Exhibit 10.23

 

Cymer, Inc.

Long-Term Incentive Program

Summary Description

 

Establishment:  The Compensation Committee of Cymer’s Board of Directors
originally adopted the Long-Term Incentive Program on October 16, 2007
(“LTIP”).  The following is a summary of the terms of the LTIP, as amended
effective January 1, 2009.

 

Eligibility: Director-level employees and senior Individual Contributor
employees and above that are employed by Cymer or its subsidiaries are eligible
to participate in the LTIP.  Employees hired or promoted to an eligible position
within a fiscal year will be eligible to participate in the LTIP for that fiscal
year and receive a full award.  Those employees first hired or promoted to an
eligible position on or after October 1st of a fiscal year will not be eligible
to participate in the LTIP for the immediately following fiscal year.

 

Award Targets:  Equity awards will be granted under Cymer’s Amended And Restated
2005 Equity Incentive Plan or any successor equity incentive plan (“Incentive
Plan”) and may include any of the following equity vehicles: performance-based
vesting restricted stock units (“PRSUs”), restricted stock units (“RSUs”), stock
options, and/or any other equity awards permitted under the Incentive Plan. All
potential equity awards granted under the LTIP will be based on a target dollar
amount which is benchmarked annually against similarly-sized companies within
our industry.  This target dollar award is then converted into equity awards by
dividing an average fair value of the equity vehicle into the target dollar
award to determine the size of the equity award (the “equity guideline”). The
equity guideline is tied to the position level held at the time of the grant and
is expressed as a number of shares subject to the equity awards (i.e.,
participants at the same position level are eligible to receive similar-sized
equity awards).

 

PRSU Performance Measures: The number of shares subject to any PRSU awards that
will vest and become issuable to participants following the applicable 3-year
performance period that commences on the first trading day of the fiscal year
that includes the date of grant (“the performance period”) will be determined
based on Cymer’s relative performance compared to Cymer’s peer companies as
listed on the attached Appendix A (the “peer companies”) over the performance
period, and individual MBO achievement during the performance period, such
determination based on performance measures approved by the Compensation
Committee of Cymer’s Board of Directors as follows:

 

Financial Performance Metrics:  Cymer’s actual performance measured against two
financial metrics:

 

·      Revenue Growth relative to peer companies:  60% weighting.

 

Revenue Growth is defined as the average 1-year growth for the three (3) fiscal
years covered in the performance period.  1-year growth is calculated as ending
fiscal year total revenue divided by prior fiscal year total revenue, minus one.

 

·      Net Income Change as a Percentage of Revenue relative to peer companies: 
40% weighting.

 

Net Income Growth is defined as the average 1-year net income change as a
percent of revenue for the three (3) years covered in the performance period. 
One year change is calculated as ending year net income minus prior year net
income, divided by ending year total revenue.  Note:  the net income change as a
percent of revenue calculation is used rather than true net income growth
(ending year net income divided by prior year net income, minus one) as many
peer companies have recently experienced net losses and net income growth cannot
be calculated when one year is a loss.

 

Individual Performance Metrics:  The number of shares subject to PRSUs that will
vest and be issued will be adjusted downward if the participant’s individual
3-year average MBO achievement during the performance period is less than 100%
of the participant’s target MBOs.  For example, if individual average MBO
achievement over the performance period is 92% of target (100%), the number of
shares subject to PRSUs that will vest and be issued on the distribution date is
reduced by 8%.

