EXHIBIT 10.1
FY05 BONUS PLAN
ANALOG DEVICES U.S.- BASED EMPLOYEES
Analog Devices places great value in sharing our company's success with those
who make it possible--our employees. One of the ways we are able to do this is
through the Analog Devices Bonus Plan. The aim of this Bonus Plan is to
encourage all of us to participate in reaching company goals and to share the
rewards of our achievements.
JERRY FISHMAN
President and CEO
[ANALOG DEVICES LOGO] WWW.ANALOG.COM
THE FY05 BONUS PLAN
Analog Devices is a growth company. Given our focus on the highest growth
segments of the semiconductor industry--analog integrated circuits, digital
signal processing, and micro-electromechanical systems--we believe it is
possible and necessary to grow at rates faster than the industry moving forward.
To achieve this type of growth, we must continue to focus on those products that
not only grow but achieve high profit levels.
Therefore, our Bonus Plan emphasizes one key metric--operating profit before
taxes (OPBT) as a percentage of revenue--which implicitly requires high sales
growth and high return on assets to meet our goals. With our current mix of
business and an eye towards competitive profit margins, our goal this year is to
operate with an OPBT above 27%. The Plan is designed to allow bonus payments to
accelerate substantially when the company increases its operating profit as a
percentage of sales (see graph below).
All employees can contribute to the accomplishment of these goals by enhancing
their productivity, improving efficiency, controlling expenses, minimizing
waste, increasing customer satisfaction, and supporting the design,
manufacturing, and sales processes.
CALCULATING BONUS PAYMENTS
The bonus payout factor is determined by using the percentage of OPBT as a
percentage of sales that we achieve in a given quarter. The bonus amount is
calculated each quarter and paid out semi-annually after the close of the bonus
period. The first bonus period consists of the first and second fiscal quarters;
the second bonus period consists of the third and fourth fiscal quarters. As
indicated in the graph below, if we achieve an OPBT of 27%, then the bonus
factor utilized will be 1.0.
[BONUS PAYMENTS GRAPH]
The maximum payout for the FY05 Bonus Plan is 3.0 times target. For any quarter
during which our OPBT is 20% or less, there will be no bonus payout earned for
that quarter.
To determine the potential individual gross bonus payment for each employee, the
bonus payout factor is multiplied by the eligible employee's accumulated
eligible earnings for the bonus period and the employee's bonus target
percentage. The bonus target percentage used in calculating the bonus may vary
by job grade.
Example:
Accumulated eligible earnings for the bonus period $ 15,000
Bonus target for your job grade 4%
Payout factor for the bonus period 0.8
Gross bonus (before tax) payment: $ 480
15,000 X 4% X 0.8
Earnings included in the bonus calculation:
- - Base pay
- - Holiday pay
- - Shift differential
- - Bereavement pay
- - Sick pay
- - Jury duty pay
- - Vacation pay
- - Alternative work schedule pay
- - Military leave pay
Earnings excluded from the bonus calculation:
- - Overtime pay
- - Bonus payments from a previous bonus period
- - Other payments that are taxable but not considered regular earnings
Bonus payments are not eligible for company basic or matching contributions for
the TIP program.
Bonus payments are made subject to any taxes or other deductions which are
required by law.
BONUS PAYOUT SCHEDULE
Bonus payments are scheduled to be made on a semiannual basis in June and
December, approximately six weeks after the end of 2Q and 4Q.
The Plan is effective from November 2004 through October 2005.
WHO IS ELIGIBLE TO PARTICIPATE?
In general, ADI employees who are actively employed during the applicable bonus
period and remain employed through their last regularly scheduled work day of
the bonus period are eligible to participate in the Bonus Plan. New employees
are eligible to participate in the Plan as of their first full fiscal quarter of
employment.
Employees whose status is any one of the following are ineligible to participate
in the Plan:
- - Employee is already participating in a field sales, field applications
engineering, or other incentive program.
- - Employee voluntarily terminates employment at Analog Devices, or is
involuntary discharged, before the end of the bonus period.
