Exhibit 10.1
NATIONAL SEMICONDUCTOR CORPORATION
Executive Officer Incentive Plan
(as amended effective May 28, 2001)
1. Objectives.
The National Semiconductor Corporation Executive Officer Incentive Plan (the
"Plan") is designed to retain executives and reward them for making major
contributions 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.
2. Definitions.
(a) Award - The Award to a Plan participant pursuant to terms and
conditions of the Plan.
(b) Award Agreement - An agreement between the Company and a participant
that sets forth the terms, conditions and limitations applicable to an Award.
(c) Board - The Board of Directors of National Semiconductor Corporation.
(d) Code - The Internal Revenue Code of 1986, as amended from time to time.
(e) Committee - The Stock Option and Compensation Committee of the Board,
or such other committee of the Board that is designated by the Board to
administer the Plan. The Committee shall be constituted to permit the Plan to
comply with the requirements of Section 162(m) of the Code and any regulations
issued thereunder and shall initially consist of not less than three members of
the Board.
(f) Company - National Semiconductor Corporation ("NSC") and any other
corporation in which NSC controls, directly or indirectly, fifty percent (50%)
or more of the combined voting power of all classes of voting securities.
(g) Executive Officer - Any officer of the Company subject to the reporting
requirements of Section 16 of the Securities and Exchange Act of 1934 ("Exchange
Act").
3. Eligibility.
Only Executive Officers are eligible for participation in the Plan.
4. Administration.
The Plan shall be administered by the Committee which shall have full power and
authority to construe, interpret and administer the Plan. Each decision of the
Committee shall be final, conclusive and binding upon all persons. Prior to the
beginning of each fiscal year, the committee shall: (i) determine which
Executive Officers are in positions in which they are likely to make substantial
long term contributions to the Company's success and therefore participate in
the Plan for the fiscal year; and (ii) to which Award level each participant is
assigned.
5. Performance Goals.
(a) The Committee shall establish performance goals applicable to a
particular fiscal year prior to its start, provided, however, that such goals
may be established after the start of the fiscal year but while the outcome of
the performance goal is substantially uncertain if such a method of establishing
performance goals is permitted under proposed or final regulations issued under
Code Section 162 (m).
(b) Each performance goal applicable to a fiscal year shall identify one or
more business criteria that is to be monitored during the fiscal year. Such
business criteria include any of the following:
Net income Cash flow
Earnings per share Stockholder return
Debt reduction Revenue
Return on investment Revenue growth
Return on net assets Manufacturing improvements and/or
Operating ratio efficiencies
Quality improvements Return on equity
Market share Cycle time reductions
Profit before tax Customer satisfaction
Size of equity improvements
Reduction in product Return on research and
returns development investment
Reduction in product Customer request date
Strategic positioning performance
programs Human resource excellence
Compensation/review programs
program improvements New product releases
Business/information
systems improvements
(c) The Committee shall determine the target level of performance that must
be achieved with respect to each criteria that is identified in a performance
goal in order for a performance goal to be treated as attained.
(d) The Committee may base performance goals on one or more of the
foregoing business criteria. In the event performance goals are based on more
than one business criteria, the Committee may determine to make Awards upon
attainment of the performance goal relating to any one or more of such criteria,
provided the performance goals, when established, are stated as alternatives to
one another.
6. Awards.
(a) The Committee shall make Awards only in the event the Committee
certifies in writing prior to payment of the Award that the performance goal or
goals under which the Award is to be paid has or have been attained.
(b) The maximum Award payable under this Plan to any participant for any
fiscal year shall be the lesser of $2 million (two million dollars) or 200% of
the participant's annualized base remuneration at the end of the fiscal year.
(c) The Committee in its sole and absolute discretion may reduce but not
increase the amount of an Award otherwise payable to a participant upon
attainment of the performance goal or goals established for a fiscal year.
(d) A participant's performance must be satisfactory, regardless of Company
performance, before he or she may be paid an incentive Award.
(e) To the extent permitted under regulations issued under Code Section
162(m), in the event the performance goals for a fiscal year are attained, the
Committee, in its discretion, may grant all or such portion of an incentive
Award for the year as it deems advisable to a participant (or his or her
beneficiary in the case of his death) who is employed or who is promoted to an
Executive Officer position covered by this Plan during the year, or whose
employment is terminated during the fiscal year, or who suffers a permanent
disability.
