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EXHIBIT 10.31
TABLE OF CONTENTS
SECTION 1: POLICIES & PRACTICES.................................... 3
PURPOSE.......................................................... 3
PREVIOUS PLANS................................................... 3
ELIGIBILITY SCOPE................................................ 3
PARTICIPATION TARGETS............................................ 3
ENROLLMENT....................................................... 4
NEW HIRES........................................................ 4
INTERNAL TRANSFERS............................................... 4
PROMOTION OUTSIDE FOCAL.......................................... 4
PLAN METRICS..................................................... 4
PLAN CHANGES..................................................... 4
REORGANIZATIONS.................................................. 4
PAYMENT CYCLES................................................... 4
VIP CALCULATIONS................................................. 5
TERMINATIONS- VOLUNTARY AND INVOLUNTARY.......................... 5
LEAVES OF ABSENCE-MEDICAL/FAMILY/PERSONAL/SABBATICAL............. 5
COMMUNICATION.................................................... 5
EXCEPTIONS....................................................... 5
PLAN AMENDMENTS.................................................. 6
SECTION 2: VARIABLE INCENTIVE PAY PLANS............................ 7
VIRAGE LOGIC CORPORATE EXECUTIVE PAY PLAN........................ 7
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SECTION 1: POLICIES & PRACTICES
PURPOSE
To enhance shareholder value by promoting strong linkages between employee
contributions and company performance.
To provide a variable pay plan that directly supports the achievement of
company annual business objectives.
PREVIOUS PLANS
Virage Logic Variable Incentive Pay Plan in effect prior to the FY2001 plan
does not apply to results achieved in FY2001.
ELIGIBILITY SCOPE
The following exempt job types with pay grades equal to or higher than E08
are eligible to participate in the FY2001 Virage Logic Variable Incentive
Pay Plan:
E09 President, VP's
E08 Directors
Participants may NOT be enrolled in more than one plan at a time.
Participants must be employed as of the plan payout date with a performance
rating of New in Job, Consistently Meets Peer Performance, or Consistently
Exceeds Peer Performance to be eligible for payout. Employees on
Performance Improvement Plans as of the plan payout date are not eligible
for VIP payout.
o State and Federal taxes are withheld at the supplemental rate
o 401(k) contributions are deducted, if applicable.
PARTICIPATION TARGETS
PAY LEVEL REQUIRED/OPTIONAL PERCENT OF BASE PAY
--------- ----------------- -------------------
E08 Required 15%
E09 Required 25%
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ENROLLMENT
Annual enrollment is completed at the beginning of the Fiscal Plan year. If
there is no enrollment sheet on file with Corporate Compensation by
December 31, 2000 for the FY2001 plan, no portion of the variable component
will be paid for FY2001 performance.
All new VIP participants as of the Focal will be enrolled effective April
2001. An enrollment sheet for new participants must be completed and
forwarded to compensation within 30 days of the Focal effective date.
Any increase in participation level at Focal will be effective April 1,
2001 and does not require a new enrollment form.
NEW HIRES
New employees with VIP participation as part of the hire offer will be
eligible effective the first day of the new quarter following effective
date of hire. An enrollment sheet must be completed and forwarded to
compensation within 30 days of the hire date.
INTERNAL TRANSFERS
Not-applicable
PROMOTION OUTSIDE FOCAL
When promoted from a non-eligible pay level to a pay level eligible for
VIP, VIP (if elected by the manager when optional) is effective the first
day of the new quarter following the promotion effective date. A new
enrollment sheet must be completed and forwarded to compensation within 30
days of the promotion date.
PLAN METRICS
All annual VIP targets are set by executive management, and are subject to
change during the plan year.
PLAN CHANGES
In the event of a material change to an existing plan (to be determined by
the Corporate Compensation Committee), the plan administrator will
coordinate distribution of new plans and enrollment forms to the affected
participants.
REORGANIZATIONS
The Corporate Compensation Committee will make the final decision regarding
plan changes due to reorganizations.
PAYMENT CYCLES
Quarterly VIP payouts are paid by the end of the proceeding month following
the end of the fiscal quarter.
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VIP CALCULATIONS
Quarterly VIP payouts are calculated based on individual target dollars and
achievement of plan objectives. Individual target dollars are determined on
an ongoing basis throughout the plan year. If individual base pay or
quarterly VIP percentage changes, quarterly target dollars change. The VIP
Plan is intended to recognize group performance. Individual payouts are
non-discretionary below E09 (or equivalent) pay grade.
