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FY2005
VARIABLE COMPENSATION PLAN
Mike Zuckerman
OBJECTIVES
The specific aim of the 2005 Variable Compensation Plan is to focus Sales
and Business Development Management on Immersion's revenue goals, and to
reward achievement of those goals.
In addition to his base salary, Mike is eligible to receive quarterly
payments under Immersion's 2005 Variable Compensation Plan.
ELIGIBILITY
Mike is eligible to participate in the 2005 Variable Compensation Plan for
all of 2005.
Eligibility will be subject to the review and approval of the Director of
Human Resources and the President/CEO. This Variable Compensation Plan
replaces all prior Variable Compensation Plans whether established in offer
letters, employment agreements, established for prior periods or the
current period.
COMMISSION ADMINISTRATION
The commission plan is effective from the beginning to the end of the
fiscal year. Immersion may cancel, suspend or revise this program for any
reason at any time.
Payments will be made as payroll checks and will be subject to the usual
mandatory withholding of federal and state income and employment taxes. All
variable compensation payments will be paid approximately 45 days after the
end of each quarter, once the revenues have been finalized, the earnings
have been announced for that quarter, and synchronized with the next
payroll period.
Nothing in this plan shall in any way diminish or limit the Company's right
to terminate the employment of any participant, at-will, at any time. All
employees of the company are employed on an "at-will" basis, which means
that either the employee or the company may terminate the relationship at
any time with the understanding that neither party has the obligation to
base that decision on any reason other than their intent not to continue
the employment relationship.
For purposes of these plans, if for any reason the participant's employment
with Immersion terminates, the last day of work is defined as the last day
on which work duties are actually performed by the participant.
Specifically excluded from eligibility for variable compensation
determinations are all periods of pay in lieu of notice, severance, or any
other post-termination benefits or compensation period.
MANAGEMENT'S DISCRETION
The terms of the Variable Compensation plan does not form part of any
employee's contract of employment and no employee will have or become
entitled to any rights or damages or other compensation during or on
the termination of their employment in respect of the loss or
alteration of any rights or expectations they may have under this plan
at any time. All Variable Compensation payments are at the discretion
of management, and the provisions of this plan can be changed at any
time, including termination of the plan.
VARIABLE COMPENSATION PLAN DESIGN
Summary:
Quarterly Variable Compensation (QVC) payments are paid based on actual
revenue. Revenue is defined as sales that are recognizable by Immersion
for the quarterly period as reported in the quarterly audited financial
statements. It is not cash-in. Development contracts are usually
recognized on a percentage complete basis. Extended warranties and
software maintenance contracts are usually recognized over the life of
the contract. Thus commissions are earned and paid as the revenue is
recognized, as defined above.
In general, QVC is earned based equally on revenue performance for the
current quarter, and on revenue performance year-to-date. You must
achieve at least critical percentages of each metric in order to earn
QVC for that metric. There is no cap or limit on how much QVC can be
earned; it is totally driven by revenue.
Formula:
Mike's variable compensation is based on revenues from the total
revenue generated from Grants and all 3D, Microscribe, Industrial and
Automotive products sold worldwide. Mike has a quarterly quota based on
these revenues, and his Quarterly Variable Compensation (QVC) will be
paid quarterly based on the following computations:
o Quarterly Gross Commission (QGC) will be calculated based on Mike's
Year-To-Date (YTD) Revenue.
o The QGC will equal {the actual YTD revenue at the end of the quarter
less the YTD revenues of the previous quarter} X the Variable
Compensation Rate. Thus the QGC for the quarter is:
Q(n)GC = [Q(n)YTD Revenue - Q(n-1) YTD Revenue] X VCR
The QGC is the maximum Variable Compensation that may be earned in
that quarter. How much of the QGC is actually earned is determined by
the following two variables.
o One half (1/2) of the QGC is earned based on a Quarterly Performance
Factor (QPF). QPF is calculated based on the quarterly revenue as a
percentage of quarterly quota achieved:
o One half (1/2) of the QGC is earned based on a Year-to-Date
Performance Factor (YPF). YPF is calculated based on the YTD revenue
as a percentage of YTD quota achieved.
o Quarterly Variable Compensation (QVC) =
(QGC/2) X QPF
+
(QGC/2) X YPF
**Mike's Quarterly and Annual Performance Factors for 3D/Microscribe/Industrial,
Automotive and Grants are attached below by division (Attachment A).
The above has been read, understood and agreed.
/s/ Michael Zuckerman
------------------------------------------
Mike Zuckerman
/s/ Victor Viegas
------------------------------------------
Vic Viegas, President & CEO
/s/ Tino Silva
------------------------------------------
Tino Silva, Director of Human Resources
Attachment A (1of 2)
3D - Industrial - Microscribe Plan
YTD Revenue Variable Compensation Rate
----------- --------------------------
$0 to $4,500,000 0.5 %
> $4,500,000 2.0 %
Quarterly Quota Achieved QPF
------------------------ ---
0% to 200% 100%
Quarterly Quota Achieved YPF
------------------------ ---
0% to 200% 100%
Quarter Quarter Quota YTD Quota
---------- ---------------- -----------
1 $1,168,292 $1,168,292
2 $1,400,948 $2,569,240
3 $1,666,103 $4,235,343
4 $1,784,760 $6,020,103
Automotive Variable Compensation Plan
YTD Revenue Variable Compensation Rate
----------- --------------------------
$0 to $1,750,000 0.5 %
> $1,750,000 2.0 %
Quarterly Quota Achieved QPF
------------------------ ----
0% to 200% 100%
Quarterly Quota Achieved YPF
------------------------ ---
0% to 200% 100%
Quarter Quarter Quota YTD Quota
---------- ---------------- -----------
1 $341,001 $341,001
2 $426,002 $767,003
3 $476,001 $1,243,004
4 $476,001 $1,719,005
Grant Variable Compensation Plan
YTD Revenue Variable Compensation Rate
----------- --------------------------
$0 & UP 0.5 %
Quarterly Quota Achieved QPF
------------------------- ----
0% to 200% 100%
Quarterly Quota Achieved YPF
------------------------ ---
0% to 200% 100%
Quarter Quarter Quota YTD Quota
---------- ---------------- -----------
1 $125,000 $341,001
2 $125,000 $250,000
3 $125,000 $375,000
4 $125,000 $500,000