EX-10.08.1 8 f80848a8exv10w08w1.txt EXHIBIT 10.08.1 EXHIBIT 10.08.1 CONFIDENTIAL TREATMENT REQUESTED FORMFACTOR, INC. KEY MANAGEMENT BONUS PLAN (2003) I. PURPOSE To further the success of FormFactor, Inc. (hereinafter referred to as the "COMPANY") by enabling the Company to be competitive with the rest of the industry in attracting and retaining key talent and to provide an incentive, in addition to base salary compensation, to those key professionals of the Company who will have a substantial opportunity to influence achievement of major corporate objectives and subsequent Company growth. This will 1) more closely associate the personal interests of such key professionals with Company interests, 2) encourage such key professionals to continue as employees of the Company; and 3) position the Company as a company that provides better-than-market rewards for better-than-market performance. II. DETERMINATION OF BONUS PAYMENT Actual bonus award amounts are based on a combination of specific percentage achievement of corporate objectives and specific percentage achievement of personal objectives. Percentage participation rates are established for each individual based on level of responsibility and scope of work in the organization. Specific bonus target percentages will be established for each plan year. III. CORPORATE OBJECTIVES Due to the economic climate when establishing the 2003 Operating Plan, the Company established an Operating Plan permitting it to address separately the first and second halves of its fiscal year 2003 ("FY2003"). As a result of establishing two half-year operating plans for FY2003, the Company will establish two sets of indicators to measure the achievement of the corporate objectives, one set for the first half of 2003 and one set for the second half of 2003. Attachment A lists the indicators used to measure achievement of the corporate objectives component for the first half FY2003 plan. Each objective has equal weight (1/3). The minimum threshold equals 80% of the target (i.e., no payment for that indicator unless 80% of the target is reached.) The maximum threshold equals 200% of the target (i.e., for any single indicator, no more than 200% of the bonus target amount will be paid). IV. PERSONAL OBJECTIVES Participants will work with their Managers to identify three to five personal objectives to be used as achievement indicators for each individual participating in the Plan. These objectives should be critical to the success of the individual and should tie into the - --------------------- *** Confidential treatment has been requested for portions of this exhibit. The copy filed herewith has been marked to indicate the information subject to the confidentiality request. Omissions are designated as *****. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission. overall Company business priorities. The applicable Senior Vice President (or higher) must approve each individual's personal objectives. The personal objectives component will constitute a pre-determined percentage of the total award depending upon the degree of each participant's actual achievement of personal goals as determined by the appropriate Senior Vice President (or higher). Each participant's manager will determine whether the participant will have one set of personal objectives for FY2003 or two sets of objectives, one for the first half of FY2003 and a separate set for the second half. V. ALLOCATION OF INCENTIVE BONUS A. DEFINITIONS: 1. CAF = Corporate Achievement Factor defined as the average of the percentage achievement of the three corporate objectives (with a minimum of 80% and a maximum of 200% for each objective achieved; if the percentage achievement is less than 80% for a corporate objective, it counts as zero in computing the CAF): Percentage of Bookings Target achieved = % Percentage of Net Sales Target achieved = % Percentage of Operating Margin Target achieved = ______ % Total = % CAF = Total ----- 3 2. PPS = Participant's Proportional Share (%) defined as: Participant's Participant's Bonus % x (CAF x # * * *% Personal x # * * *%) Objectives Achievement # percentage see Attachment A 3. PIB = Participant's Incentive Bonus defined as: (example) Participant's Individual x PPS = PERSONAL INCENTIVE BONUS Base Salary (subject to Override calculation) B. EXAMPLE ONLY: Director-BU at $* * * base with * * *% bonus % and personal objectives achievement of 89%. HYPOTHETICAL - --------------------- *** Confidential treatment has been requested for portions of this exhibit. The copy filed herewith has been marked to indicate the information subject to the confidentiality request. Omissions are designated as *****. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.
PPS = (* * *%) X (* * * % x * * *% + 89% X * * *%) (* * *%) X (* * *% + * * *%) = * * *% PIB = $* * * X * * *% = $* * *.- = PERSONAL INCENTIVE BONUS VI. DEFINITION OF BASE PAY An individual's eligible gross earnings for the Plan Year (exclusive of overtime, shift premiums, car allowance, bonuses, etc.) will be used in calculating the bonus payment. VII. PLAN YEAR The Plan Year nets from December 29, 2002 - December 27, 2003. VIII. MISCELLANEOUS PROVISIONS A. ADMINISTRATION The Chairman of the Board of Directors and the Board Compensation Committee shall have full power and authority to administer and interpret the plan and to adopt such rules and regulations consistent with the terms of the Plan as they deem necessary or advisable to carry out the provisions of the Plan. The CEO/President may appoint an Administrator of the Plan and delegate to such Administrator power to administer and interpret the Plan as to such matters as the CEO/President may deem necessary. B. TERMINATION OF EMPLOYMENT In order to be eligible for the bonus, an employee must be employed with the Company on the date payouts for the designated plan year occur. If prior to the end of the award period a participant's employment terminates by way of retirement, normal retirement date, death, or total and permanent disability (as determined under the Company's Long- Term Disability Plan), and the participant would have been entitled to the payment of the award if his/her employment had not so terminated, payment of the award shall be pro-rated based on the number of months of the award period during which the participant was an employee. If a participant's employment terminates by reason of death, payment of the award shall be made to the person(s) designated as the participant's beneficiary under the Company incorporated Retirement Plan, and if there is none, to the participant's estate. - --------------------- *** Confidential treatment has been requested for portions of this exhibit. The copy filed herewith has been marked to indicate the information subject to the confidentiality request. Omissions are designated as *****. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission. C. SALE OF COMPANY If the Company is sold, or if the Company is a party to a merger or consolidation in which it is not the surviving company, all awards will be deemed to have been earned at 100% of the target value for the current year and will be paid to the applicable participant at that point. D. TRANSFER OF RIGHTS The rights and interests of a participant under the Plan may not be assigned or transferred except by will and the laws of descent or distribution. E. RIGHT TO EMPLOYMENT Participation in the Plan shall not confer on any employee the right to continued employment in the same or any other capacity. F. RIGHTS TO PLAN No employee or other person shall have any claim or right to be granted an award under the Plan, nor shall participation in the Plan in one year grant any right to participate in the Plan in any subsequent year. G. WITHHOLDING The Company shall have the right to deduct from all awards paid under the Plan any federal, state, local, or foreign taxes required by law to be withheld with respect to such awards. H. UNALLOCATED FUNDS Monies that are unallocated due to the personal objectives not being satisfactorily accomplished, as determined by the President, will remain part of the Company's operating funds. I. AMENDMENT AND TERMINATION The Board of Directors may amend or suspend the Plan, in whole or in part, at any time with respect to the current or any subsequent Plan year. ATTACHMENT A FY2003 MANAGEMENT BONUS PLAN MATRIX
- --------------------- *** Confidential treatment has been requested for portions of this exhibit. The copy filed herewith has been marked to indicate the information subject to the confidentiality request. Omissions are designated as *****. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.