- - Employee receives a "Needs Improvement" or "Marginal" performance rating
(where applicable) during the bonus period.
- - Employee receives a final written warning during the bonus period.
- - Employee is a co-op, or intern, or temporary employee.
HOW CHANGES IN YOUR EMPLOYMENT STATUS AFFECT BONUS PAYMENTS
- - If your job grade and bonus target change during the bonus period:
Your bonus payment will be based on the job grade and bonus target that
are effective at the end of the bonus period.
- - If you change work shifts during the bonus period:
Because shift differential paid during the bonus period is included as
part of your earnings for the bonus calculation, your bonus payment will
take shift differential pay into consideration.
- - If you transfer business units:
If you transfer to another business unit, your earnings records transfer
with you, so your bonus amount is based on the total accumulated eligible
earnings for the bonus period.
- - If you change status between full-time and part-time working hours:
Because your bonus amount is based on your accumulated paid earnings for
the bonus period, your bonus calculation will take into account any change
in status, such as part-time to full-time or full-time to part-time
working hours.
- - If you are on a leave of absence or disability for part of the bonus
period:
The bonus is paid based on your earnings while actively at work during the
period (not on short-term disability, long-term disability, or voluntary
leave of absence). Therefore, any pay received during your leave of
absence will be excluded from your accumulated paid earnings for bonus
calculation purposes.
- - If you are a new employee:
You are eligible for a bonus payment as of the first full fiscal quarter
of employment. For example, if you were hired during 1Q, your bonus
payment for the first half of the year would be based on eligible earnings
for 2Q only--your first full fiscal quarter of employment.
BONUS PLAN DESIGN
The Bonus Plan is designed to reward all eligible employees for contributing to
company-wide business goals during each fiscal year. It also serves as an
incentive for continued employment with Analog Devices.
The Bonus Plan design, or portions of the design, may change as the company's
focus moves to different company-wide performance goals that are determined to
be critical during that fiscal year. The fact that this Bonus Plan is in force
for a particular year is not a guarantee that the Bonus Plan will be offered in
future years. Further, below certain levels, our business results may not be
competitive and may not meet key business performance measures. At these low
levels of business performance, no bonus will be paid.
Unless modified or terminated earlier as provided for in this Plan, all prior
bonus plans have expired of their own terms or have been revoked and withdrawn.
This Plan supersedes all prior written or oral bonus and incentive plans,
promises, agreements, practices, understandings, negotiations, and/or incentive
arrangements.
WORLDWIDE HEADQUARTERS
One Technology Way
P.O. Box 9106
Norwood, MA
02062-9106 U.S.A.
Tel: 781.329.4700
(1.800.262.5643,
U.S.A. only)
Fax: 781.326.8703
ANALOG DEVICES, INC.
EUROPE
c/o Analog Devices SA
17-19, rue Georges Besse
Parc de Haute
Technologie d'Antony
F-92182
Antony Cedex, France
Tel: 33.1.46.74.45.00
Fax: 33.1.46.74.45.01
ANALOG DEVICES, INC.
JAPAN HEADQUARTERS
New Pier Takeshiba
South Tower Building
1-16-1 Kaigan,
Minato-ku, Tokyo
105-6891, Japan
Tel: 813.5402.8210
Fax: 813.5402.1063
ANALOG DEVICES, INC.
SOUTHEAST ASIA
HEADQUARTERS
39/F One Pacific Place
88 Queensway Admiralty,
Hong Kong, PRC
Tel: 852.2506.9336
Fax: 852.2506.4755
The Plan brochure provides a summary of the FY05 Bonus Plan.
If you need further information, please ask your supervisor or
Human Resources consultant. Analog Devices reserves the right
to modify the Bonus Plan at the sole discretion of management.
All changes to the Bonus Plan are subject to the approval of
ADI's Board of Directors.
(C) 2005 Analog Devices, Inc. All rights reserved.
Trademarks and registered trademarks are the property
of their respective owners.
Printed in the U.S.A. BR04730f-1.1-1/05
[ANALOG DEVICES LOGO] WWW.ANALOG.COM