Integrated Mixed Signal Products (56.2% of 2004 revenue)
EX-10.26 3 v06073exv10w26.txt EXHIBIT 10.26 EXHIBIT 10.26 [AMI LOGO] AMI Semiconductor, Inc. Amended Key Manager Incentive Plan (KMIP) 2004 - KEY MANAGER INCENTIVE PLAN (KMIP) -- The KMIP rewards senior management and senior technical leaders who are responsible for and drive the achievement of company objectives. A KMIP incentive is computed as a pre-determined percentage of base salary, and is determined by the financial performance of the company. Additionally, a KMIP incentive can be affected by an Individual Performance Factor. The company must first meet the financial targets in order to fund the incentive. The Individual Performance Factor is a function of individual performance, impact on company results and perceived future contributions to the company while the financial performance of the company under KMIP is measured by Operating Income. - KMIP AND INSIDER TRADING POLICY -- Please note that each participant in the Key Manager Incentive Plan is considered a "Restricted Individual", and is subject to trading windows and blackout periods, as per the AMIS Holdings, Inc., Corporate Policy and Procedure on Insider Trading (see posting found on INsite at http://insite.amis.com/insider_trading/english.shtml). [AMI LOGO] Amended Key Manager Incentive Plan (KMIP) 2004 KMIP Plan Page 2 Table of Contents
ATTACHMENTS: A. MATHEMATICAL REPRESENTATION OF FORMULA FOR CALCULATING KMIP B. KMIP PERFORMANCE FACTOR BONUS AGREEMENT C. SAMPLE KMIP COMMUNICATION LETTER KMIP Plan Page 3 1.0 PURPOSE The purpose of the AMI Semiconductor, Inc. Key Manager Incentive Plan ("Plan") is to reward senior management and senior technical leaders (AMI Semiconductor and its subsidiaries) who are responsible for and drive the achievement of company objectives. 2.0 TERM The term of the Plan is 12 months, commencing on January 1, 2004 and ending December 31, 2004. 3.0 PLAN ADMINISTRATION The Board of Directors of the Company approves the Company's annual Operating Plan including targets for Operating Income. The Compensation Committee of the Company's Board reviews and approves the specific Operating Income targets for KMIP Payouts. Additionally the Compensation Committee reviews and recommends KMIP Incentive Targets, reviews plan results and recommends payouts and Individual Performance Factors for the CEO and CFO for approval by the Company's board of directors. The Compensation Committee also reviews and approves KMIP Incentive Targets, payouts and Individual Performance Factors for other Executive Managers. For non-executive management participants, the Plan will be administered by a Plan Committee consisting of the Senior Vice President of Human Resources, Chief Financial Officer and Chief Executive Officer ("Plan Committee"). The Plan Committee will have responsibility to review and approve the eligibility and target incentive amounts for non-Executive Managers. The Individual Performance Factor for non-Executive Managers is determined by the employee's executive management and the CEO. 4.0 MISCELLANEOUS A. This plan provides guidelines only and is not established to grant to any participant any contractual rights. AMI Semiconductor, Inc. ("AMIS") reserves the absolute right to change this Plan, with or without notice, at any time. B. Nothing in this Plan shall be construed to create or to imply the creation of a term contract between AMIS and any participant nor a guarantee of employment for any specific period of time. C. AMIS reserves the unilateral right to terminate participation in the Plan of any individual(s) at any time, with or without cause and with or without prior written notice. D. All incentive payments under the Plan are subject to the total discretion of AMIS, and, prior to distribution pursuant to the provisions of the Plan, incentive payments may be reduced or eliminated entirely if business considerations of AMIS so require. E. Each participant in the Key Manager Incentive Plan is considered a "Restricted Individual", and is subject to trading windows and blackout periods, as per the AMIS Holdings, Inc., Corporate Policy and Procedure on Insider Trading (see posting found on INsite at http://insite.amis.com/insider_trading/english.shtml). KMIP Plan Page 4 5.0 ELIGIBILITY To be eligible for the KMIP, the following requirements must be met: 1. To receive any payment pursuant to the Plan, the employee must be employed by AMIS throughout the period of time during which the performance criteria set forth in the Plan are measured, and also must be employed by AMIS up to and including the date on which any such payment pursuant to the Plan is made. 2. To receive any payment pursuant to the Plan, the employee must not be participating in any other cash Incentive program. (e.g. Sales or commissioned employees) unless the CEO approves an exception. 4. Participants who receive a performance rating for the plan year of development required (DR) are typically ineligible for payout. 5. For those employees whose termination of employment is due to death, disability, reduction in force, or normal retirement as defined in Belgian Social Security legislation, or as otherwise agreed upon as a result of a Separation Agreement, a pro-rata payment of the incentive may be made, at the discretion of the Committee. 6. Resignation by the employee from AMIS automatically disqualifies the employee from participation in the Plan. 7. Participation in the Plan in no way affects or restricts AMIS's unqualified right at any time to make any organizational changes that it may deem appropriate (including, but not limited to, position reassignment). 8. This Plan will not replace any merit increase eligibility. 