Exhibit 10.34
[VIRAGE LOGIC LOGO]
VIRAGE LOGIC CORPORATION
FY2003 EXECUTIVE
VARIABLE INCENTIVE PAY PLAN
The symbol "[***]" is used to indicate that a portion of the exhibit has been
omitted and filed separately with the commission. Confidential treatment has
been requested with respect to the omitted portions.
TABLE OF CONTENTS
SECTION 1: POLICIES & PRACTICES..................................................3
Purpose.......................................................................3
Previous Plans................................................................3
Eligibility Scope.............................................................3
Enrollment....................................................................4
New Hires.....................................................................4
Internal Transfers............................................................4
Promotion Outside Focal.......................................................4
Plan Metrics..................................................................4
Plan Changes..................................................................4
Reorganizations...............................................................4
Payment Cycles................................................................4
VIP Calculations..............................................................5
Terminations- Voluntary and Involuntary.......................................5
Leaves of Absence-Medical/Family/Personal/Sabbatical..........................5
Communication.................................................................5
Exceptions....................................................................6
Plan Amendments...............................................................6
SECTION 2: VARIABLE INCENTIVE PAY PLANS..........................................7
Virage Logic Corporate Executive Pay Plan.....................................7
Appendix "A" VIP Enrollment Sheet....................................10
Change Record - Exec VIP Plans...............................................11
FY2003 Exec VIP Plan Page 2
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Section 1: Policies & Practices
PURPOSE
To enhance shareholder value by promoting strong linkages between employee
contributions and company performance.
To provide a variable pay plan that directly supports the achievement of
company annual business objectives.
PREVIOUS PLANS
Virage Logic Variable Incentive Pay Plan in effect prior to the FY2003
plan does not apply to results achieved in FY2003.
ELIGIBILITY SCOPE
The following exempt job types with pay grades equal to or higher than E06
with managing positions are eligible to participate in the FY2003 Virage
Logic Variable Incentive Pay Plan:
E09 President, VP's
E08 Directors
E07 Managers
E06 Employees with managing positions
Participants may NOT be enrolled in more than one plan at a time.
Participants must be employed as of the plan payout date with a
performance rating of New in Job, Consistently Meets Peer Performance, or
Consistently Exceeds Peer Performance to be eligible for payout. Employees
on Performance Improvement Plans as of the plan payout date are not
eligible for VIP payout.
- State and Federal taxes are withheld at the supplemental rate
- 401(k) contributions are deducted, if applicable.
FY2003 Exec VIP Plan Page 3
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ENROLLMENT
Annual enrollment is completed at the beginning of the Fiscal Plan year.
If there is no enrollment sheet on file with Corporate Compensation by
December 31, 2002 for the FY2003 plan, no portion of the variable
component will be paid for FY2003 performance.
All new VIP participants as of the Focal will be enrolled effective
October 2002. An enrollment sheet for new participants must be completed
and forwarded to compensation within 30 days of the Focal effective date.
Any increase in participation level at Focal will be effective April 1,
2003 and does not require a new enrollment form.
NEW HIRES
New employees with VIP participation as part of the hire offer will be
eligible effective the first day of the new quarter following effective
date of hire. An enrollment sheet must be completed and forwarded to
compensation within 30 days of the hire date.
INTERNAL TRANSFERS
Not-applicable
PROMOTION OUTSIDE FOCAL
When promoted from a non-eligible pay level to a pay level eligible for
VIP, VIP (if elected by the manager when optional) is effective the first
day of the new quarter following the promotion effective date. A new
enrollment sheet must be completed and forwarded to compensation within 30
days of the promotion date.
PLAN METRICS
All annual VIP targets are set by executive management, and are subject to
change during the plan year.
PLAN CHANGES
In the event of a material change to an existing plan (to be determined by
the Corporate Compensation Committee), the plan administrator will
coordinate distribution of new plans and enrollment forms to the affected
participants.
REORGANIZATIONS
The Corporate Compensation Committee will make the final decision
regarding plan changes due to reorganizations.
PAYMENT CYCLES
Quarterly VIP payouts are paid by the end of the proceeding month
following the end of the fiscal quarter.
