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EXHIBIT 10.10
GENERAL SEMICONDUCTOR, INC.
MANAGEMENT INCENTIVE PLAN
1. Purpose
The purpose of the Management Incentive Plan is to enhance the
ability of General Semiconductor, Inc. to attract, motivate, reward and retain
key employees, to strengthen their commitment to the success of the Company and
to align their interests with those of the Company's stockholders by providing
additional compensation to designated key employees of the Company based on the
achievement of performance objectives. To this end, the Management Incentive
Plan provides a means of rewarding participants primarily based on the
performance of the Company and its Business Units and secondarily based on the
achievement of personal performance objectives.
2. Eligibility
Participation in the Plan for a Performance Period shall be
limited to those Employees who, because of their significant impact on the
current and future success of the Company, the CEO selects, in accordance with
Section 4, to participate in the Plan for that Performance Period.
Notwithstanding the foregoing, Officers shall participate in the Plan in every
Performance Period.
To be eligible to participate in the Plan in any Performance
Period an Employee shall have had at least 30 days active tenure during such
Performance Period and be actively employed by the Company on the Award payment
date (except as provided in Sections 6 and 7).
Employees shall participate in only one short-term cash or
sales incentive plan for any specific period in time. For example, an individual
may not participate in both the Plan and the Company's sales incentive plan at
the same time. An individual may participate in this Plan and another Plan
sequentially during any Performance Period because of promotion or reassignment,
provided that participation in each such plan is pro-rated to reflect (to the
nearest weekly increment) the period during which he or she participated in each
plan.
3. Administration
The administration of the Plan shall be consistent with the
purpose and the terms of the Plan. The Plan shall be administered by the
Committee with respect to Officers and by the CEO with respect to all other
Participants. The Committee and the CEO, as the case may be, shall have full
authority to establish the rules and regulations relating to the Plan, to
interpret the Plan and those rules and regulations, to select Participants in
the Plan, to determine each Participant's Target Award Percentage, to approve
all Awards, to decide the facts in any case arising under the Plan and to make
all other determinations and to take all other actions necessary or appropriate
for the proper administration of the Plan, including the delegation of such
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authority or power, where appropriate; provided, however, that only the
Committee shall have authority to amend or terminate the Plan. The Committee's
and the CEO's administration of the Plan, including all such rules and
regulations, interpretations, selections, determinations, approvals, decisions,
delegations, amendments, terminations and other actions, shall be final and
binding on the Company, their respective stockholders and all employees of the
Company, including the Participants and their respective beneficiaries.
4. Determination of Awards
Prior to, or as soon as practicable following, the commencement
of each Performance Period, the CEO with respect to all Employees other than
Officers shall determine the Employees who shall be Participants during that
Performance Period and determine each Participant's Target Award Percentage and
the Committee shall determine each Officer's Target Award Percentage. The
Company shall prepare schedules, which will be treated as part of the Plan for
that Performance Period, setting forth (a) the Participants during that
Performance Period, (b) each Participant's Target Award Percentage for that
Performance Period, and (c) the Operational Targets (and the allocation among
the Operational Targets) for that Performance Period (which shall be established
before the later of the date on which 25 percent of the term of such Performance
Period has elapsed or the 30th day after the commencement of the such
Performance Period). The Company shall notify each Participant of his or her
Target Award Percentage and the applicable Operational Targets for the
Performance Period. The Committee shall establish the Target Award Percentage
and the Operational Targets for Officers before the later of the date on which
25 percent of the term of the relevant Performance Period has elapsed or the
30th day after the commencement of the such Performance Period.
A Participant earns an Award for a Performance Period based on
(i) the Company's and his or her Business Unit's achievement of the Operational
Targets, and (ii) in the case of Participants other than the CEO, his or her
achievement of personal performance goals. The portion of Awards based on
Company or Business Unit Performance will only be earned if the Company or
Business Unit, as applicable, achieves at least the minimum percentage specified
by the Committee or the CEO, as applicable, of the Operational Target set for
the Performance Period. The Awards for any Performance Period may also be
increased above the Target Award Percentage for achievement in excess of the
Operational Targets for that Performance Period, as specified by the Committee
or CEO, as applicable, for that Performance Period. The Awards of each
Participant may be adjusted upward or downward by twenty percent (20%) by the
Committee or the CEO, as applicable, based upon the CEO's or the Committee's
determination of a Participant's Personal Performance Percentage for that
Performance Period.
