Ikanos Communications,Inc. 2006 Sales Compensation Plan For Vice President Worldwide Sales Version 2.7
Exhibit 10.2
[***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
Ikanos Communications, Inc.
2006 Sales Compensation Plan
For Vice President Worldwide Sales
Version 2.7
1. Purpose
1.1. Attraction, retention and motivation. The goal of this plan is to attract, retain, and motivate the best salespeople in the industry through clearly specified sales goals and a pay-for-performance philosophy.
1.1.1. Attraction. Earn higher than the industry norm through the no-cap quarterly revenue-based and margin-based commission and the no-cap annual revenue-based and margin-based commission with multiplier.
1.1.2. Retention. Participants are rewarded with an Annual Commission paid after year end results are final.
1.1.3. Motivation. OEM Design Win Incentives and Strategic Telco Win Incentives
1.2. Communicate the company goals. Another goal of the Plan is to communicate what the company wants you to focus on:
1.2.1. Exceeding quarterly revenue targets
1.2.2. Exceeding quarterly margin targets
1.2.3. Winning strategic Telco tenders
1.2.4. Winning OEM designs and launching new products
1.2.5. Teamwork to meet above goals
1.3. Pay for performance. The company believes in pay for performance and rewards sales performance with a no-cap revenue-based commission plan.
2. Overview
The Ikanos 2006 Sales Compensation Plan is composed of:
2.1. Salary
2.2. Performance Pay
2.2.1. Commission based on meeting Quarterly Target Revenue and Target Margin Goals
2.2.2. Annual Commission based on exceeding Annual Target Revenue and Target Margin Goals
2.2.3. Incentives to win OEM designs and launch new products
2.2.4. Incentives to win strategic Telco tenders
2.3. Stock Options
2.4. Benefits
2.5. Car Allowance
3. Definitions
3.1. Performance Pay—Variable compensation calculated based on performance to goals and typically paid on a quarterly and annual basis.
3.2. FAE—Field Applications Engineers
3.3. Salary—Compensation usually referred to as “Base Salary” paid on a regular basis.
3.4. Commission—Compensation that varies as a function of performance against assigned tasks or goals.
3.5. Benefits—A form of compensation allocated to or for the purchase of employee benefits such as company health care plan/s. In some cases, the employee may pay some portion of the cost of these benefits
3.6. Target Customers—OEM’s, Distributors or Contract Manufacturers that purchase products or services from Ikanos.
3.7. Target OEM Design Wins—Ikanos chipsets that have fulfilled a system vendor’s specifications and have been designed into a specific end product.
3.8. Target Commission—Variable compensation amount limited to a specific time period.
3.9. Quarterly Target Revenue Goal—Quarterly revenue target toward which the effort of an employee is directed.
3.10. Annual Target Revenue Goal—Fiscal year revenue target toward which the effort of an employee is directed.
3.11. Quarterly Target Margin Quota—Quarterly margin target toward which the effort of an employee is directed.
3.12. Annual Target Margin QuotaFiscal year margin target toward which the effort of an employee is directed
3.13. Actual Revenue—Net revenue that has been reported by the company following any necessary review or audit by the Company’s independent CPA’s.
3.14. Actual Margin—Calculated as Net Revenue less cost of revenue as reported on un-audited non-GAAP statement of operations.
3.15. Teamwork—Work and activities of a group of employees who individually contribute to the productivity of the whole.
3.16. Sales Teams—A group of employees associated together in work or activities.
3.17. Shared Quota—a quota that is shared amongst two or more sales people.
3.18. OEM—Original Equipment Manufacturer that typically sells and supports equipment to Telco’s.
4. Eligibility
4.1. Sales managers, sales directors, sales operations managers and sales vice presidents are eligible for commissions and incentives under this Plan while employed by the Company.
4.2. FAE’s are eligible for incentives under this Plan while employed by the Company.
5. Deadlines
5.1. The following Table 1 determines the deadlines involved in the calculation and payment of your commissions and incentives.
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5.2. Adjustments to your Plan Summary for Shared Quotas, OEM Design Win Targets, and Strategic Telco Wins may be approved prior to the beginning of each quarter on the dates below by the CEO.
5.3. In the event that OEM Design Win Claim Forms or Strategic Telco Win Claim Forms are not submitted by the Plan participant before the deadline then the OEM Design Win and/or the Strategic Telco Win shall not be paid for the current quarter.
5.4. Provided that the Plan participants submit their Claim Forms, in the event of a delay in disbursement of payment, you will be eligible for a recoverable draw for the amount of 50% of your performance pay for that quarter.
