DISCRETIONARY BONUS PLAN
I. PURPOSES OF THE PLAN
1.01 Komag, Incorporated (the "Company") hereby establishes this Discretionary
Bonus Plan ("Plan") as an incentive program pursuant to which discretionary or
other retention-based bonuses may be awarded for one or more fiscal years in
order to retain the services of those employees critical to the Company's
1.02 The Company's compensation programs are designed to retain and motivate
staff through the delivery of competitive cash compensation each year.
Accordingly, the Compensation Committee of the Company's Board of Directors as
plan administrator shall, with the assistance of the Company's management and
such outside compensation specialists as the Compensation Committee may deem
appropriate, undertake a competitive analysis for each fiscal year the Plan
remains in effect. If the analysis for any fiscal year suggests that the level
of cash compensation for that year does not adequately reflect the achievements
of the participants during the plan year, the Company's Board of Directors,
through the Compensation Committee of the Board, may establish a separate bonus
pool to reward those who contributed to the Company's performance. The bonus
distribution will be targeted to those employees considered essential to the
Company's continued financial success who would otherwise be vulnerable to
competitor recruiting by offers of more attractive compensation.
II. ADMINISTRATION OF THE PLAN
2.01 The Plan is hereby adopted by the Company's Board of Directors (the
"Board"), effective January 31, 2005, and shall be administered by the
Compensation Committee ("Committee") of the Board.
2.02 The interpretation and construction of the Plan and the adoption of rules
and regulations for administering the Plan shall be made by the Committee.
Decisions of the Committee shall be final and binding on all parties who have an
interest in the Plan.
III. DISCRETIONARY BONUS POOL
3.01 The Committee shall make an annual assessment of the industry, including
such factors as the financial performance of the Company's competitors, the
expansion plans of those competitors, and a competitive analysis of the
Company's annual cash compensation. Should such analysis suggest that the level
of annual cash compensation for the Company's key employees is not competitive,
resulting in their vulnerability to recruitment by other firms, or should
industry trends reveal that recruiting activity will in the upcoming year be
significant, the Committee shall have full power and authority to create a bonus
pool under the Plan for that fiscal year. The bonus pool shall be in