Notice of Grant of Restricted Stock Unit Award under LSI Corporation 2003 Equity Incentive Plan
This agreement is between LSI Corporation and the grantee, granting the grantee a specified number of restricted stock units (RSUs) under the LSI Corporation 2003 Equity Incentive Plan. The RSUs will vest on April 1, 2015, provided the grantee remains employed and certain company performance targets are met, as certified by the Compensation Committee. The number of RSUs that vest may be adjusted based on LSI’s financial performance compared to peer companies. Any unvested RSUs will be cancelled. The agreement also outlines conditions for vesting in the event of a change in control or business acquisitions/dispositions.
Exhibit 10.6.8
| Notice of Grant of Restricted Stock Unit Award Under the LSI Corporation 2003 Equity Incentive Plan | LSI CORPORATION ID: 94 ###-###-#### 1621 BARBER LANE MILPITAS, CALIFORNIA 95035
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| GRANTEE NAME Address Address | Award Number: Grant Date: Number of Restricted Stock Units:
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On the grant date shown above, LSI Corporation granted you the number of restricted stock units shown above under the LSI Corporation 2003 Equity Incentive Plan. If and when it vests, each restricted stock unit entitles you to receive one share of LSI common stock. We typically will withhold some of the shares you would receive when the restricted stock units vest to satisfy applicable tax or similar withholding obligations.
All or a portion of your Award may vest on April 1, 2015 if you have not incurred a Termination of Service prior to that date. Annex A describes how we will determine the portion of your Award, if any, that will vest on that date.
By your signature below, you agree that this award is governed by this Notice of Grant, the attached Restricted Stock Unit Agreement and the LSI Corporation 2003 Equity Incentive Plan. You acknowledge that you have received, read and understand this Notice of Grant, the attached agreement and the plan. You agree to accept as binding all decisions or interpretations of the Board of Directors of LSI or its delegate regarding any questions relating to the plan, this Notice of Grant or the attached agreement.
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| GRANTEE NAME |
| Date: |
Annex A
In order for your award to vest on the date set forth in the notice of grant, each of the following conditions must be satisfied:
| 1. | You must not have incurred a Termination of Service before that date. |
| 2. | LSI’s Revenue Growth must be equal to or better than the Revenue Growth of at least 50% of the Peers. |
| 3. | The Compensation Committee of LSI’s Board of Directors must certify in writing (as contemplated by Section 162(m) of the Internal Revenue Code) that the condition in paragraph 2 was satisfied. |
If these conditions are satisfied, then the full number of Restricted Stock Units shown in the notice of grant shall vest; provided, however, that the Compensation Committee may, in its sole and absolute discretion, on or before the vesting date set forth in the notice of grant, reduce the number of Restricted Stock Units that so vest. The Compensation Committee currently intends to reduce the number of Restricted Stock Units that vest using the following methodology:
| 1. | If LSI’s Adjusted Operating Income Growth is not equal to or better than the Adjusted Operating Income Growth of at least 50% of the Peers, then no Restricted Stock Units will vest. |
| 2. | If LSI’s Adjusted Operating Income Growth is equal to or better than the Adjusted Operating Income Growth of at least 35% of the Peers, then the number of Restricted Stock Units that vest will be reduced to the number obtained by multiplying your Target Award by the percentage determined in accordance with the table below. |
| If LSI’s Adjusted Operating Income Growth is equal to or better than the Adjusted Operating Income Growth of this percentage of the Peers | Then we will multiply your Target Award by the following percentage to determine how many Restricted Stock Units vest: | |
| 35th | 50 | |
| 60th | 100 | |
| 75th | 200 | |
The determination of the Compensation Committee will be final and binding. Any Restricted Stock Units that do not vest will be cancelled. When calculating the performance tests and the number of Restricted Stock Units that vest, we will use the following concepts:
| 1. | No additional Restricted Stock Units will vest if LSI’s Adjusted Operating Income Growth is greater than the Adjusted Operating Income Growth of more than 75% of the Peers. |