 

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Calculation of PRSU Awards:

 

Award Determination:  The actual PRSU award earned is based on Cymer’s
percentile rank of actual performance as measured relative to peer companies for
Revenue Growth (weighted 60%) and Net Income Growth (weighted 40%):

 

Percent Rank vs. Peers

 

Percent of Target
Award Earned

 

< 40th Percentile

 

0

%

40th – 50th Percentile

 

50

%

50th – 60th Percentile

 

75

%

60th – 70th Percentile

 

100

%

70th – 80th Percentile

 

125

%

80th – 90th Percentile

 

150

%

Greaterthan 90th Percentile

 

200

%

 

·                  Target Revenue Growth Component:

 

·                  No PRSUs will be awarded for relative performance to peer
companies below 40th percentile ranking (refer to chart above),

 

·                  Between 50% and 100% of the PRSU target will be awarded for
relative performance to peer companies that is at or above the 40th and at or
below the 70th percentile ranking (refer to chart above),

 

·                  An above-plan performance multiplier will be applied only to
the target revenue growth component amounts of the PRSUs when Cymer’s
performance is greater than 70th percentile ranking (refer to chart above)
against peer companies.

 

·                  Target Net Income Growth Component:

 

·                  No PRSUs will be awarded for performance below
40th percentile ranking (refer to chart above),

 

·                  Between 50% and 100% of the PRSU target will be awarded for
relative performance to peer companies that is at or above  the 40th and at or
below the 70th percentile ranking (refer to chart above),

 

·                  An above-plan performance multiplier will be applied only to
the target net income growth component amounts of the PRSUs when Cymer’s
performance is greater than 70th percentile ranking (refer to chart above)
against peer companies.

 

Performance Adjustments:  An adjustment will be made to the target PRSUs based
upon achievement against established individual MBOs:

 

·                  Target Individual MBO Adjustments:

 

·                  No PRSUs will be awarded to a participant whose individual
3-year average MBO performance is below 60% of the MBO target, regardless of
Cymer’s financial performance,

 

·                  PRSUs will be adjusted downward based on the individual’s
3-year average MBO achievement if 3-year average MBO achievement is below 100%.

 

All determinations of financial metric and individual MBO performance are
subject to approval by executive management

 

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and/or the Compensation Committee of Cymer’s Board of Directors:

 

Vesting/Performance Period:

 

PRSUs:  PRSU shares will vest and be issued, if at all, following the end of the
performance period.  The number of PRSU shares that vest and will be issued to
the participant, if any, will be contingent upon the level of achievement of the
performance measures as determined by the Compensation Committee following the
end of the performance period.  The PRSU shares that vest upon achievement of
the performance measures, as determined by the Compensation Committee, will be
issued during the first calendar year that follows the performance period, but
no later than 30 days following the completion and certification of financial
statements for the performance period.  A participant must be employed on the
last day of the performance period in order to be eligible for any shares
subject to the PRSU award to vest and become issuable to the participant.

 

RSUs:  RSU grants vest over a three-year period commencing on or about the first
date of the fiscal year in which the award is granted with 33% of the shares
vesting on the first, second and third annual anniversaries of the vesting
commencement date subject to the participant’s continued service with Cymer
through the applicable vesting dates.

 

Stock Options:  Stock option grants vest over a four-year period commencing on
or about the first date of the fiscal year in which the award is granted with
25% of the shares vesting on the first annual anniversary of the vesting
commencement date, and the balance vesting in 36 equal monthly installments
thereafter over the remaining 3-year vesting period subject to the participant’s
continued service with Cymer through the applicable vesting dates.

 

Other Equity Awards:  Equity awards other than PRSUs, stock options and RSUs
will be subject to such vesting conditions as may be determined by the
Compensation Committee.

 

PRSU Performance Approval and Process: Revenue growth and net income growth
performance will be calculated and verified by Finance and approved by the
Compensation Committee of Cymer’s Board of Directors for the performance
period.   All determinations of financial and individual MBO metric performance
are subject to approval by executive management and/or the Compensation
Committee of Cymer’s Board of Directors.  The Compensation Committee has the
authority to alter any portion of the PRSU award distributable to any individual
participant under the LTIP.

 

Terms of Equity Awards:  All equity awards will be granted in accordance with
the terms of Cymer’s Incentive Plan and the applicable form of equity award
agreement for the Incentive Plan.  Participants will receive a prospectus
describing the terms of the equity awards according to the Incentive Plan.