Table 1. Deadlines
| Deadlines 2006 |
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| Sales—Adjustments to your Plan Summary for the following quarter |
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| Sales—Last day to ship Products |
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| Sales—OEM Design Win and Strategic Telco Win Claim Forms submitted from Sales to Finance |
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| Finance—Complete Review of Claims when submitted |
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| HR, Finance—PANs Completed |
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| HR—CEO signed off |
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| Payroll—Payments Disbursed |
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6. Salary
6.1. The Company will pay you a regular fixed salary paid in 26 (US employees) or 12 (international office employees) pay periods based on your Plan Summary.
7. Commission on Revenue
7.1. Target Revenue. The attached Compensation Plan Summary as published to the Compensation Committee sets your Target Quarterly Revenue and your Target Annual Revenue at the time the 2006 Sales Plan is approved. In the event that the Compensation Plan Summary revenue is increased your Plan Summary revenue target shall not be increased. In the event that the Compensation Plan Summary revenue is decreased, you may be eligible for a change to your Plan Summary if approved by the
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CEO. The Plan Summary lists your Target Quarterly Revenue and Target Annual Revenue. A copy of the Compensation Plan Summary is attached.
7.2. Target Commission. Your Plan Summary lists the dollar amounts of your Target Quarterly Commission and your Target Annual Commission.
7.3. Calculation of Quarterly Revenue Commission. Quarterly Revenue Commission shall be calculated as follows unless otherwise limited in your Plan Summary:
Quarterly Revenue Commission = (Actual Quarterly Revenue/Target Quarterly Revenue)*Target Quarterly Revenue Commission
7.4. Calculation of Annual Revenue Commission. If your Actual Annual Revenue is over 100% of your Target Annual Revenue, then you are eligible for the Annual Revenue Commission. Annual Revenue Commission shall be calculated as follows:
Annual Revenue Commission = 2 * ((Actual Annual Revenue/Target Annual Revenue)-1) * Target Annual Revenue Commission
7.5. No Cap on Commissions. Quarterly and Annual Commission on Revenue shall not be capped.
8. Commission on Margin
8.1. Target Margin. The Compensation Plan Summary as published to the Ikanos Board of Directors sets your Target Quarterly Margin and your Target Annual Margin at the time the 2006 Sales Plan is approved. In the event that the Compensation Plan Summary revenue is increased your Plan Summary revenue target shall not be increased. In the event that the Compensation Plan Summary revenue is decreased, you may be eligible for a change to your Plan Summary if approved by the CEO. The Plan Summary lists your Target Quarterly Margin and Target Annual Margin
8.2. Target Margin Commission. Your Plan Summary lists the dollar amounts of your Target Quarterly Margin Commission and your Target Annual Margin Commission.
8.3. Calculation of Quarterly Margin Commission. Quarterly Margin Commission shall be calculated as follows:
Quarterly Margin Commission = (Actual Quarterly Margin/Target Quarterly Margin) * Target Quarterly Margin Commission
8.4. Calculation of Annual Margin Commission. If your Actual Annual Margin is over 100% of your Target Annual Margin, then you are eligible for the Annual Margin Commission. Annual Margin Commission shall be calculated as follows:
Annual Margin Commission = 2 * ((Actual Annual Margin/Target Annual Margin)-1) * Target Annual Margin Commission
8.5. No Cap on Commissions. Quarterly and Annual Commission on Revenue shall not be capped.
9. OEM Design Win Incentives
9.1. Target OEM Design Wins. Your Plan Summary lists your Target OEM Customers and Products that are eligible for OEM Design Win Incentives. The list includes opportunities to win new OEM customers and to launch new products with existing OEM customers. You may request to have new Design Win opportunities added to your list of targets by submitting an amended Plan Summary to your immediate supervisor. If you have not obtained the appropriate signatures on the amended Plan Summary by the end of the fiscal quarter for the following quarter, your new Design Win opportunities will not be included in your compensation for the following quarter.
9.2. Target OEM Design Win Incentive Amount. Your Plan Summary lists the dollar amount of your OEM Design Win Incentive.
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9.3. Qualifying OEM Design Wins. To qualify for an OEM Design Win Incentive, the OEM customer and product must be listed on your Plan Summary before the beginning of each quarter. Each OEM Design Win shall be assigned a weighting factor measured in points and listed in your Plan Summary. Points shall be assigned in reference to revenue and margin opportunity or by strategic significance.
9.4. Claiming OEM Design Win Incentive. Payments for OEM Design Wins result from timely filed claim forms that meet sales director win requirements submitted to and approved by the finance department.
9.5. Late Claim Forms. If you fail to submit your Claim Form on the dates specified in Table 1 above, then your claim will not be included in that quarter’s compensation. You may submit a new claim form in the following fiscal quarter under this Plan. If you fail to submit your claim form in the fourth fiscal quarter of this year, then your claim will not be included in this year’s compensation calculations.
9.6. Calculation of OEM Design Win Incentive. OEM Design Win Incentives shall be calculated as dollars per point times the Target OEM Design Win points. The dollars per point and points per Target OEM Customer are listed in your Plan Summary.
