|
Exhibit 10.1
CREE, INC.
FISCAL 2009 MANAGEMENT INCENTIVE COMPENSATION PLAN
The following Management Incentive Compensation Plan (the
“Plan”) is adopted by Cree, Inc. and its consolidated
subsidiaries (collectively, the “Company”) for its
fiscal year ending June 28, 2009 (the “Plan Year”):
1. Purpose. The purpose of the
Plan is to motivate and reward excellent performance, to attract
and retain outstanding senior management, to create a strong link
between strategic and corporate operating plans and individual
performance, to achieve greater corporate performance by focusing
on results, and to encourage teamwork at the highest levels within
the organization. The Plan rewards participants with
incentives based on their contributions and the attainment of
specific corporate and individual performance
goals. Incentives may be calculated in part based on a
performance measurement multiplied by the participant’s
annual target award level. Annual target award levels
vary according to the position.
2. Eligibility. The senior level
managers of the Company who report directly to the Company’s
Chief Executive Officer (CEO) and other key managers of the Company
who have been identified by the CEO are eligible to participate in
this Plan upon approval by the Compensation Committee in the case
of executive officers, or by the CEO in all other cases, of such
individual’s target award level for the Plan
Year. Participation in a predecessor incentive
compensation plan does not entitle any Company employee to be
selected for participation in this Plan. If an eligible
participant’s duties and responsibilities materially change
during the Plan Year, the Compensation Committee in the case of
executive officers, or the CEO in all other cases, shall have the
option to terminate the participant’s eligibility to
participate in the Plan or otherwise modify the participant’s
goals and/or incentives due to such change.
3. Plan Awards:
3.1 Target Award Levels. Annual
target award levels are expressed as a percentage of base salary
and vary by position. The target award level specified
for each participant represents the award level for 100%
achievement of all objectives by that participant. The
actual award amount is determined by multiplying the
participant’s base salary during the award period by various
percentages, as provided in Paragraph 3.2 below.
3.2 Determination of
Awards. Except as expressly provided otherwise in this
Plan, each eligible participant’s base salary for all award
periods in the Plan Year will be determined by reference to the
participant’s base salary in effect on the last day of the
first fiscal quarter of the Plan Year (as provided in the
Company’s human resources management system). If
the participant’s base salary changes after the first fiscal
quarter of the Plan Year, the base salary for the award period in
which the change occurs will be the weighted average base salary
for the award period determined by multiplying each base salary in
effect during that award period by a fraction, the numerator of
which is the number of calendar days in the award period on which
such base salary was in effect and the denominator of which is the
number of calendar days in the award period, and the base salary
for all full subsequent award periods will be the new base salary
(subject to any further changes). Awards are determined
based on performance against goals in two
categories: corporate goals, and individual MBO
goals. Unless otherwise approved by the Compensation
Committee in the case of executive officers or by the CEO in all
other cases, 60% of a participant’s target award level will
be allocated to achievement of corporate
annual goals and 40% of a participant’s target
award level will be allocated to achievement of individual MBO
goals. Performance against individual MBO goals will be
measured quarterly on a scale of 0% to 100% and performance against
corporate annual goals will be measured annually on a scale of 0%
to 150%. Actual awards will be determined for each
participant in accordance with the following formulas:
Quarterly Awards: A x B x C x D !
Annual Award: A x B x E x
F
Where:
|
|
A equals the base salary for the award period
|
|
|
B equals the target award level for the participant (expressed
as a percentage)
|
|
|
C equals the percentage of the target award level allocated to
individual performance goals for the fiscal quarter (e.g., ¼
of 40%)
|
|
|
D equals the participant’s aggregate performance
measurement against individual goals for the fiscal quarter
(expressed as a percentage)
|
|
|
E equals the percentage of the target award level allocated to
corporate performance goals for the fiscal year (e.g., 60%)
|
|
|
F equals the performance measurement against corporate goals for
the fiscal year (expressed as a percentage)
|
3.3 Individual MBO Goals. At the
beginning of each fiscal quarter, the CEO will determine the
quarterly corporate financial performance goals, if any, to be
included in each participant’s individual objectives and the
weight to be applied thereto. At the beginning of each
fiscal quarter, each participant will develop performance goals
specific to such individual or to his or her business unit’s
performance for that fiscal quarter and assign a weight to each
goal (expressed as a percentage) such that the aggregate weight of
all goals (including the weight of any quarterly corporate
financial performance goals specified by the CEO) is equal to
100%. The participant's proposed goals and assigned
weights will be submitted to the CEO for
approval. Meeting an individual goal will yield a
performance measurement of 100% for that individual
goal. Not meeting an individual goal will result in a 0%
performance measurement for that goal unless the CEO in his
discretion approves a prorated percentage based on partial
achievement of the goal. Performance measurements for
individual goals will be approved by the CEO and multiplied by the
weight assigned to that goal to arrive at the participant’s
aggregate performance measurement against individual goals for the
fiscal quarter. Any corresponding awards will be paid to
eligible participants following approval of the amount by the
CEO.
3.4 Corporate Goals. Performance
against corporate goals is measured based on the Company meeting or
exceeding the revenue and earnings per share (EPS) targets for the
Plan Year recommended by the CEO and approved by the Compensation
Committee. The performance measurement against corporate
goals will be 0% for the Plan Year unless both the revenue and EPS
targets established for the minimum performance measurement level
are achieved for such award period. After the end of the
Plan Year, the Compensation Committee will assess the
Company’s revenue and EPS results for the Plan Year using
competent and reliable information, including but not limited to
audited financial statements, if available, and will determine in
good faith and in its sole discretion the performance measurement
against corporate goals (expressed as a percentage) for the Plan
Year using a pre-established interpolation schedule. The
performance payout for the award period will be determined based on
the lower of the performance measurement level associated with
revenue results or the performance measurement level associated
with EPS results. The performance measurement percentage
will then be used to determine each participant’s annual
incentive compensation based on achievement of corporate
goals. Any corresponding awards will be paid to eligible
participants following approval of the - 2 -
amount by the Compensation Committee in the case of
executive officers and
|