5. Changes to the Target
The Committee, with respect to Officers, and the CEO, with
respect to all other Participants, may at any time prior to the final
determination of Awards change the Target Award Percentage of any Participant or
assign a different Target Award Percentage to a Participant to reflect any
change in the Participant's responsibility level or position during the course
of the Performance Period.
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The Committee, with respect to Officers, and the CEO, with
respect to all other Participants, may at any time prior to the final
determination of Awards change the Operational Targets to reflect a change in
corporate capitalization, such as a stock split or stock dividend, or a
corporate transaction, such as a merger, consolidation, separation,
reorganization or partial or complete liquidation; or to equitably reflect
changed business circumstances during the Performance Period; the occurrence of
any extraordinary event; any change in applicable accounting rules or
principles; any change in the Company's method of accounting; any change in
applicable law; any change due to any merger, consolidation, acquisition,
reorganization, stock split, stock dividend combination of shares or other
changes in the Company's corporate structure or shares; or any other change of a
similar nature.
6. Payment of Awards
The Committee shall certify and announce the Awards that will
be paid by the Company to each Officer as soon as practicable following the
final determination of the Company's financial results for the relevant
Performance Period. Subject to the provisions of Section 7, payment of the
Awards certified by the Committee shall normally be made, in a single lump sum
cash payment as soon as practicable following the close of such Performance
Period but in any event within 60 days after the close of the Performance
Period. In the case of all other Participants, as soon as practicable after the
close of a Performance Period, the CEO shall review the Business Units'
financial performance against the Operational Targets for that Performance
Period and, subject to the provisions of Section 7, each Award to the extent
earned shall be paid in a single lump sum cash payment as soon as practicable
after the close of the Performance Period, but no later than 60 days following
the close of the Performance Period.
If a Change in Control occurs, the Company shall, within 60
days thereafter, pay to each Participant in the Plan immediately prior to the
Change in Control (regardless of whether the Participant remains employed after
the Change in Control) an Award which is calculated assuming that all
performance percentages are 100 percent, and such Award shall be prorated to the
date of the Change in Control based on the Participant's Base Salary earned to
the date of the Change in Control.
7. Limitations on Rights to Payment of Awards
No Participant shall have any right to receive payment of an
Award under the Plan for a Performance Period unless the Participant remains in
the employ of the Company through the Award payment date, except as provided in
the last paragraph of Section 6. However, if the Participant has active service
with the Company for at least 30 days during any Performance Period and the
Participant's employment with the Company terminates due to the death,
Disability or Retirement (or, in the event of the Participant's death, the
Participant's estate, beneficiary or beneficiaries as determined under Section
8), the Participant shall remain eligible to receive a prorated portion of any
earned Award, based on the number of weeks that the Participant was actively
employed and performed services during such Performance Period.
8. Designation of Beneficiary
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A Participant may designate a beneficiary or beneficiaries who,
in the event of the Participant's death prior to full payment of any Award
hereunder, shall receive payment of any Award due under the Plan. Such
designation shall be made by the Participant on a form prescribed by the
Committee. The Participant may, at any time, change or revoke such designation.
A beneficiary designation, or revocation of a prior beneficiary designation,
will be effective only if it is made in writing on a form provided by the
Company, signed by the Participant and received by the Company's Human Resources
Department. If the Participant does not designate a beneficiary or the
beneficiary dies prior to receiving any payment of an Award, Awards payable
under the Plan shall be paid to the Participant's estate.
9. Amendment and Termination
(a) The Committee may at any time, or from time to time,
amend, in whole or in part, the Plan. However, no amendment or termination of
the Plan shall adversely affect any Participant's right to or interest in an
Award earned prior to the date of such amendment, unless the Participant agrees
in writing thereto.
(b) The Committee may terminate the Plan, in whole or in part;
however, each Participant shall receive an amount equal to the amount of the
Award that would have been paid for the Performance Period, prorated for the
number of weeks in the Performance Period prior to the date of termination of
the Plan.
