EXHIBIT 10.16
DATA I/O CORPORATION
MANAGEMENT INCENTIVE COMPENSATION PLAN
ARTICLE I
PURPOSE AND EFFECTIVE DATE
This Management Incentive Compensation Plan (the "Plan") is intended to promote
the interests of Data I/O Corporation by stimulating the efforts of key
management staff through the opportunity to share in the success of the Company.
This Plan is effective January 1, 1994.
ARTICLE II
DEFINITIONS
2.1 "Administrator" shall mean the Compensation Committee of the Board.
2.2 "Annual Base Pay" shall mean with respect to a Participant the
Participant's base pay earnings during the Plan Year including pay for
vacation, holidays, and sick leave and excluding pay for overtime, bonuses,
relocation, and other similar additional pay.
2.3 "Board" shall mean the Board of Directors of Data I/O Corporation, a
Washington corporation.
2.4 "Company" shall mean Data I/O Corporation and all of its subsidiaries.
2.5 "Compensation Committee" shall mean the Compensation Committee of the
Board.
2.6 "Earnings Per Share" shall mean pre-tax income per the audited year end
financial statements, less any gains and losses on sales or disposals of
assets not occurring in the normal course of business, less taxes, at a
pre-determined rate, divided by the annual weighted average shares
outstanding per the audited financial statements. Due to the exclusion of
gains and losses on the sale or disposal of assets and income taxes
being calculated at a pre-determined rate, the earnings per share for
purposes of this plan may not equal those per the audited financial
statements.
2.7 "Employee" shall mean any person employed by the Employer in any capacity.
2.8 "Employer" shall mean the Company.
2.9 "Guideline" shall mean the percentage of Annual Base Pay which the
Participant can receive in incentive compensation if the Company achieves
its Target. The Guideline shall be approved by the Administrator based on
the following table:
Management level Guideline %
---------------- -----------
Officer 30% - 50%
Director 20% - 25%
Manager 10% - 20%
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2.10 "Participant" shall mean any Employee who meets the eligibility
requirements set forth in Article III.
2.11 "Plan" shall mean the Management Incentive Compensation Plan set forth
herein.
2.12 Plan Year" shall mean the period commencing on January 1 and ending on the
following December 31.
ARTICLE III
ELIGIBILITY
An Employee is eligible to participate in the Plan during a Plan Year if:
(a) The Employee is not a participant in any other commission, incentive or
bonus plan for the Plan Year (being a recipient of a spot award or a
service award does not eliminate eligibility); and
(b) As of the end of the Plan Year the Employee is employed on the payroll of
the Company; and
(c) Is employed as a REGULAR full time or part time employee (not temporary or
contract employee); and
(d) The Employee is a direct report to an elected officer of the Company or a
direct report of a direct report of an Officer of the Company; and
(e) The Employee has an annual base salary in excess of $60,000.
ARTICLE IV
TARGET PAYOUT CALCULATION
4.1 "Target" is stated in terms of Earnings Per Share and is set annually by
the Administrator at a level which may or may not correspond to the
Company's operating plan for earnings per share for that year.
4.2 Payout at Target is equal to Guideline percent of Annual Base Pay.
Payouts between Threshold and Target and between Target and Maximum are
prorated linearly.
4.3 "Threshold" is the minimum performance level at which a payout under the
Plan will be made. Threshold is set annually by the Administrator and is
represented as a percent of the Earnings Per Share Target. Payout when
Threshold is met is set annually by the Administrator and is represented
as a percent of Guideline.
4.4 "Maximum" is the performance level at which the payout under the Plan
discontinues to increase. Maximum is set annually by the Administrator
and is represented as a percent of the Earnings Per Share Target. Payout
when Maximum is met is set annually by the Administrator and is represented
as a percent of Guideline.
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ARTICLE V
PAYMENT
5.1 Payouts shall be paid by the Company as soon as practicable after the end
of the Plan Year. The Company shall use its best efforts to make such
payments by March 15 following the end of the Plan Year.
5.2 Notwithstanding anything in the Plan to the contrary, the Company shall
withhold from all payments made under the Plan any amount which the Company
is required to withhold for any applicable state, federal, or local taxes.
ARTICLE VI
ADMINISTRATION
6.1 The Plan shall be administered by the Administrator. The Administrator
shall interpret the Plan and may from time to time make such decisions and
adopt such rules and regulations for amending or interpreting the Plan as
it deems appropriate.
6.2 The Administrator shall have complete authority to determine, in
accordance with the provisions of the Plan, the existence or non-existence,
nature and amount of the rights and interest of the Employee and his
beneficiaries under the Plan. In any action or proceeding affecting the
Plan, the Administrator shall be the only necessary party, and no employee
or former employee of the Employer or any other person having or claiming
to have an interest under the Plan shall be entitled to any notice or
process. Any judgment which may be entered in any such action or proceeding
shall be binding and conclusive on all persons having or claiming to have
any interest under the Plan.
ARTICLE VII
INDEMNIFICATION
The Company shall defend, indemnify, and hold all officers and directors of the
Company, the Administrator, and all members of the Compensation Committee
harmless from and against any and all loss, liability, damage and/or deficiency
(including, without limitation, reasonable attorney's fees) arising out of the
establishment or operation of this Plan.
ARTICLE VIII
AMENDMENT AND TERMINATION
The Administrator shall have the power, right and authority to amend,
discontinue, or terminate the Plan in its sole discretion; provided no accrued
payouts as of the end of a Plan Year may be reduced on account of any amendment
or action of the Administrator.
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ARTICLE IX
MISCELLANEOUS
9.1 Source of Funding. The rights of a Participant to benefits under the Plan
shall be solely those of an unsecured creditor of the Company and all
benefits payable under the Plan shall be paid from the general funds of the
Company.
9.2 This agreement shall not be deemed to constitute a contract of employment
between any employee and the Company nor shall any provision restrict the
right of the Company to discharge any employee, or restrict the right of
any employee to terminate his employment with the Company.
9.3 A Participant or beneficiary shall have no right to transfer, assign,
encumber, hypothecate, pledge, put up as collateral for a loan, or
otherwise dispose of his right to receive payments under the Plan.
9.4 The provisions of the Plan shall bind and inure to the benefit of the
Company and its successors and assigns.
9.5 All expenses and costs in connection with the adoption and administration
of the Plan shall be borne by the Company.
9.6 The provisions of the Plan shall be governed by and construed in
accordance with the laws of the State of Washington. Invalidation of any
one or the provisions of the Plan for any reason shall in no way affect the
other provisions hereof, and all such other provisions shall remain in full
force and effect.
DATA I/O CORPORATION
By //S//Steven M. Gordon
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Its Chief Financial Officer
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Date: February 7, 1995
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