1
Exhibit 10.40
ON SEMICONDUCTOR
2000 MANUFACTURING INCENTIVE PLAN
1. Purpose. The Purpose of the ON Semiconductor 2000 Manufacturing
Incentive Plan ("Plan") is to provide an annual incentive program for the
Manufacturing employees who are normally affiliated with a manufacturing
facility of the Company or any subsidiary. The Plan was effective as of January
1, 2000 and will terminate on December 31, 2000.
2. Administration. The Plan is administered by the Compensation Committee
of the Company's Board of Directors ("Committee"). The Committee has the
discretion to determine all matters related to the Plan, including but not
limited to, matters related to eligibility, participation, Company and Employee
Goals, award determinations, and any other administrative matter to be
determined under the Plan.
3. Eligibility and Participation.
(a) Eligibility. Regular full-time and part-time employees of the
Company or any subsidiary working 20 hours or more per week with a manufacturing
facility of the Company are eligible to participate in the Plan. Any employee of
the Company or a subsidiary who is designated as an on-call, intern, co-op,
part-time working less than 20 hours, or any individual designated as a
contractor, consultant, or hired via a temporary staffing agency is not eligible
to participate in the Plan.
(b) Participation. From among the eligible employees of the Company or
any subsidiary, the Company will determine those individuals who will
participate in the Plan. The Committee will notify those selected to participate
in the manufacturing Plan as soon as practicable after they are determined. If
an employee is determined as eligible, within a manufacturing facility, to
participate in the Plan, except as provided below, he or she must be actively
employed by the Company or any subsidiary at the time that the amounts are paid
under the Plan to be entitled to receive an award under the Plan.
4. Performance Measures.
An employee's total award under the Plan is computed based on (i) the
employee's base salary, (ii) whether the Company achieves its "threshold" EBITDA
goal, and (iii) whether the manufacturing plant meets its manufacturing goals.
EBITDA means the Company's Earnings Before Interest, Taxes, Depreciation, and
Amortization and is determined after December 31, 2000.
(a) Employee's Target Bonus. Under the Plan, an employee's target bonus
amount is determined by the Committee and will generally range from 2% to 10% of
the employee's base salary as of December 31, 2000.
1
2
(b) Company Threshold EBITDA Goals.
(i) For former employees of Cherry Semiconductor, the
Company's EBITDA goals for calendar year 2000, including financial results from
the combined Cherry Semiconductor and the Company, are as follows:
EBITDA GOAL COMPANY EBITDA
Threshold $425,000,000
(ii) For employees of the Company or any subsidiary, other
than former employees of Cherry Semiconductor, the Company's EBITDA goals for
calendar year 2000, not including financial results from Cherry Semiconductor,
are as follows:
EBITDA GOAL COMPANY EBITDA
Threshold $400,000,000
The Committee reserves the right to amend the Threshold EBITDA
goals in the event of a future acquisition, disposition, or other significant
event affecting the Company or any subsidiary.
(c) The Employee's individual performance goals are not a factor
in determining the individual employee's award; the entire award is based on the
Company meeting its EBITDA goals as described above.
5. Award Determination.
(a) Manufacturing goals. Each plant determines the weight of each
measurement category by placing a certain percentage on each of the three
measures: Cycle time; Shipments; and Costs.
(b) EBITDA Goals. If the Company does not achieve the Threshold
EBITDA goal, no amounts will be paid under the Plan (either based on Company
performance or the individual plant's performance).
The Committee will adjust these percentage on a pro rata basis if the
Company's EBITDA falls in between the Threshold, Target, and Stretch EBITDA
goals.
6. Transfers, Promotions, New Hires, and Salary Adjustments.
TYPE OF CHANGE EFFECT ON AWARDS
Move into Eligible Position and New Hires Eligible for participation in Plan
if moved in or hired before December
1, 2000. Award prorated on the basis
of months of service in eligible
position.
Move Into Ineligible Position Award prorated at end of Plan Year
on the basis of months of service in
eligible position.
Move Into Another Eligible Position Award prorated on the basis of
months of service in each position
for the varying target bonus
percentages.
Change of Salary No impact. The employee's base
salary on December 31, 2000
determines the employee's target
bonus percentage.
2
3
7. Effect of Termination on Award. If an employee terminates employment
with the Company or a subsidiary for any reason prior to December 31, 2000, the
employee will not be entitled to receive an award under the Plan. In addition,
an employee must be an active employee of the Company or any subsidiary as of
the date of payment to receive an award under the Plan; provided, however, if
the employee is on an a Company-approved leave of absence, becomes disabled, or
dies before the date of the payment (but after December 31, 2000), the employee
will be entitled to receive a payment under the Plan. If an employee retires
during the calendar year 2000, the employee will be entitled to receive payment,
prorated on the basis of the months of services during that calendar year.
8. Former Cherry Employees. Former Cherry Semiconductor employees may
receive payouts under this plan on a pro-rated basis on the date of the
acquisition or date of hire, which ever is later.
3