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8-K - FORM 8-K - CADENCE DESIGN SYSTEMS INC | f59218e8vk.htm |
EXHIBIT 10.01
SENIOR
EXECUTIVE BONUS PLAN
1. Purpose.
The purpose of the Senior Executive Bonus Plan (the
Plan) is to motivate and reward that individual who
is serving as the Chief Executive Officer (the CEO)
of Cadence Design Systems, Inc. (the Company) and
the individuals who are part of the senior executive staff as
designated by the CEO (collectively, the Executives)
in order to improve the Companys profitability and achieve
the established corporate goals of the Company. Under the Plan,
an Executive may be awarded for each fiscal year of the Company,
or a portion thereof, a performance bonus, described in
Section 4 hereof, which is intended to constitute
performance-based compensation within the meaning of
Section 162(m) of the Internal Revenue Code of 1986, as
amended (the Code).
2. Eligibility.
In addition to the CEO, those individuals who are part of the
senior executive staff as designated by the CEO, at the
CEOs discretion, shall be eligible to participate in the
Plan. Other than the CEO, no person is automatically entitled to
participate in the Plan in any fiscal year, or portion thereof.
Participation in the Plan during any fiscal year, or portion
thereof, does not entitle a participant to participate in the
Plan or any similar plan in the future.
3. Administration of the Plan.
The Plan shall be administered by the Compensation Committee of
the Board of Directors of the Company (the Compensation
Committee) which shall consist of at least two independent
directors of the Company who satisfy the requirements of
Section 162(m) of the Code. The Compensation Committee
shall have the sole discretion and authority to:
(i) administer and interpret the Plan in accordance with
Section 162(m) of the Code as appropriate;
(ii) prescribe the terms and conditions of any awards
granted under the Plan; (iii) adopt rules and guidelines
for the administration of the Plan that are consistent with the
Plan; and (iv) interpret, amend or revoke any such rules
and guidelines. The decisions of the Compensation Committee
shall in every case be final and binding on all persons having
an interest in the Plan.
4. Performance Bonus Amounts.
For each fiscal year, the performance bonus amount payable to
each Executive under this Section 4 is intended to
constitute performance-based compensation for purposes of
Section 162(m) of the Code and shall be based on a target
bonus, in turn based on one or more relevant performance
criteria and the extent to which targets identified for such
criteria are realized. The Compensation Committee shall, for
each fiscal year, approve the target bonus amount for each
Executive, the relevant performance criteria, the respective
targets for such criteria, and the bonus amounts payable
depending upon if and the extent to which such targets are
realized, in accordance with the following rules;
(i) The relevant performance criteria shall include, either
individually or in combination, applied to the Company as a
whole or to individual units thereof, and measured either
absolutely or relative to a designated group of companies or
relative to a pre-established target or a previous years
results (and in each case on a GAAP or non-GAAP basis, if
applicable): (a) cash flow (including measures of operating
or free cash flow), (b) earnings per share (diluted or
basic), (c) earnings per share from continuing operations,
(d) earnings (including but not limited to earnings before
interest, taxes, depreciation and amortization), (e) return
on equity, (f) total stockholder return, (g) return on
capital, (h) return on assets or net assets,
(i) revenue or revenue growth, (j) income or net
income, (k) operating income or net operating income,
(l) operating profit or net operating profit,
(m) operating margin, (n) return on operating revenue,
(o) market share, (p) customer loyalty or satisfaction
as measured by a customer loyalty or satisfaction index
determined by an independent consultant or expert in measuring
such matters, (q) return on investment, (r) stock
price, (s) market capitalization, (t) cash from
operations, (u) product innovation or release schedule,
(v) capital expenditure , (w) working capital,
(x) cost of capital, (y) cost reductions,
(z) bookings and segments of bookings such as net product
bookings, (aa) market penetration, and (bb) technology
development or proliferation.
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(ii) To the extent consistent with Section 162(m) of
the Code, the Compensation Committee (A) may appropriately
adjust any evaluation of performance under a performance
criteria to eliminate the effects of charges for restructurings,
discontinued operations, extraordinary items and all items of
gain, loss or expense determined to be extraordinary or unusual
in nature or related to the disposal of a segment of a business
or related to a change in accounting principle all as determined
in accordance with the applicable accounting provisions, as well
as the cumulative effect of accounting changes, in each case as
determined in accordance with generally accepted accounting
principles or identified in the Companys financial
statements or notes to the financial statements, and
(B) may appropriately adjust any evaluation of performance
under a performance criteria to exclude any of the following
events that occurs during a performance period: (i) asset
write-downs, (ii) litigation, claims, judgments or
settlements, (iii) the effect of changes in tax law or
other such laws or provisions affecting reported results,
(iv) accruals for reorganization and restructuring programs
and (v) accruals of any amounts for payment under this Plan
or any other compensation arrangement maintained by the Company.
