EXHIBIT 10.1
MICROCHIP TECHNOLOGY
INCORPORATED
MANAGEMENT INCENTIVE COMPENSATION
PLAN
(as amended by the Board of
Directors on August 14, 2008)
1.
Purposes of the Plan . The Plan is intended to
increase shareholder value and the success of the Company by
motivating our key management and senior technical employees to:
(1) perform to the best of their abilities, and
(2) achieve the Company’s objectives. The
Plan’s goals are to be achieved by providing such personnel
with incentive awards based on the achievement of goals relating to
the performance of the Company, on the achievement of individual
performance goals, retention-based bonuses, or nonrecurring awards
for performance beyond that expected.
2.
Definitions .
(a) “
Award ” means, with respect to each Participant, the
award determined pursuant to Section 7(a) below for a
Performance Period. Each Award is determined by a Payout
Basis for a Performance Period, subject to the Committee’s
authority under Section 7(a) to increase, eliminate or reduce the
Award otherwise payable.
(b) “
Base Salary ” means as to any Performance Period, the
Participant’s annualized salary rate on the last day of the
Performance Period. Such Base Salary shall be before
both (a) deductions for taxes or benefits, and
(b) deferrals of compensation pursuant to Company-sponsored
plans.
(c) “
Board ” means the Board of Directors of the
Company.
(d) “
Cash Position ” means the Company’s level of
cash and cash equivalents.
(e) “
Code ” means the Internal Revenue Code of 1986, as
amended.
(f) “
Committee ” means the Compensation Committee of the
Board, or a sub-committee of the Compensation Committee, which
shall consist solely of two or more members of the Board who are
not employees of the Company and who otherwise qualify as
“outside directors” within the meaning of Section
162(m).
(g) “
Company ” means Microchip Technology Incorporated or
any of its subsidiaries (as such term is defined in Code Section
424(f)).
(h) “
Earnings Per Share ” means as to any Fiscal Quarter or
Fiscal Year, the Company’s or a business unit’s Net
Income, divided by a weighted average number of common shares
outstanding and dilutive common equivalent shares deemed
outstanding, determined in accordance with generally accepted
accounting principles.
(i) “
Fiscal Quarter ” means a fiscal quarter of the
Company.
(j) “
Fiscal Year ” means a fiscal year of the
Company.
(k) “
Gross Margin ” means the Company’s or a business
unit’s net sales for the Fiscal Quarter or Fiscal Year less
the Company’s or a business unit’s, as applicable, cost
of goods sold for the Fiscal Quarter or Fiscal Year, determined in
accordance with generally accepted accounting
principles.
(l) “
Net Income ” means as to any Fiscal Quarter or Fiscal
Year, the income after taxes of the Company for the Fiscal Quarter
or Fiscal Year determined in accordance with generally accepted
accounting principles.
(m) “
Operating Cash Flow ” means the Company’s or a
business unit’s sum of Net Income plus depreciation and
amortization less capital expenditures plus changes in working
capital comprised of accounts receivable,
inventories,
other current assets, trade accounts payable, accrued expenses,
product warranty, advance payments from customers and long-term
accrued expenses, determined in accordance with generally accepted
accounting principles.
(n) “
Operating Expenses ” means the sum of the
Company’s or a business unit’s research and development
expenses and selling and general and administrative expenses during
a Fiscal Quarter or Fiscal Year.
(o) “
Operating Income ” means the Company’s or a
business unit’s income from operations determined in
accordance with generally accepted accounting
principles.
(p) “
Participant ” means an employee of the Company
participating in the Plan for a Performance Period.
(q) “
Payout Basis ” means as to any Performance Period, the
criteria established by the Committee pursuant to Section 5 in
order to determine the Awards (if any) to be paid to Participants.
The Payout Basis may contain discretionary elements to reward
additional performance as recommended by the CEO and approved by
the Committee. The criteria may differ from Participant
to Participant, or between groups of Participants.
(r) “
Performance Goals ” means the goal(s) (or combined
goal(s)) determined by the Committee (in its discretion) to be
applicable to a Participant with respect to an Award. As
determined by the Committee, the Performance Goals applicable to an
Award may provide for a targeted level or levels of achievement
based upon one or more of the following measures, but not limited
hereto: Cash Position, Earnings Per Share, Gross Margin, Net
Income, Operating Cash Flow, Operating Expenses, Operating Profit,
Return on Assets, Return on Equity, Return on Sales, Revenue
Growth, and Total Stockholder Return. The Performance
Goals may differ from Participant to Participant and from Award to
Award. The Committee may appropriately adjust any
evaluation of the performance under a Performance Goal to exclude
(i) any extraordinary non-recurring items as described in
Accounting Principles Board Opinion No. 30 and/or in
management’s discussion and analysis of financial conditions
and results of operations appearing in the Company’s
quarterly and annual reporting with Securities and Exchange
Commission for the applicable year, or (ii) the effect of any
changes in accounting principles affecting the Company’s or a
business unit’s reported results.
(s) “
Performance Period ” means any Fiscal Quarter or
Fiscal Year, or such other longer period but not in excess of five
Fiscal Years, as determined by the Committee in its sole
discretion.
(t) “
Plan ” means this Performance Bonus Plan.
(u) “
Plan Year ” means the Company’s fiscal
year.
(v) “
Return on Assets ” means the percentage equal to the
Company’s or a business unit’s Operating Income before
incentive compensation, divided by average net Company or business
unit, as applicable, assets, determined in accordance with
generally accepted accounting principles.
(w) “
Return on Equity ” means the percentage equal to the
Company’s Net Income divided by average shareholder’s
equity, determined in
