EXHIBIT 10.54

Confidential Treatment Requested. Confidential portions of this document have
been
redacted and have been separately filed with the Commission.

 

 

 

 

 

 

 

Centillium Communications, Inc.

 

2006

Executive Bonus Program

 

 

Program Description

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Centillium Communications, Inc.

Executive Bonus Program

Program Description

 

The Centillium Communications, Inc. Executive Bonus Program (the Program) is
intended to reward certain company executives for achievement of stated business
objectives.

The Program is based on a plan year (January 1 through December 31). Payment for
results achieved under the Program will be made annually, normally by March 1 of
the year following the plan year.

 

Eligibility

To participate in the Program, an employee must be serving in a designated
executive position. These positions carry titles of Vice President, General
Manager, Chief Financial Officer, Chief Technical Officer or Chief Executive
Officer. Final determination of whether an executive may participate in the
Program rests with the Chief Executive Officer (CEO) and the Board of Directors
(the Board).

In order to participate in the Program and to receive payment according to the
Program, each eligible executive must sign an agreement form that describes the
performance items and weightings upon which payment, if any, will be based.

Newly-hired executives will be eligible to participate in the Program based on
the decision of the CEO and the Board. Executives hired or promoted into an
executive position during the plan year will be eligible to receive a prorated
bonus amount based on achievement of performance and time employed at
Centillium.

Executives who terminate employment with Centillium during the plan year, or
before payment is made, will not be eligible to receive any payment under the
Program.

 

Bonus Target Amounts

Bonus target amounts are based on a designated percentage of each eligible
executive's base salary, as determined by the CEO and the Board. Bonus payments
will be prorated to account for any changes in an executive's base salary during
the plan year.

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Program Structures

Each executive will have their bonus amount(s) weighted as follows:

 

Company Revenue

40%

 

Company Earnings

30%

 

Key Corporate Initiatives

30%

 

Evaluation of Performance

Company Revenue will be the annual revenue reported in Centillium's annual
filing with the Securities & Exchange Commission (SEC).

Company Earnings will be the annual Net Profit/Loss reported in Centillium's
annual filing with the SEC.

The specific Key Corporate Initiative(s) and weighting will be determined by the
CEO and the Board.

Any financial measure involved in the three performance areas noted above shall
be without regard to the impact of FAS 123R.

Performance Targets

Prior to the beginning of the plan year, or as soon as practicable after the
start of the plan year, the CEO and the Board will establish performance targets
for each measured item. Such performance targets are listed in Attachment 3.

For the Company Revenue and Company Earnings:

If the company's performance equals the Stretch Target Level, that performance
is given a value of 100%.

If the company's performance exceeds the Stretch Target level, that performance
is given a value on a linear scale based on actual achievement up to a maximum
of 125% of the Stretch Target Level.

If the company's performance is at least at the Low Target Level, but does not
meet the Stretch Target Level, that performance is given a value on a linear
scale based on actual achievement from 50% to 100%

There is no payout for performance that does not achieve at least the Low Target
level.

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Performance Targets (Contd.)

 

For the Key Corporate Initiatives:

If the performance of an initiative meets or exceeds the target level, the
performance of that initiative will be given a value of 100%.

If the performance of an initiative does not meet the target level, there will
be no payout for that initiative.

 

Payment Calculation

For the Company Revenue and Company Earnings items, the performance level
relative to the target will be multiplied by the item weighting. The result of
this calculation will be multiplied by the executive's bonus target amount to
determine the payout for each item. The performance level will be calculated
based on the description given earlier using a linear scale between various
target levels.

For the Key Corporate Initiatives, performance for each specific initiative that
meets or exceeds the target will be paid at 100%. The overall payout for the Key
Corporate Initiatives item will be based on the results of the met targets (and
multiplied by the category weighting, if there is such a category weighting). If
there is no category weighting, the number of met initiatives will be divided by
the total number of initiatives and the quotient will be multiplied by the item
weighting.

Example: An executive has a bonus target amount of $40,000. There are four
categories in the Key Corporate Initiatives item. Each category has a 25%
weighting. Within each category there are two to four initiatives that are
weighted equally within the category. In this example, Categories #1 and #3 are
achieved. For Categories #2 and #4, two of the three initiatives in each are
achieved.

To determine payment, multiply the performance level (100%) for each fully
achieved category by that category's weighting. For categories in which some of
the initiatives are achieved, divide the number of met initiatives by the total
initiatives for that category and multiply the result by the category weighting.
Add the result for each category and multiply the sum by the item weighting
(30%). Multiply this result by the bonus target amount ($40,000).

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Payment Calculation (Contd.)

Category #1

1.00 x

.25

=

.25

Category #2

.67 x

.25

=

.1675

Category #3

1.00 x

.25

=

.25

Category #4

.67 x

.25

=

.1675

 

 

 

 

.835

.835 x .30 =

.25 x

$40,000

=

$10,000

 

The total annual bonus amount paid to each eligible executive under the Program
is determined by adding together the payout amounts for each item, calculated as
described above.

 

Administration of the Program

The CEO is responsible for the administration and interpretation of the Program.
Questions or disputes regarding the Program should be directed to the Vice
President of Human Resources who will work with the CEO to resolve such
questions or disputes. No changes to the Program will be permitted without the
written authorization of the CEO. The Company reserves the right to change,
modify or eliminate all or any part(s) of the plan at any time in its
discretion.

Attachments

Attachment 1

 

List of Program Participants and Bonus Target Amounts

Attachment 2

 

Key Corporate Initiatives for 2006 Plan

Attachment 3

 

Revenue and Earning Levels for 2006 Plan

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*** Confidential material redacted and filed separately with the Commission.

Attachment 1

 

 

List of Program Participants for 2006

[Effective July 1, 2006]

 

 

Executives eligible for the Program:

Name

Title

Target Amount
as % of Salary

Faraj Aalaei

Chief Executive Officer

100%

J. Scott Kamsler

Chief Financial Officer

50%

Hassan Parsa

Vice President

***

Didier Boivin

Vice President

***

Sriraman Chari

Chief Technical Officer

***

Dan Jochnowitz

Vice President & General Counsel

***

Manohar Mahavadi

Vice President

***

Tapan Mohanti

Vice President

***

Kris Shankar

Vice President

***

Tony Webster

Vice President

***

[TBD]

Vice President

***

 

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*** Confidential material redacted and filed separately with the Commission.

Attachment 2

 

2006 Executive Bonus Program

Key Corporate Initiatives

 

ADSL Product Line

A.) Win *** customer

Metric:

*** revenues

B.) Successfully position ***

Metric: First

*** customer board samples ***

VDSL Product Line

A.) Successful introduction of *** product

Metric: First

*** customer samples by ***

B.) Successful introduction of *** product

Metric: First customer samples

***

C.) Win

*** customers;

Metric: Confirmed

*** engagements

Optical Product Line

A.) *** expand outside ***

Metric: Win

*** customers in *** with production revenues

B.) Establish next *** position

Metric:

*** design wins

C.) Win *** business

Metric: *** business run rate by year end

VOIP Product Line

A.) Successful introduction of ***

Metric: Win

*** customers

B.) Introduce ***

Metric:

*** customer samples ***

 

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*** Confidential material redacted and filed separately with the Commission.

Attachment 3

 

 

2006 Executive Bonus Program

Revenue and Earning Levels

 

 

Revenue Target for 2006:

Stretch Target Level

***

Low Target Level

***

High Target Level

***

 

Earning/Loss Target for 2006:

Stretch Target Level

***

Low Target Level

***

High Target Level

***

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