EXHIBIT 10.65
FY2006
Variable Compensation Plan
Richard Vogel
OBJECTIVES
- ----------
The specific aim of the 2006 Variable Compensation Plan is to focus Sales and
Business Development on Immersion's revenue, operating profit, gross margin
goals and business objectives, and to reward achievement of those goals.
ELIGIBILITY
- -----------
In addition to your base salary, you are eligible to receive quarterly payments
under Immersion's 2006 Variable Compensation Plan as set out in the attached
document titled Attachment A.
Eligibility will be subject to the review and approval of the Director of Human
Resources and both the CFO and CEO. The terms and conditions of this
Compensation Plan will supersede all prior Variable Compensation Plans with
respect to the subject matter herein.
COMMISSION ADMINISTRATION
- -------------------------
The terms and conditions of this plan are effective from the beginning to the
end of the fiscal year. Immersion may cancel, suspend or revise these terms and
conditions 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 commission determinations are all periods of pay in lieu of
notice, severance, or any other post-termination benefits or compensation
period.
EXECUTIVE'S DISCRETION
- ----------------------
The terms of the Variable Compensation Plan (VCP) do 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 VCP payments are at
the discretion of the executive staff, and the provisions of this plan can be
changed at any time, for any reason, including termination of the plan.
VARIABLE COMPENSATION PLAN DEFINITIONS
- --------------------------------------
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.
Cost of Goods Sold is the direct and allocated indirect production costs of
producing goods and services.
Gross Margin (GM) is determined by subtracting the Cost of Goods Sold (COGS)
from the actual sale price of the product. The net result is the GM.
Operating Profit (Loss) is Business Unit Operating Profit (Loss) less corporate
support costs, litigation expenses, intangible amortization and stock based
charges.
Business Unit Operating Profit (Loss) can be defined as the revenue less
departmental cost of goods sold and direct operating expenses for a business
unit. Direct operating expenses are the expenses directly charged to a business
unit including all variable compensation accruals and all allocated departmental
expenses.
MBO's can be defined as business objectives with specific milestones which must
be completed, in strict accordance with the stated terms and conditions
associated with each MBO, to the satisfaction of the GM, CFO and CEO.
Richard Vogel
- ------------------------------------------- ----------------------
Name Date
/s/ Richard Vogel April 18, 2006
- ------------------------------------------- ----------------------
Business Unit Vice President Date
/s/ Stephen Ambler April 19, 2006
- ------------------------------------------- ----------------------
CFO Date
/s/ Victor Viegas April 18, 2006
- ------------------------------------------- ----------------------
CEO Date
/s/ Tino Silva April 18, 2006
- ------------------------------------------- ----------------------
Director of Human Resources Date
Attachment A
VARIABLE COMPENSATION PLAN DESIGN
Summary:
Your commissions are paid based on actual business unit operating profit
for the business segment of the company under your management, plus MBO's
related to inventory and receivable levels.
There is no cap or limit on how much commission can be earned. Commissions
will be paid quarterly as follows:
Quarterly Gross Commissions
- ---------------------------
a. You will receive part of your commissions based on the 2006 Year-To-Date
(YTD) Medical Business Unit Operating Profit PRIOR to any accrual or expense
deduction for your 2006 commission.
The Medical Business Unit Operating Profit prior to any accrual or expense
deduction for your 2006 commission is multiplied by the Variable Compensation
Rate as set out below to calculate the Year-To-Date Payable Amount. The actual
payment for the quarter will be this Year-to-Date Payable Amount less all sums
paid in previous quarters, if any.
YTD Business Unit Operating Profit Variable Compensation Rate (VCR)
- ---------------------------------- --------------------------------
Tier 1 $0 to $322,000 18.0%
Tier 2 > $322,000 3.0%
b. You will receive part of your commissions based on quarterly inventory levels
of the Medical Business Unit. Commission will be paid as set out below if the
Medical Business Unit gross (ie pre inventory reserve) inventory balances (as
included in the Company's financial statements) are below the following levels
at the quarter end date. No payment will be made for a quarter for this goal if
the Medical Business Unit gross inventory level is above the level set out
below.
Quarter end date Gross inventory level Commission payable
- ---------------- --------------------- ------------------
March 31, 2006 $2,000,000 $6,500
June 30, 2006 $1,850,000 $6,500
September 30, 2006 $1,725,000 $6,500
December 31, 2006 $1,600,000 $6,500
c. You will receive part of your commissions based on the Medical Business
Unit's quarterly trade receivables levels as a ratio of the Medical Business
Unit's quarterly revenues, expressed in the form of Days Sales Outstanding
Levels (DSO). Commission will be paid as set out below if gross DSO is below the
following levels at the quarter end date. DSO is calculated as follows: the
Medical Business Unit's gross (pre bad debt reserve) receivable balance (as
included in the Company's financial statements), divided by the Medical Business
Unit's revenues for the quarter (as included in the Company's financial
statements), multiplied by the number of days in the quarter. No payment will be
made for a quarter for this goal if the DSO level is above the level set out
below.
Quarter end date DSO Level Commission payable
- ---------------- --------- ------------------
March 31, 2006 105 days $6,500
June 30, 2006 100 days $6,500
September 30, 2006 90 days $6,500
December 31, 2006 85 days $6,500