9.7. OEM Design Win Not Achieved in the Quarter Specified. In the event that an OEM Design Win is not achieved in the quarter specified in your plan summary, the OEM Design Win rolls into the following quarter, including Q4 2005 to Q1 2006.
10. Strategic Telco Win Incentive
10.1. Target Strategic Telco Customers. Your Plan Summary lists your Target Strategic Telco Customers eligible for Strategic Telco Win Incentives. You may request to have new Strategic Telco Win opportunities to be added to your list of targets by submitting an amended Plan Summary to your immediate supervisor. If you have not obtained the appropriate signatures on the amended Plan Summary by the end of the fiscal quarter for the following quarter, your new Strategic Telco Win opportunities will not be included in your compensation for the following quarter.
10.2. Strategic Telco Win Incentive Amount. Your Plan Summary also states the dollar amount of your Strategic Telco Win Incentive.
10.3. Qualifying Strategic Telco Wins. To qualify for this Incentive, the Telco customer must be listed on your Plan Summary before the beginning of each quarter. You may request to have new Target Strategic Telco Win opportunities to be added to your list of targets for the following quarter by submitting an amended Plan Summary to your immediate supervisor. If you have not obtained the required signatures on the amended Plan Summary by the dates set in the Table 1 above in the appropriate quarter, your requested new Target Strategic Telco Wins will NOT be included in your compensation for the following quarter.
10.4. Claiming Payments. Claiming Strategic Telco Payments for Strategic Telco Wins result from timely filed claim forms that meet sales director win requirements submitted to an approved by the finance department.
11. Payment Process
11.1. Operations Sales Manager will provide to finance analyst and assistant controller a summary commission worksheet signed by the VP of WW sales. This summary sheet will list, by eligible sales personnel, the actual revenue by customer, quota, percentage achieved, quarterly revenue commission payment, total design win points, OEM design win incentive payment, and strategic telco incentive payment.
11.2. Finance analyst and assistant controller will sign off on the summary commission worksheet, after validating summaries from detail reports. After signing off, finance
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analyst and assistant controller will obtain CFO and CEO signatures on the summary commission worksheet.
11.3. After the summary commission worksheet has been signed, HR will complete requisite personnel action notices (PANs) and attach originals of signed summary worksheet. VP of HR will sign off on PANs and PANs and summaries will be submitted to Finance for payment.
12. Stock Options
12.1. All FAE’s, sales managers, sales directors, sales operations managers, and sales vice presidents eligible under this Plan qualify for Stock Options at the date of hire and also are eligible for consideration for additional stock options based on their performance during the annual option grant process.
13. Spot Bonus
13.1. All FAE’s, sales managers, sales directors and sales vice presidents are eligible for spot bonuses in accordance with the Company’s bonus policy and practices.
14. First quarter of employment guarantee
14.1. From your employment start date with the Company or any of its subsidiaries to end of your first full fiscal quarter, your Performance Pay as defined in your Plan Summary shall be paid at 100% (pro-rated for the numbers of calendar days you were employed in that quarter).
15. Other Duties
15.1. From time to time you may be assigned to perform other duties. These might include, but are not limited to, such tasks as collecting market research data, arranging press tours, participating in technical standards meetings, language translation, and setting up trade show booths. Such duties are a normal part of your job for which the company pays you a salary. Other duties may be assigned by your supervisor.
16. Employee Benefits
16.1. You will be eligible to participate in the company employee benefits programs - See HR.
17. Termination of Employment
17.1. If your employment is terminated (voluntary or involuntary), you will be eligible for a pro-rated % of your target performance pay calculated as follows:
17.1.1. (Days worked in the quarter / Days in the quarter) * your Earned Quarterly Revenue Commission. (Days are calendar days)
17.1.2. No payment for Annual Revenue Commission.
17.1.3. OEM Design Win Incentive Claim Forms and the evidence of the win must be submitted before your last day of employment for OEM design wins occurring between the first day of the quarter and the date your termination. The dollar amount shall be calculated as specified in Section 8.5.
17.1.4. Strategic Win Incentive Claim Forms and the evidence of the win must be submitted before your last day of employment for OEM design wins occurring between the first day of the quarter and the date your termination. The dollar amount shall be calculated as specified in Section 9.5.
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18. Changes to the Compensation Plan
18.1. The company may change, quotas, commissions, or any other part of this plan at any time.
19. With-Holding
19.1. Commissions paid to employees will be subject to all of the standard with-holding requirements of the country from which they are paid.
20. General Provisions
20.1 This plan does not constitute an employment agreement and does not replace Ikanos’ “at-will” employment policy. This plan supersedes all prior plans.
21. Approvals
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| Chris Smith, Vice President of Human Resources |
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| Rajesh Vashist, President and CEO |
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