10. Miscellaneous Provisions
(a) This Plan is not a contract between the Company and the
Employees or the Participants. Neither the establishment of this Plan, nor any
action taken hereunder, shall be construed as giving any Employee or any
Participant any right to be retained in the employ of the Company. The Company
is under no obligation to continue the Plan.
(b) A Participant's right and interest under the Plan may not
be assigned or transferred, except as provided in Section 8, and any attempted
assignment or transfer shall be null and void and shall extinguish, in the
Company's sole discretion, the Company's obligation under the Plan to pay Awards
with respect to the Participant.
(c) The Plan shall be unfunded. The Company shall not be
required to establish any special or separate fund, or to make any other
segregation of assets, to assure payment of Awards.
(d) The Company shall have the right to deduct from Awards
paid, any taxes or other amounts required by law to be withheld.
(e) Nothing contained in the Plan shall limit or affect in any
manner or degree the normal and usual powers of management, exercised by the
Officers and the Board of Directors or committees thereof, to change the duties
or the character of employment of any
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employee of the Company or to remove the individual from the employment of the
Company at any time, all of which rights and powers are expressly reserved.
(f) The Plan and the rights of all persons claiming hereunder
shall be construed and determined in accordance with the laws of the State of
New York, without giving effect to conflict of law principles thereof.
11. Definitions
(a) "Award" shall mean the incentive award earned by a
Participant under the Plan for any Performance Period.
(b) "Base Salary" shall mean the Participant's base salary,
paid in the performance period. Base salary does not include Awards under the
Plan, long-term incentive awards, imputed income from such programs as executive
life insurance or nonrecurring earnings such as moving expenses and is based on
salary before reductions for such items as contributions under Sections 401(k)
or 125 of the Internal Revenue Code of 1986, as amended, and Company-sponsored
deferred compensation arrangements.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Business Unit" shall mean either the Company, a strategic
function, regional group or other unit of classification, as specified by the
Committee or CEO, as applicable.
(e) "CEO" shall mean the Chief Executive Officer of the
Company.
(f) "Change in Control" shall mean a Change in Control as
defined in the General Semiconductor, Inc. Amended and Restated 1998 Long-Term
Incentive Plan, as amended.
(g) "Committee" shall mean the Compensation Committee of the
Board.
(h) "Company" shall mean General Semiconductor, Inc., and its
Subsidiaries.
(i) "Disability" shall mean permanent disability, as defined
in the Company's long-term disability plan.
(j) "Effective Date" shall mean January 1, 2001.
(k) "Employee" shall mean any person (including an officer)
employed by the Company or any of its Subsidiaries on a full-time salaried
basis.
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(l) "Officer" shall mean the CEO and an officer of the Company
elected by the Board.
(m) "Operational Targets," for any Performance Period, shall
mean the financial performance of the Company, as specified by the Committee or
the CEO, as applicable, as the stock price, earnings per share, net earnings,
operating income, return on assets, net capital employed, shareholder return,
return on equity, growth in assets, unit volume, sales, market share, or
strategic business criteria consisting of one or more Company objectives based
on meeting specified revenue goals, market penetration goals, geographic
business expansion goals, cost targets, customer satisfaction goals, product
development goals, or goals relating to acquisitions or divestitures. In setting
Operational Targets pursuant to Section 4, the Committee or the CEO shall use
objectively determinable Operational Targets based on the foregoing criteria. To
the extent applicable, any such Operational Target shall be determined in
accordance with generally accepted accounting principles and reported upon by
the Company's independent accountants. The Operational Targets established by
the Committee or the CEO may be (but need not be) different each Performance
Period and different Operational Targets may be applicable to different
Participants.
(n) "Participant," for any Performance Period, shall mean an
Officer or Employee selected to participate in the Plan for such Performance
Period in accordance with Section 2.
(o) "Performance Period" shall mean the fiscal year of the
Company or any other period designated by the Committee with respect to which an
Award is earned.
(p) "Personal Performance Percentage," with respect to
Participants other than the CEO for any Performance Period, shall mean the
percentage between 80% and 120%, based on the achievement of the Participant's
personal performance goals, as determined in accordance with Section 4.