6.0 TARGET INCENTIVES A. At the start of the Plan term, a target incentive percentage will be set for each participant, based upon level in the organization. All target incentives are subject to the review and approval of the Committee. B. Target incentives for all participants will be expressed as a percentage of annual base salary as of December 31 of that plan year. C. For purposes of the Plan, "base salary" will be defined as: - Belgium employees will be gross monthly salary x 13.92. - France and Italy employees will be gross monthly salary x 13 - Czech Republic employees will be gross monthly salary x 12.5 - US, UK, Germany and Philippines employees will be gross monthly salary x 12 KMIP Plan Page 5 - The base salary excludes any incentive payments under the Plan or any of the AMIS's other incentive compensation programs, sales incentive programs, differentials, or other payments in addition to base salary. Examples of how incentives are calculated are included in Attachment A. D. For net guaranteed salaried in Belgium, target incentives will be expressed as a percentage of 70% of the annual net guaranteed salary. For purposes of the plan, annual net guaranteed salary will be the net monthly salary of December 31, 2004 x 13.92. The net monthly salary excludes any incentive payments under the plan or any of the AMIS's other incentive compensation programs, sales incentive programs, differentials or other payments in addition to base salary. E. Employees hired into an eligible position during the Plan term will have their target incentive set based upon their level in the organization. Since the target incentive percentage applies to base salary paid during the Plan term, the incentive will be automatically pro-rated from the day they are eligible to participate. An employee hired into an eligible position must start on or before September 30th of the fiscal year to be eligible for the incentive. F. Employees newly promoted into an eligible position during the Plan term will have their target incentive set based upon their level in the organization, similar to a new hire in Part E. above. If the promotion occurs during the focal review period, they will be eligible for the full 12-month KMIP incentive. If the promotion occurs at any other time during the Plan term, the incentive will be pro-rated from the day they are eligible to participate. An employee promoted into an eligible position must be promoted on or before September 30th of the fiscal year to be eligible for any KMIP incentive. G. Employees who are promoted into a higher pay grade while already participating in the KMIP will have their annual target incentive set based upon their post-promotion level in the organization if promoted on or before September 30th of the fiscal year. Employees who are promoted into a higher pay grade while already participating in the KMIP will have their annual target incentive remain at their pre-promotion level in the organization if promoted after September 30th of the fiscal year. Incentive payments will not be pro-rated over two different target incentives. 7.0 AMIS PERFORMANCE OBJECTIVES At the start of the Plan term, AMIS performance objectives for Purposes of the Plan will be set by the CEO, subject to the review and approval of the Board. 8.0 INCENTIVE DETERMINATION A. COMPANY PERFORMANCE FACTOR: The overall annual financial performance of the company will be measured by achievement of minimum and target Operating Income (OI) goals established in the company's Operating Plan for 2004, as approved by the Board. The company performance factor will be calculated as a percentage of target OI achieved above the minimum OI. B. INDIVIDUAL PERFORMANCE FACTOR: The individual performance factor is discretionary and is determined by the CEO/executive management or, for the CEO and the CFO, by the Compensation Committee and/or the Board of Directors. The total performance factor ranges from 0.5 to 1.5 and represents two bonus components. The first bonus component is discretionary pay for individual performance for the plan year, and is a value of between 0.5 and 1.0. The second bonus component is discretionary pay for retention of KMIP Plan Page 6 the key employee for the coming plan year and is any portion of the total performance factor between 1.0 and 1.5. The bonus amount paid for retention is subject to the payback provision described in section D. C. INCENTIVE CALCULATION: The actual incentive is calculated by multiplying the plan participant's year-end base salary by their pre-determined KMIP percentage, their individual performance factor, and the company performance factor. Participants who receive a performance rating for the plan year of "Development Required" (DR) are ineligible for any payout. Examples of how incentives are calculated are included in Attachment A. D. BONUS REPAYMENT AGREEMENT: The portion of KMIP bonus resulting from a performance factor between 1.0 and 1.5 represents a retention bonus for the coming year and is subject to a pro-rated one-year "vesting schedule". While the retention portion of the bonus is paid with the earned KMIP, the employee will be required to repay the unvested portion of the retention component of the bonus if voluntarily terminating employment with AMIS within one (1) year of the bonus payment, as per the KMIP Performance Factor Bonus Agreement (see Attachment B). The repayment agreement states that the repayment amount will be reduced by one/twelfth (1/12) for each full month of AMIS employment the employee completes after receiving the retention component of the KMIP bonus. All KMIP participants must sign the Performance Factor Bonus Agreement before receiving any KMIP payout. E. If the company achieves the overall financial targets, incentive payments will be made in February or March 2005 as the audited financial statements of the Company are approved. KMIP Plan Page 7