Calculation Example:
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BASE VIP TARGET
DATE ACTION PAY PERCENTAGE CALCULATION DOLLARS
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October 1 Plan Year Begins 100,000 15% 15,000 / 12 mo. 7,500
X 6 mo.
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April 1 Focal Pay Change 105,000 15% 15,750 / 12 mo. 3,938
X 3 mo.
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July 1 Promotion 130,000 25% 32,500 / 12 mo. 8,125
X 3 mo.
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TOTAL ANNUAL TARGET DOLLARS $19,563
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(CERTAIN ONE-TIME CHARGES MAY BE EXCLUDED. THE UNPLANNED FINANCIAL IMPACTS
OF ACQUISITIONS AND DIVESTITURES WILL NOT BE INCLUDED FOR THE YEAR IN WHICH
THEY WERE ACQUIRED. THE BOARD OF DIRECTORS WILL REVIEW QUARTERLY RESULTS TO
ENSURE CONSISTENCY WITH BUSINESS EXPECTATIONS. THE CORPORATE COMPENSATION
COMMITTEE WILL REVIEW PAYOUTS ON A SEMI-ANNUAL BASIS).
TERMINATIONS- VOLUNTARY AND INVOLUNTARY
To be eligible for payout under any FY2001 VIP plan, the participant must
be a Virage Logic employee, or an employee of a subsidiary or branch office
of Virage Logic Corporation as of the payout date.
In the event of an employee's death, participation in any VIP plan will
continue for 30 days following the date of death, or the end of the plan
year, whichever occurs first. Earned prorated VIP payments will be paid to
the employee's estate after the end of the quarterly payout schedule.
LEAVES OF ABSENCE-MEDICAL/FAMILY/PERSONAL/SABBATICAL
Before a personal leave begins, employees must use all accrued PTO hours
until depleted. Once PTO hours are depleted, employees will be placed on an
unpaid leave status. VIP payout calculations will include time charged to
PTO. Quarterly VIP Payouts for employees with leaves of absence less than
or equal to 90 days during FY2001 will not be prorated to exclude the leave
of absence.
Quarterly VIP payouts for employees with unpaid leaves of absence over 90
days in duration during FY2001 will be prorated to exclude the entire leave
of absence.
COMMUNICATION
VIP plan participation is communicated to participants by HR and the
employees' manager at the beginning of the Plan year. Performance
objectives are communicated to participants by the CFO and the Departmental
Managers with approval of the CFO, as soon as the annual targets are
finalized. The CFO on a quarterly basis communicates updates on progress
toward objectives to participants.
EXCEPTIONS
Unique situations that were not anticipated in this document may require an
adjustment to variable compensation. The Corporate Compensation Committee
must approve all
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exceptions.
PLAN AMENDMENTS
This plan reflects company structure at time of plan approval. Virage Logic
reserves the right to amend this plan at any time with reasonable notice.
ROLES
Corporate Compensation Committee Plan Administrator
Adam Kablanian Renae Hogan
Alex Shubat
James R. Pekarsky
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SECTION 2: VARIABLE INCENTIVE PAY PLANS
VIRAGE LOGIC EXECUTIVE PAY PLAN
PLAN TYPE: 50% Revenue / 50% Operating Profit
PLAN YEAR: FY2001
PLAN PURPOSE: The purpose of the Virage Logic VIP plan is to link
employee contributions and company performance.
FY2000 ELIGIBILITY: Employees in Pay Grades E08 - E09
PLAN METRIC: Payout will be determined on achievement of
corporate performance as measured by FY2001 planned
revenue and operating profit each quarter of the
fiscal year. Operating Profit Dollars will be
adjusted for unusual accounting items (stock-based
compensation charges, re-valuation of warrants) as
directed by the Board of Directors.
REVENUE
PAYOUT TABLE: Performance and payout above Plan is capped at 2X. The
payout is interpolated; payout will be rounded to the
nearest whole percent. Individual quarterly payments will be
calculated as follows: (employee's salary paid during the
quarter X employee's VIP percentage X payout %).
OPERATING PROFIT
PAYOUT TABLE: Performance and payout above Plan is capped at 2X. The
payout is interpolated; payout will be rounded to the
nearest whole percent. Individual quarterly payments will be
calculated as follows: (employee's salary paid during the
quarter X employee's VIP percentage X payout %).
SPECIAL NOTE: The minimum quarterly operating profit of 80% of
target (excluding extraordinary charges) must be met first
to qualify for the revenue accelerator otherwise the
revenue payout caps at 100%.