(q) "Plan" shall mean this General Semiconductor, Inc.
Management Incentive Plan, as from time to time amended and in effect.
(r) "Retirement" shall mean retirement at or after age 65 or
early retirement with the prior written approval of the Company.
(s) "Subsidiary" shall mean a corporation as defined in
Section 424(f) of the Internal Revenue Code of 1986, as amended, with the
Company being treated as the employer corporation for purposes of this
definition.
(t) "Target Award Percentage" for any Participant with respect
to any Performance Period, shall mean the percentage of the Participant's Base
Salary that the Participant would earn as an Award for that Performance Period
if each of the Operational Target Awards Earned and the Personal Performance
Percentage (if applicable) for that Performance Period is 100%, and shall be
determined by the Committee with respect to Officers and by the CEO with respect
to all other Participants, based on the Participant's responsibility level or
the
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position or positions held during the Performance Period; provided, however,
that if any Participant other than an Officer held more than one position during
the Performance Period, then the CEO may designate a different Target Award
Percentage with respect to each position and the Award will be pro-rated to
reflect (to the nearest semi-monthly increment) the period during which such
Participant had each Target Award Percentage.
General Semiconductor, Inc.
Date: February 12, 2001 By: /s/ Ronald A. Ostertag
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Schedule A
EARLY RETIREMENT WINDOW BENEFIT
Notwithstanding any provision of this Plan to the contrary, any
Window-Eligible Participant (as defined in Item 1 below) who (i) makes a proper
"Early Retirement Window Election" (as defined in Item 2 below) during the
period commencing on February 9, 2001 and ending on February 28, 2001, (ii)
executes and does not rescind the release and waiver described in Item 2, and
(iii) has a termination of employment on his "Designated Termination Date" (as
defined in Item 3 below), shall be entitled to receive benefits described in
Item 4 below.
1. "Window-Eligible Participant" means a person who is a full-time
employee of the Company on February 9, 2001 provided that the sum of his age and
years of Vesting Service (as defined in the General Semiconductor, Inc. Pension
Plan for Salaried and Hourly Paid Non-Union Employees) as of March 31, 2001
equals or exceeds 65.
2. Early Retirement Window Election. An "Early Retirement Window
Election" means a written election by a Window-Eligible Participant, on a form
provided by the Company, (i) to terminate employment with the Company on the
Designated Termination Date, and (ii) to execute a release and waiver in the
form provided by the Company. The Early Retirement Window Election must be
received by the General Semiconductor, Inc. Employee Benefits Administrative
Committee no later than February 28, 2001.
An Early Retirement Window Election shall be irrevocable following
the expiration of the applicable rescission period set forth in the Early
Retirement Window Election form.
3. Designated Termination Date. The "Designated Termination Date" of
a Window-Eligible Participant who has made an Early Retirement Window Election
shall be the date, as determined by the Company in its sole discretion, on which
the Window-Eligible Participant must have a termination of employment in order
to receive the benefits described in Item 4 below. Notwithstanding the
foregoing, a Window-Eligible Participant's Designated Termination Date shall not
be earlier than the last day of the applicable rescission period set forth in
the Window-Eligible Participant's Early Retirement Window Election and shall not
be later than May 31, 2001.
4. Continued Plan Participation. A Window-Eligible Participant who
is a participant in the General Semiconductor, Inc. Management Incentive Plan
("MIP") on February 9, 2001 who properly makes an Early Retirement Window
Election, executes and does not rescind the required release and waiver, and has
a termination of employment on his Designated Termination Date shall continue to
participate in the MIP as if he continued to be employed by the Company for the
period for which he is eligible to receive enhanced severance benefits pursuant
to the First Amendment to the General Semiconductor, Inc. Severance Plan
("Severance Plan"). The requirement that a participant in the MIP must be
employed by the Company on the day awards under the MIP are paid is waived with
respect to participants continuing to participate in the MIP under this Item 4.
A participant who is continuing to participate in the MIP under this Item 4 and
is eligible for 78 weeks salary pursuant to the First Amendment to the Severance
Plan shall receive an award under the MIP for 2002 (payable in 2003) equal to
50% of
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the award that would be payable if the participant was employed by the Company
for the full year.
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