InterDigital
Long-Term Compensation
Program
The Company
implemented the Long-Term Compensation Program (the
“Program”) to encourage management and executive level
employees to exercise their best efforts toward ensuring the
success of the Company. All regular full-time and regular part-time
employees (as defined in the Employee Handbook), at or above a
manager or technical equivalent level, are eligible to participate
in the Program.
Compensation Components.
As further described below, the
Program consists of two compensation components: (1) a
Long-Term Incentive providing performance-based cash bonuses (the
“LTI”), and (2) an award of restricted stock units
(“RSUs”).
The LTI
component of the Program rewards grantees based on the
Company’s achievement of performance goals
established/approved by the Compensation Committee of the Board of
Directors.
The RSU awards
provide recipients with an opportunity to share in the growth of
the Company’s value in the marketplace and rewards
participants based on the achievement of performance goals
established by the Compensation Committee. An RSU is a contractual
right to receive a share(s) of InterDigital Common Stock after
completion of a specified time period and, in the case of the
performance-based RSUs, the achievement of certain goals within a
specified period.
Program
Cycle. The Program
consists of overlapping RSU and LTI cycles, each of which are
generally three years in length and recur every other year (a
“Program cycle”).
LTI Cash
Bonuses . Each
participant’s LTI cash bonus target is established as a
percentage of the participant’s annual base salary. Any
payout under the LTI is determined by the Compensation Committee
based on the Company’s achievement of certain performance
goals, as established at the start of each Program cycle and
measured at the end of each Program cycle. The cash LTI payout may
exceed or be less than the targeted amount, depending on the level
of achievement of the performance goals. No payout may be made if
the Company fails to meet the minimum performance criteria
established for the goals during the Program cycle. To be eligible
for a cash payout, an employee must remain continuously employed by
the Company (or an Affiliate of the Company) through the end of the
Program cycle and must continue to be employed at least until the
time the LTI payout is made. For purposes of this Program, an
Affiliate means any other individual, corporation, partnership,
association, trust or other entity that, directly or indirectly, is
in control of or is controlled by or is under common control with
the Company. Payout of the LTI cash bonus will be made no later
than March 15 of the year following the end of each Program
cycle.
RSU
Terms. For all
non-executives, 25% of the total equity award will be in the form
of performance based RSUs (“performance shares”) and
75% will be in the form of time-based RSUs. For all executive level
participants, 50% of the total equity award will be in the form of
performance shares and 50% will be in the form of time-based RSUs.
Participants will receive an RSU Award Agreement setting forth the
terms of each RSU grant along with a copy of the prospectus for the
Plan. In the event of any conflict between this summary and the RSU
award agreement, the RSU award agreement will govern.
For all
non-executives, the time-based RSUs granted in connection with each
three-year Program cycle will vest in equal increments on each
successive January 1 over the three-year period. For example, RSUs
granted at the beginning of the Program cycle that began in
January 2009 will vest as follows: 25% (one-third) of the
total time-vested RSUs on January 1, 2010, 25% on
January 1, 2011 and 25% on January 1, 2012. For all
executive level participants, the time-based RSUs granted in
connection with each Program cycle will vest 100% at the end of
each Program cycle. Settlement for time-vested RSUs will occur on
the first business day following the applicable vest
date.
Performance based RSU awards
For all Program
participants, the performance shares will vest following the end of
the three-year Program cycle in conjunction with a determination by
the Compensation Committee that at least minimum level of
performance was achieved relative to the performance goals
associated with that cycle. Settlement will occur for any such
performance based RSUs as soon as practicable following vesting as
described above, but in no event later than March 15 of the
year in which the relevant cycle ends. To be entitled to the shares
underlying the performance based RSUs, the participant must remain
employed through the end of the Program cycle and also through the
date settlement occurs, based on the Compensation Committee’s
determination that at least a minimum level of performance was
achieved.
New
Program Participants . An employee promoted to a level which
qualifies for participation in the Program for the first time or an
employee that is newly hired within the first two years of a
three-year Program cycle, will be eligible to receive a pro-rata
LTI cash bonus and RSU award. The pro-rata target LTI cash bonus
and RSU award will be determined based on the amount of time
(number of pay periods) remaining in each cycle. For example, a
non-executive employee hired October 1 st of
the first year of a three year Program cycle, would be eligible to
receive 3/12 of that year’s Program eligibility plus
full-year eligibility for the second and third years of the Program
cycle. The LTI (cash) and RSU awards will be paid out and vest
respectively, as described under the sections entitled “LTI
Cash Bonuses” and “RSU Terms.”
Promotion
during Program Cycle. If an employee is promoted within the first six
months of the start of a Program cycle and such promotion results
in an accompanying increase in the Program payout target (LTI
target and RSU award), the benefit of the Program target increase
will be realized retroactive to the beginning of such Program
cycle. If an employee is promoted at any other time during a
Program cycle and such promotion results in an accompanying
increase in the Program payout target (LTI target and RSU award),
the benefit of the Program target increase will be realized at the
beginning of the next applicable Program cycle unless the
Compensation Committee, in its sole discretion, authorizes an
adjustment at a different time.
Effect of
Termination of Employment. In general, any benefits from the Program are
forfeited upon termination of employment by the participant (i.e.,
the participant voluntarily resigns from employment). Benefits may
be vested to some degree, as explained below, where the
participant’s employment terminates due to his or her death,
“disability,” “retirement,” or as a result
of the termination of employment by the Company other than for
“cause” (each as defined below).
Partial
vesting of time-based RSUs: If a participant’s employment terminates
during a year due to death, disability, or retirement, or is
terminated by the Company without cause, time-based RSUs that would
have become vested at the end of that year become vested on a
pro-rata basis based on the portion of the year the participant was
employed. Time-based RSUs that would have become vested at the end
of subsequent years are forfeited entirely. The settlement of a
participant’s time-based RSUs that become vested as described
above will occur as soon as administratively practical after
termination of employment.
Partial
vesting of performance based RSUs and LTI Cash Bonus
: If a participant’s
employment terminates for any reason during the first year of a
three year Program cycle, the participant forfeits eligibility to
receive any LTI cash bonus and all performance based RSUs
associated with that Program cycle. If, however, during the second
or third year of a Program cycle, a participant’s employment
with the Company terminates due to his or her death, disability, or
retirement, or is terminated by the Company without cause, the
participant will be eligible to earn a pro-rata portion of the LTI
cash bonus and performance-based RSUs. The pro-rata portion will be
det
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