(iii) As determined by the Compensation Committee, any
given performance criterion may be measured over all or part of
the fiscal year. If for a fiscal year the Compensation Committee
determines to use only performance criteria measurable over the
entire fiscal year, then it must identify in writing within
ninety (90) days after the beginning of the fiscal year the
target bonus, and the selected performance criteria and targets.
If for any fiscal year the Compensation Committee determines to
use at least one performance criterion to be measured over less
than the entire fiscal year, then the performance bonus for the
fiscal year shall be the bonus calculated for such short
performance period or, if more than one performance period per
fiscal year is involved, then the sum of the bonuses calculated
separately for each short performance period ending with or
within the fiscal year. In that case, on or before the date
which represents 25 percent of the total number of days in
such short performance period, the Compensation Committee shall
identify in writing the target bonus, the selected performance
criteria, and the targets applicable to such period.
(iv) The Compensation Committee may in its discretion
direct that any performance bonus be reduced below the amount as
calculated above. Further, the Compensation Committee may in its
discretion increase the amount of compensation otherwise payable
to any Executive upon satisfaction of the designated targets if
such Executive is not covered by Section 162(m) of the Code.
5. The Payment of Bonuses.
Notwithstanding the foregoing, the maximum aggregate amount
payable under this Plan to any Executive for any fiscal year as
a performance bonus shall be $5,000,000. The bonus or bonuses
for a fiscal year (including all short performance periods
ending with or within such year) shall be paid as soon as
practicable following the approval of such bonuses following the
end of such year or short performance period, as the case may
be. No performance bonus under Section 4 hereof shall be
paid unless and until the Compensation Committee makes a
certification in writing that the performance criteria and
targets have been satisfied as required by Section 162(m)
of the Code. Further, unless otherwise provided in a written
agreement with an Executive, the Executive must be employed by
the Company on the date that bonus payments are distributed for
a fiscal year or short performance period, as the case may be,
or have terminated employment prior to that time solely on
account of death or disability. If an Executive is entitled to
payment of a performance bonus under Section 4 hereof, but
was not employed by the Company for the entire fiscal year or
short performance period, as the case may be, he or she may, at
the discretion of the Compensation Committee, receive a prorated
amount of the bonus amount payable as though he or she were
employed for the entire year determined as follows: (i) if
the performance period for such bonus is the entire fiscal year,
the full year bonus amount shall be multiplied by a fraction,
the numerator of which is the number of days the Executive was
employed by the Company during the fiscal year and the
denominator of which is the number of days in the entire fiscal
year; or (ii) if the bonus for the fiscal year represents
the bonus or sum of bonuses computed separately for each short
period within the fiscal year, then the bonus otherwise payable
for each short period shall be multiplied by a fraction, the
numerator of which is the number of days the Executive was
employed by the Company during such short period and the
denominator of which is the total number of days in such short
period.
6. Amendment and Termination.
The Compensation Committee may terminate the Plan at any time,
for any and no reason, and may also amend the Plan in order to
reduce the amount of any Executives bonus payments at any
time, for any or no reason.
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7. Cadence Design Systems, Inc. Clawback
Policy.
All amounts earned under the Plan and paid on or after
January 1, 2010 are subject to the Cadence Design Systems,
Inc. Clawback Policy as in effect from time to time, a current
copy of which may be requested from the Company at any time, and
the terms and conditions of which are hereby incorporated by
reference into this Plan.
8. Section 409A of the Code.
To the extent applicable, it is intended that this Plan and any
awards granted hereunder either be exempt from the requirements
of, or else comply with the requirements of, Section 409A
of the Code and any related regulations or other guidance
promulgated with respect to such Section by the
U.S. Department of the Treasury or the Internal Revenue
Service. Any provision that would cause any award granted
hereunder to incur additional taxes under Section 409A of
the Code shall have no force or effect until amended to comply
with Section 409A of the Code, which amendment may be
retroactive to the extent permitted by Section 409A of the
Code.
9. No Right to Employment, Reelection or Continued
Service.
Nothing in this Plan or a bonus granted hereunder shall
interfere with or limit in any way the right of the Company to
terminate any participants employment, service on the
Board of Directors or service for the Company at any time or for
any reason not prohibited by law, nor shall this Plan or a bonus
granted hereunder itself confer upon any participant any right
to continue his or her employment or service for any specified
period of time. Neither a bonus awarded hereunder nor any
benefits arising under this Plan shall constitute an employment
contract with the Company.
10. Unfunded Plan.
The Plan is intended to be an unfunded plan. Participants are
and shall at all times be general creditors of the Company with
respect to their bonus awards, if any. If the Compensation
Committee or the Company chooses to set aside funds in a trust
or otherwise for the payment of bonuses under the Plan, such
funds shall at all times be subject to the claims of the
creditors of the Company in the event of its bankruptcy or
insolvency.
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