FY2003 Exec VIP Plan Page 4
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VIP CALCULATIONS
Quarterly VIP payouts are calculated based on individual target dollars
and achievement of plan objectives. Individual target dollars are
determined on an ongoing basis throughout the plan year. If individual
base pay or quarterly VIP percentage changes, quarterly target dollars
change. The VIP Plan is intended to recognize group performance.
Calculation Example:
BASE VIP TARGET
DATE ACTION PAY PERCENTAGE CALCULATION DOLLARS
- --------- ---------------- ------- ---------- ----------- -------
October 1 Plan Year Begins 100,000 15% 15,000 / 12 7,500
mo. X 6 mo.
April 1 Focal Pay Change 105,000 15% 15,750 / 12 3,938
mo. X 3 mo.
July 1 Promotion 130,000 25% 32,500 / 12 8,125
mo. X 3 mo.
TOTAL ANNUAL TARGET DOLLARS $19,563
(CERTAIN ONE-TIME CHARGES MAY BE EXCLUDED. THE UNPLANNED FINANCIAL IMPACTS
OF ACQUISITIONS AND DIVESTITURES WILL NOT BE INCLUDED FOR THE YEAR IN
WHICH THEY WERE ACQUIRED. THE BOARD OF DIRECTORS WILL REVIEW QUARTERLY
RESULTS TO ENSURE CONSISTENCY WITH BUSINESS EXPECTATIONS. THE CORPORATE
COMPENSATION COMMITTEE WILL REVIEW PAYOUTS ON A SEMI-ANNUAL BASIS).
TERMINATIONS- VOLUNTARY AND INVOLUNTARY
To be eligible for payout under any FY2003 VIP plan, the participant must
be a Virage Logic employee, or an employee of a subsidiary or branch
office of Virage Logic Corporation as of the payout date.
In the event of an employee's death, participation in any VIP plan will
continue for 30 days following the date of death, or the end of the plan
year, whichever occurs first. Earned prorated VIP payments will be paid to
the employee's estate after the end of the quarterly payout schedule.
LEAVES OF ABSENCE-MEDICAL/FAMILY/PERSONAL/SABBATICAL
Before a personal leave begins, employees must use all accrued PTO hours
until depleted. Once PTO hours are depleted, employees will be placed on
an unpaid leave status. VIP payout calculations will include time charged
to PTO. Quarterly VIP Payouts for employees with leaves of absence less
than or equal to 90 days during FY2003 will not be prorated to exclude the
leave of absence.
Quarterly VIP payouts for employees with unpaid leaves of absence over 90
days in duration during FY2003 will be prorated to exclude the entire
leave of absence.
COMMUNICATION
VIP plan participation is communicated to participants by HR and the
employees' manager at the beginning of the Plan year. Performance
objectives are communicated to participants by the CFO and the
Departmental Managers with approval of the CFO, as soon as the annual
targets are finalized. The CFO on a quarterly basis communicates updates
on progress toward objectives to participants.
FY2003 Exec VIP Plan Page 5
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EXCEPTIONS
Unique situations that were not anticipated in this document may require
an adjustment to variable compensation. The Corporate Compensation
Committee must approve all exceptions.
PLAN AMENDMENTS
This plan reflects company structure at time of plan approval. Virage
Logic reserves the right to amend this plan at any time with reasonable
notice.
ROLES
Corporate Compensation Committee Plan Administrator
Adam Kablanian Leon Bezdikian
Alex Shubat
James R. Pekarsky
FY2003 Exec VIP Plan Page 6
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SECTION 2: VARIABLE INCENTIVE PAY PLANS
VIRAGE LOGIC EXECUTIVE PAY PLAN
PLAN TYPE: 50% Revenue / 50% Operating Profit
PLAN YEAR: FY2003
PLAN PURPOSE: The purpose of the Virage Logic VIP plan is to link
employee contributions and company performance.
FY2003 ELIGIBILITY: Employees in Pay Grades E06 (with managing positions) -
E09
PLAN METRIC: Payout will be determined on achievement of corporate
performance as measured by FY2003 planned revenue and
operating profit each quarter of the fiscal year.
Operating Profit Dollars will be adjusted for unusual
accounting items (stock-based compensation charges,
re-valuation of warrants, other one-time charges) as
directed by the Board of Directors.
REVENUE
PAYOUT TABLE: Payout is based on the following table. Performance and
payout above Plan is capped at 2X. The payout is
interpolated; payout will be rounded to the nearest
whole percent. Individual quarterly payments will be
calculated as follows: (employee's salary paid during
the quarter X employee's VIP percentage X payout %).