| 2. | For purposes of determining the percentage of the Peers that LSI has outperformed on Adjusted Operating Income Growth, we will look at the percentage of the Peer just below LSI and the Peer just above LSI and take the average of the two. |
| 3. | For purposes of determining how many Restricted Stock Units vest, we will use a sliding scale for performance between the levels listed in the table. For example, if LSI’s performance is better than 57% of the Peers, then the payout will be 85% of your Target Award (i.e., you’ll get 50% for exceeding 50% of the Peers, plus 35%, which is 70% of the difference between the payout at 50% performance and 60% performance). |
| 4. | No adjustments to the performance tests will be made if a Peer acquires or disposes of a business or assets. |
| 5. | If, on or before December 31, 2014, LSI disposes of one or more businesses that, in the aggregate, accounted for more than $25 million of LSI’s Revenue in the fiscal year(s) preceding the fiscal year in which the disposition(s) occurred, then the Revenue from the business(es) disposed of will be excluded from the calculation of Revenue for all periods. |
| 6. | If, on or before December 31, 2014, LSI acquires one or more businesses that, in the aggregate account for more than 10% of LSI’s revenue in 2014, then the Compensation Committee will have the discretion to reduce the number of Restricted Stock Units that vest (or make no adjustment) as it deems appropriate in its sole discretion to reflect the acquisition(s) and may consult with the Audit Committee in making any such determination. |
| 7. | For Peers with a December 31 fiscal quarter end, we will use Revenue and Adjusted Operating Income for the 12 months ending December 31 of the relevant year. For Peers with a fiscal quarter that ends on a date other than December 31, we will use Revenue and Adjusted Operating Income for the 12 months ending on the last day of the fiscal quarter ending immediately before December 31 in the relevant year. |
| 8. | To compute Revenue and Adjusted Operating Income, we will use information filed by LSI and the Peers with the U.S. Securities and Exchange Commission in reports on Form 10-Q and Form 10-K. |
| 9. | No fractions of an RSU will vest. If the number of RSUs that would vest is not a whole number, then the number of RSUs that vest will be rounded down to the next whole number. |
| 10. | If a Change in Control occurs and the successor entity assumes this Award, the performance tests in this Award will be deemed met at a level that would result in the payout of your Target Award and your Target Award will vest on the date set forth in the Notice of Grant if you have not incurred a Termination of Service prior to that date. |
| 11. | In the event of any changes in applicable accounting authority, the Compensation Committee will have the discretion to make changes or adjustments it deems appropriate to the performance tests in this Award, or the calculation of those tests, to maintain the original intent of this Award. |
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Capitalized terms in this Annex A have the following meanings:
“Adjusted Operating Income” means a company’s operating income, determined in accordance with US GAAP, excluding the impact of stock-based compensation, amortization of intangibles and restructuring charges.
“Adjusted Operating Income Growth” means the percentage change in a company’s Adjusted Operating Income from 2011 to 2014 (i.e., (2014 Adjusted Operating Income – 2011 Adjusted Operating Income) / 2011 Adjusted Operating Income).
“Peers” means those companies identified on Schedule 1 hereto. If a Peer is acquired or discontinues business operations or does not file financial statements with the SEC prior to the Vesting Date for any relevant period, then that company will not be considered a Peer and will be excluded from the calculations for all periods.
“Target Award” means one half (50%) of the number of Restricted Stock Units indicated in the Notice of Grant.
“Revenue” means revenue determined in accordance with US GAAP.
“Revenue Growth” means the percentage change in a company’s Revenue from 2011 to 2014 (i.e., (2014 Revenue – 2011 Revenue) / 2011 Revenue).
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Schedule 1
Peer Group
| Advanced Micro Devices, Inc. | KLA-Tencor Corporation | |
| Altera Corporation | Lam Research Corporation | |
| Analog Devices, Inc. | Linear Technology Corporation | |
| Atmel Corporation | Marvell Technology Group Ltd. | |
| Avago Technologies Limited | MEMC Electronic Materials, Inc. | |
| Broadcom Corporation | NVIDIA Corporation | |
| Cypress Semiconductor Corporation | ON Semiconductor Corporation | |
| Fairchild Semiconductor International, Inc. | PMC-Sierra, Inc. | |
| International Rectifier Corporation | Xilinx, Inc. | |
| Intersil Corporation |