7. Payment of Awards.
(a) Each participant shall be paid the Award solely in cash as soon as
practicable following grant of the Award by the Committee.
(b) Participants who are eligible under the National Semiconductor
Corporation 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.
(c) Effective after May 27, 2001, any previously deferred Awards will be
consolidated under the Deferred Compensation Plan and will be payable and
administered in accordance with the terms of the Deferred Compensation Plan and
no longer will be payable under the terms of this Plan. In no event will a
participant be entitled to the same amount under this Plan and the Deferred
Compensation Plan.
8. Tax Withholding.
The Company shall have the right to deduct applicable taxes from any Award
payment.
9. Amendment, Modification, Suspension
or Discontinuance of this Plan.
The Committee may amend, modify, suspend or terminate the Plan for the purpose
of meeting or addressing any changes in legal requirements or for any other
purpose permitted by law. The Committee will seek stockholder approval of an
amendment if determined to be required by or advisable under regulations of the
Securities and Exchange Commission or the Internal Revenue Service, the rules of
any stock exchange on which the Company's stock is listed or other applicable
law or regulation. No amendment, suspension, termination or discontinuance may
impair the right of a participant or his or her designated beneficiary to
receive any Award accrued prior to the later of the date of adoption or the
effective date of such amendment, suspension, termination or discontinuance.
10. Termination of Employment.
If the employment of a participant terminates, other than pursuant to paragraphs
(a) and (b) of this Section 10, all unpaid Awards shall be cancelled
immediately, unless the Award Agreement provides otherwise.
(a) Retirement - When a participant's employment terminates as a result of
retirement, the Committee may permit Awards to continue in effect beyond the
date of retirement in accordance with the applicable Award Agreement and the
vesting of any Award may be accelerated.
(b) Death or Disability of a Participant.
(i) In the event of a participant's death, the participant's estate or
beneficiaries shall have a period up to the expiration date specified in
the Award Agreement within which to receive any outstanding Award held by
the participant under such terms as may be specified in the applicable
Award Agreement. Rights to any such outstanding Awards shall pass by will
or the laws of descent and distribution in the following order: (a) to
beneficiaries so 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. Awards
so passing shall be made at such times and in such manner as if the
participant were living.
(ii) In the event a participant is disabled, Awards and rights to any
such Awards may be paid to the participant.
(iii) After the death or disability of a participant, the Committee
may in its sole discretion at any time (a) terminate restrictions in Award
Agreements; (b) accelerate any or all installments and rights; and (c)
instruct the Company to pay the total of any accelerated payments in a lump
sum to the participant, the participant's estate, beneficiaries or
representative.
(iv) In the event of uncertainty as to interpretation of or
controversies concerning this paragraph (b) of Section 10, the Committee's
determinations shall be binding and conclusive.
11. Cancellation and Rescission of Awards.
Unless the Award Agreement specifies otherwise, the Committee may cancel any
unpaid Awards at any time if the participant is not in compliance with all other
applicable provisions of the Award Agreement and the Plan. Awards may also be
cancelled if the Committee determines that the participant has at any time
engaged in activity harmful to the interest of or in competition with the
Company.
12. Nonassignability.
No Award or any other benefit under the Plan shall be assignable or transferable
by the participant during the participant's lifetime.
13. Unfunded Plan.
The Plan shall be unfunded. Although bookkeeping accounts may be established
with respect to participants, any such accounts shall be used merely as a
bookkeeping convenience. The Company shall not be required to segregate any
assets that may at any time be represented by cash, nor shall the Plan be
construed as providing for such segregation, nor shall the Company nor the Board
nor the Committee be deemed to be a trustee of any Award under the Plan. Any
liability of the Company to any participant with respect to an Award under the
Plan shall be based solely upon any contractual obligations that may be created
by the Plan and any Award Agreement; no such obligation of the Company shall be
deemed to be secured by any pledge or other encumbrance on any property of the
Company. Neither the Company nor the Board nor the Committee shall be required
to give any security or bond for the performance of any obligation that may be
created by the Plan.
14. No Right to Continued Employment.
Nothing in this Plan shall confer upon any employee any right to continue in the
employ of the Company or shall interfere with or restrict in any way the right
of the Company to discharge an employee at any time for any reason whatsoever,
with or without good cause.
15. Effective Date.
The Plan shall become effective on May 29, 1994. The Committee may terminate or
suspend the Plan at any time. No awards may be made while the Plan is suspended
or after it is terminated.