior to thirty
(30)days before the end of the fiscal year. Notices of Election are not
self-renewing and must be completed for each fiscal year if deferral is desired
for the applicable fiscal year.
B. For each Participant who elects deferral, the Company will establish and
maintain book entry accounts which will reflect the deferred Award and any
interest credited to the account.
C. For deferred Awards, Participant deferred accounts will be credited each
Award Date with interest set at the rate for long-term A-rated corporate bonds,
as reported by the investment banking firm of Salomon Smith Barney Inc of New
York City (or such other investment banking firm as the Committee may specify)
during the first week of each calendar year. The interest rate will be reset at
the beginning of each calendar year. Interest will begin to accrue on the Award
Date and will be credited each Award Date until the date payment is actually
made. If a Participant's Award is distributed at any time other than on an Award
Date, the Participant's account will be credited with interest until the date of
distribution.
D. Participants will not receive deferred Awards until the earlie of termination
of employment for any reason (including Retirement,Disability, or death) or a
date pre-selected by the Participant. The account balance will be paid in a lump
sum in the month following the earlier of termination of employment for any
reason or the pre-selected date unless installment payments are permitted and
have been elected as follows: Upon termination of employment by reason of
Retirement or Disability, a Participant who has previously elected to defer an
Award may irrevocably elect to have the balance of the deferred Award plus
accrued interest paid to the Participant in periodic, annual installments over a
period of ten (10) years. Payments shall commence or be made annually on a day
that is within thirty (30) days of the anniversary date following the
Participant's Retirement or Disability.
E. Subject to Section 7.F.,if the Participant's employment is terminated for any
reason other than death, Disability or Retirement, the Participant will be paid
the entire account balance in a lump sum in the month after termination, less
any sums due the Company. 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, less any
sums due the Company.
F. Payment of part or all of the deferred Award may be accelerated in the case
of severe hardship for good cause shown to the satisfaction of the Committee,
which shall mean an emergency or unexpected situation 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.
G. No Participant may assign, pledge or borrow against his or her account
except as provided in this Agreement.
H. If permitted by local law and regulations, the Participant may designate a
beneficiary to receive deferred Awards 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: In those jurisdictions where spouses are granted
rights by law in a Participant's earnings, if the Participant is married at the
time of designation, the Participant's spouse must consent to the beneficiary
designation and any change in beneficiary. If no beneficiary is chosen or the
beneficiary does not survive the Participant, the Award account balance will be
paid in accordance with the terms of Article 7C or as otherwise required by
local law or regulation.
ARTICLE 9
Interpretations and Rule-Making
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
The Committee may on or before the Award Date: (i) determine not to make
any Awards to any or all Participants for any Plan Period; (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
A. Except as provided in Article 8 H, no right or interest in the Plan is
transferable or assignable except by will or the laws of descent and
distribution.
B. Participation in this 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. Awards that are deferred under Article 8 constitute an unfunded Plan of
deferred compensation. As such,any amounts payable thereunder 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.
E. Maintenance of financial information relevant to measuring performance
during the fiscal year will be the responsibility of the Chief Financial Office
of the Company.
F. 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.
G. Except to the extent superseded by federal law, this Agreement shall
be construed in accordance with the laws of the State of California.
H. 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.
I. 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.