EXHIBIT 10.11
CONFIDENTIAL TREATMENT REQUESTED
FORMFACTOR, INC.
KEY MANAGEMENT BONUS PLAN
(2004)
I. PURPOSE
To further the success of FormFactor, Inc. (hereinafter referred to as
the "COMPANY") by enabling the Company to be competitive with the rest
of the industry in attracting and retaining key talent and to provide
an incentive, in addition to base salary compensation, to those key
professionals of the Company who will have a substantial opportunity to
influence achievement of major corporate objectives and subsequent
Company growth. This will 1) more closely associate the personal
interests of such key professionals with Company interests, 2)
encourage such key professionals to continue as employees of the
Company; and 3) position the Company as a company that provides
better-than-market rewards for better-than-market performance.
II. DETERMINATION OF BONUS PAYMENT
Actual bonus award amounts are based on a combination of specific
percentage achievement of corporate objectives and specific percentage
achievement of personal objectives. Percentage participation rates are
established for each individual based on level of responsibility and
scope of work in the organization. Specific bonus target percentages
will be established for each plan year.
III. CORPORATE OBJECTIVES
Attachment A lists the indicators used to measure achievement of the
corporate objectives component for FY2004 plan.
Each objective has equal weight (1/3). The minimum threshold equals 80%
of the target (i.e., no payment for that indicator unless 80% of the
target is reached.) The maximum threshold equals 200% of the target
(i.e., for any single indicator, no more than 200% of the bonus target
amount will be paid).
IV. PERSONAL OBJECTIVES
Participants will work with their Managers to identify personal
objectives to be used as achievement indicators for each individual
participating in the Plan. These objectives should be critical to the
success of the individual and should tie into the overall Company
business priorities. The maximum threshold equals 125% of the target
(i.e., for any single personal objective, no more than 125% of the
bonus target amount will be paid). The applicable Senior Manager must
approve each individual's personal objectives and the weighting of each
within the total percentage for personal objectives. The personal
objectives component will constitute a pre-determined percentage of the
total award depending upon the degree of each participant's actual
achievement of personal goals as determined by the appropriate Vice
President (or higher).
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* * * Confidential treatment has been requested for portions of this exhibit.
The copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
V. ALLOCATION OF INCENTIVE BONUS
A. DEFINITIONS:
1. CAF = Corporate Achievement Factor defined as the average of the
percentage achievement of the three corporate objectives (with a
minimum of 80% and a maximum of 200% for each objective achieved; if
the percentage achievement is less than 80% for a corporate objective,
it counts as zero in computing the CAF):
Percentage of Bookings Target achieved = %
Percentage of Net Sales Target achieved = %
Percentage of Operating Margin Target achieved = ______%
Total = %
CAF = Total
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3
2. PPS = Participant's Proportional Share (%) defined as:
Participant's Participant's
Bonus % x (CAF x #* * *% + Personal x #* * *%)
Objectives
Achievement
# percentage see Attachment A
3. PIB = Participant's Incentive Bonus defined as: (example)
Participant's
Individual x PPS = PERSONAL INCENTIVE BONUS
Base Salary (subject to Override calculation)
B. EXAMPLE ONLY:
Director-BU at $* * * base with * * *% bonus % and personal objectives
achievement of 89%. HYPOTHETICAL
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* * * Confidential treatment has been requested for portions of this exhibit.
The copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
AOP RESULT ACHIEVEMENT % CAF
--- ------ ------------- ---
Bookings $* * * $64.3M * * *%
Net Sales $* * * $75.0M * * *% * * *%
Operating Margin $* * * $ 1.1M * * *%
PPS = (* * *%) X (* * * % x * * *% + 89% X * * *%)
(* * *%) X (* * *% + * * *%) = * * *%
PIB = $* * * X * * *% = $* * *.- = PERSONAL INCENTIVE BONUS
VI. DEFINITION OF BASE PAY
An individual's eligible gross earnings for the Plan Year (exclusive of
overtime, shift premiums, car allowance, bonuses, etc.) will be used in
calculating the bonus payment. Participants who enter the KMBP during
the year will receive a pro-rated payout based on the number of
completed weeks in the plan year.
VII. PLAN YEAR
The Plan Year nets from December 28, 2003 - December 25, 2004.
VIII. MISCELLANEOUS PROVISIONS
A. ADMINISTRATION
The Chairman of the Board of Directors and the Board Compensation
Committee shall have full power and authority to administer and
interpret the plan and to adopt such rules and regulations consistent
with the terms of the Plan as they deem necessary or advisable to carry
out the provisions of the Plan. The CEO/President may appoint an
Administrator of the Plan and delegate to such Administrator power to
administer and interpret the Plan as to such matters as the
CEO/President may deem necessary.
B. TERMINATION OF EMPLOYMENT
In order to be eligible for the bonus, an employee must be employed
with the Company on the date payouts for the designated plan year
occur. If prior to the end of the award period a participant's
employment terminates by way of retirement, normal retirement date,
death, or total and permanent disability (as determined under the
Company's Long- Term Disability Plan), and the participant would have
been entitled to the payment of the award if his/her employment had not
so terminated, payment of the award shall be pro-rated based on the
number of months of the award period during which the participant was
an employee. If a participant's employment terminates by reason of
death, payment of the award shall be made to the person(s) designated
as the participant's beneficiary under the Company 401(k) Retirement
Plan, and if there is none, to the participant's estate.
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* * * Confidential treatment has been requested for portions of this exhibit.
The copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
C. SALE OF COMPANY
If the Company is sold, or if the Company is a party to a merger or
consolidation in which it is not the surviving company, all awards will
be deemed to have been earned at 100% of the target value for the
current year and will be paid to the applicable participant at that
point.
D. TRANSFER OF RIGHTS
The rights and interests of a participant under the Plan may not be
assigned or transferred except by will and the laws of descent or
distribution.
E. RIGHT TO EMPLOYMENT
Participation in the Plan shall not confer on any employee the right to
continued employment in the same or any other capacity.
F. RIGHTS TO PLAN
No employee or other person shall have any claim or right to be granted
an award under the Plan, nor shall participation in the Plan in one
year grant any right to participate in the Plan in any subsequent year.
G. WITHHOLDING
The Company shall have the right to deduct from all awards paid under
the Plan any federal, state, local, or foreign taxes required by law to
be withheld with respect to such awards.
H. UNALLOCATED FUNDS
Monies that are unallocated due to the personal objectives not being
satisfactorily accomplished, as determined by the CEO/President, will
remain part of the Company's operating funds.
I. AMENDMENT AND TERMINATION
The Board of Directors may amend or suspend the Plan, in whole or in
part, at any time with respect to the current or any subsequent Plan
year.
ATTACHMENT A
FY2004 MANAGEMENT BONUS PLAN GUIDELINES
Title/Responsibility Target % Corporate Target % Personal
- -------------------- ------------------ -----------------
CEO 100 0
Senior Vice-President 80 20
Vice-President-Corp. * * * * * *
Vice-President-B.U. * * * * * *
Vice-President-Tech. L.C. * * * * * *
Director - BU * * * * * *
Director - Tech. I.C. * * * * * *
FY2004 CORPORATE BONUS PLAN TARGETS
BOOKINGS: $* * *
NET SALES: $* * *
OPERATING MARGIN: $* * *
* Includes charges of $6.2M for the new site.
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* * * Confidential treatment has been requested for portions of this exhibit.
The copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as * * *. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.