Verigy Pay-for-Results Executive Bonus Program Description (Fiscal 2007)
This document describes Verigy's Pay-for-Results program for fiscal year 2007, which provided cash bonuses to executives and key contributors based on business performance. The program, overseen by the Compensation Committee, awarded bonuses if specific financial targets, primarily pro forma operating profit, were met or exceeded during two six-month periods. Eligibility required employment through the end of the bonus period. Bonus amounts were set as a percentage of base salary, with some participants' targets based on company-wide results and others on specific product family performance.
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Exhibit 10.10
Description of Verigy's Pay-for-Results Program
General
The following is summary of the key provisions of Verigy's Pay-for-Results program as in effect during fiscal 2007. There is no formal plan document related to this program.
The pay-for-results program is designed to link the cash compensation for designated executives and other key contributors directly to business performance. The program provides for the payment of cash bonuses above base pay if pre-determined business performance measures are met and/or exceeded.
Administration
The Compensation Committee of the Board administered the program as it related to executives, and approved attainment levels for all participants.
Participation and Eligibility
All executives and certain other key contributors participated in the program during fiscal 2007. To be eligible for payment, participants had to be employed at the last day of the bonus period.
Plan Operation
The program was administered in six-month performance periods that coincided with each half of Verigy's fiscal year. Each participant's target bonus was an amount, equal to a fixed percentage of the participant's base salary. The stated percentage included, in each case, a target of 15% of the participant's base salary that is tied to the same objective as applies to all employees under Verigy's company-wide bonus program. Target bonuses were paid if 100% of all applicable performance measures were met in the performance period.
Performance measures for both periods in fiscal 2007 were achievement of target pro forma operating profit. Pro forma operating margin is calculated for purposes of the program by excluding from GAAP results (i) FAS123R compensation expenses recorded with respect to equity-based compensation; and (ii) restructuring and separation expenses incurred in connection with Verigy's separation from Agilent Technologies, Inc. For certain individuals, the program provided weighting for the financial results associated with the product family with which they are primarily associated while other participants targets were based entirely on overall company-wide results.
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- Exhibit 10.10