FY2003 Exec VIP Plan Page 7
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PLAN IS CAPPED AT 2X PAYOUT
Qtr. Revenue Targets ($M)
REVENUE AS A % OF ---------------------------------
YTD PLAN Q1 03 Q2 03 Q3 03 Q4 03 YTD PAYOUT %
- ----------------- ----- ----- ----- ----- --- --------
*** *** *** *** *** *** ***
THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
FY2003 Exec VIP Plan Page 8
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OPERATING PROFIT
PAYOUT TABLE: Payout is based on the following table. Performance and
payout above Plan is capped at 2X. The payout is
interpolated; payout will be rounded to the nearest
whole percent. Individual quarterly payments will be
calculated as follows: (employee's salary paid during
the quarter X employee's VIP percentage X payout %).
* PLAN IS CAPPED AT 2X PAYOUT
Qtr. Profit Targets ($M)
OPERATING PROFIT AS A --------------------------------
% OF YTD PLAN Q1 03 Q2 03 Q3 03 Q4 03 YTD Payout %
- --------------------- ----- ----- ----- ----- --- --------
*** *** *** *** *** *** ***
THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
FY2003 Exec VIP Plan Page 9
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APPENDIX "A" VIP ENROLLMENT SHEET
VIRAGE LOGIC CORPORATION FY2003
VARIABLE COMPENSATION ENROLLMENT FORM
(PLEASE CHECK APPROPRIATE BOX)
[ ] ANNUAL ENROLLMENT [ ] PARTICIPANT NEW TO PLAN
(PLEASE CHECK APPROPRIATE BOX)
[ ] EXECUTIVE VARIABLE INCENTIVE PAY PLAN
[ ]
[ ]
THIS ENROLLMENT FORM IS TO BE USED FOR ALL FY2003 COMPENSATION PLANS FOR THE
GROUPS LISTED ABOVE. THIS FORM, COMBINED WITH A COPY OF THE VIRAGE LOGIC FY2003
VARIABLE INCENTIVE PAY PLAN AND A TARGET SUMMARY FROM THE FINANCE DEPARTMENT,
PROVIDES THE INFORMATION NECESSARY TO UNDERSTAND THE FY2003 VARIABLE
COMPENSATION EARNINGS OPPORTUNITIES.
All plans listed above share common eligibility requirements; see Section 1,
Policies and Practices, FY2003 Variable Incentive Pay Plan. Plan specifics are
listed in Section 2 of the Plan.
EMPLOYEE NAME:_________________________ LOCATION:______________________________
EMPLOYEE #: __________________________ MANAGER NAME: _________________________
PLAN # (See Plan)______________________ JOB TITLE:_____________________________
PAY GRADE:_____________________________ DATE OF HIRE:__________________________
ANNUAL ENROLLMENT (FOR EXISTING VIP PARTICIPANT):
Percent participation as of 10-1-02: _______%
NEW PARTICIPANT (FOR NEW HIRE, TRANSFER TO NEW PLAN, NEWLY ELIGIBLE (INCLUDES
NEW ON VIP AT FOCAL AND PROMOTED TO VIP DURING YEAR)
Percent Participation: __________________% Effective Date*: ________________
*EFFECTIVE DATE FOR NEW HIRES, TRANSFERS TO NEW PLAN, NEWLY ELIGIBLE (AT
FOCAL/PROMO) IS FIRST OF MONTH FOLLOWING EVENT.
I have reviewed a copy of the FY2003 Virage Logic Executive Variable Incentive
Pay Plan and understand my participation in the plan and the payout
factors/targets that pertain to that plan. I also understand that this Plan is
subject to change at the discretion of Virage Logic Corporation.
Employee: _________________________________________ Date:_____________________
Manager: _________________________________________ Date:_____________________
CEO: _____________________________________________ Date:_____________________
CFO: _____________________________________________ Date: ____________________
RETURN COMPLETED FORMS TO HR, TANYA DODGE
FY2003 Exec VIP Plan Page 10
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CHANGE RECORD - EXEC VIP PLAN
VERSION DATE DESCRIPTION OF REVISION
FY2003 Exec VIP Plan Page 11
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