2004 Freescale Incentive Plan

Exhibit 10.3

2004 Freescale Incentive Plan

Overview

The 2004 Freescale Incentive Plan (the “Plan”) has been established to motivate select senior officers of Freescale Semiconductor, Inc. (the “Company”) to achieve exceptional financial performance. The Plan provides participants the opportunity to earn special awards with respect to the Company’s performance in the fiscal years ending December 31, 2004 and December 31, 2005 (each a “Plan Year”).

Eligibility

Senior officers and other key employees of the Company or a subsidiary selected by the Compensation Committee of the Board of Directors (“Committee”) shall participate in the Plan. The participation of officers and other key employees who are newly hired during a Plan Year shall be at the discretion of the Committee. To earn an award under the Plan the participant must be (i) active on a Freescale payroll at the end of a Plan Year, (ii) on an approved leave of absence at the end of such year, or (iii) retired or deceased during the Plan Year while actively employed or on an approved leave of absence. Retirement shall be determined in accordance with Company policy.

Administration

The Committee has the authority to manage, administer, amend and interpret the terms of the Plan. All determinations and interpretations made by the Committee shall be binding and conclusive on all participants and their legal representatives.

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Award Calculation

The award amounts earned in each Plan Year, if any, will be based on growth of Revenue and Operating Earnings during each Plan Year. The award in each Plan Year for each participant will be determined by multiplying the participant’s Eligible Earnings for that year by the factor indicated in a matrix established for each year by the Committee that relates the Company’s Revenue and Operating Earnings for that Plan Year. For these purposes, the Revenue of the Company shall be determined in accordance with GAAP and as disclosed in the Company’s annual earnings release for each respective Plan Year. Operating Earnings shall be determined in accordance with GAAP, net of special items, and charges related to divestiture from Motorola will be excluded. Revenue and Operating Earnings of the Company for the 2004 Plan Year shall include Revenue and Operating Earnings earned by SPS prior to the establishment of the Company as a separate entity.

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Payout of Earned Awards

The amount of each participant’s award, if any, for a Plan Year will be determined as soon as practicable after the Company’s annual earnings release for that Plan Year. Any awards determined by application of a factor of .50 or less from the matrix shall be paid in cash as soon as practicable after the determination of the amount of the award. Any award determined by applying a factor in excess of .50 shall be paid 50% in cash as soon as practicable after the determination of the amount of the award and 50% in restricted stock units which vest upon completion of a two-year period of service with the Company from the date of the determination of the amount of the award. At the time of vesting, the Company will issue to the participant a stock certificate for a number of shares of its common stock equal to the number of restricted stock units then credited to the participant’s account. Any fractional restricted stock unit will be paid in cash.

Reserved Shares

The aggregate number of shares of Freescale Class A Common Stock that may be issued under the Plan will not exceed 1 million (subject to adjustment in the event of a stock split, stock dividend, recapitalization, reorganization or similar transaction).

General Provisions

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contract of employment or a contract of any other kind. Nothing in the Plan entitles an employee to any remuneration or benefits not set forth in the Plan nor does it restrict the Company’s rights to increase or decrease the compensation of any employee, except as otherwise required under applicable law.

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