 

Annual Maximum: The dollar value of the aggregate annual awards under the LTIP
and the Short-Term Incentive Plan (STIP) may not exceed 15% of Cymer’s adjusted
EBITDA annually (earnings before interest, taxes, depreciation, amortization and
compensation expense attributable to stock options). If the aggregate award
amount under both plans exceeds the cap, the awards will be adjusted downward
proportional to 15% of Cymer’s adjusted EBITDA for the year.

 

Disclaimer: Cymer reserves the right to modify the LTIP at any time. Cymer also
retains the right to award additional incentive compensation outside the LTIP
without regard to the minimum performance metrics or annual maximum limits set
forth in the LTIP.

 

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APPENDIX A

 

List of Peer Companies(1)

 

Advanced Energy Industries, Inc.

Asyst Technologies, Inc.

Axcelis Technologies, Inc.

Brooks Automation, Inc. (USA)

Coherant Inc

FEI Company

FLIR Systems, Inc.

FormFactor, Inc.

MKS Instruments, Inc.

Newport Corporation

Phototronics, Inc.

Varian Semiconductor

Veeco Instruments, Inc.

Agilent Technologies Inc.

Applied Materials, Inc.

KLA-Tencor Corporation

Lam Research Corporation

Leap Wireless International, Inc.

MEMC Electronic Materials, Inc.

Microchip Technology, Inc.

Novellus Systems, Inc.

 

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(1) The applicable list of peer companies will be reconfirmed by Cymer prior to
the beginning of each performance period.  If a company is acquired or is no
longer an operating entity as of the end of the performance period, the company
will be excluded from the peer list for that performance period.

 

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APPENDIX B

 

Target Amounts for Fiscal Year 2009

 

The LTIP target award values and actual equity awards granted for fiscal year
2009 performance to our named executive officers are as follows:

 

 

 

 

 

Awards Granted

 

Executive Officer

 

Target Award
Value (1)

 

Number of
Restricted
Stock Units
(RSUs) (2)

 

Number of
Performance
Restricted
Stock Units
PRSUs (2)

 

Aggregate Fair
Market Value
of Awards on
Grant Date (3)

 

Robert P. Akins, Chairman of the Board and Chief Executive Officer

 

$

1,200,000

 

17,820

 

17,820

 

$

775,526

 

 

 

 

 

 

 

 

 

 

 

Edward J. Brown, Jr., President and Chief Operating Officer

 

$

900,000

 

13,370

 

13,370

 

$

581,862

 

 

 

 

 

 

 

 

 

 

 

Paul B. Bowman, Vice President Investor Relations and Interim Chief Financial
Officer

 

$

600,000

 

8,910

 

8,910

 

$

387,763

 

 

 

 

 

 

 

 

 

 

 

Rae Ann Werner, Vice President, Corporate Controller and Chief Accounting
Officer

 

$

200,000

 

2,970

 

2,970

 

$

129,254

 

 

The 2009 target dollar amount is divided into two (2) equity award components
granted under the Incentive Plan: 50% in RSUs and 50% in PRSUs.  For fiscal year
2009, in view of the ongoing economic recession and in conjunction with the
Company’s cost reduction initiative, the equity awards actually granted under
the LTIP were reduced to approximately 65% of the target dollar amount.

 

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(1)

The Target Award Value dollar amount for each executive represent the target
dollar value of the LTIP awards as established consistent with our 60th
percentile pay philosophy and assumes that exactly 100% of the financial and
individual performance target metrics are achieved. However, as noted above, in
view of the ongoing economic recession and in conjunction with the Company’s
cost reduction initiative, the equity awards actually granted under the LTIP for
fiscal year 2009 were reduced to approximately 65% of the Target Award Value.
Please also refer to the LTIP sections entitled “PRSU Performance Measures” and
“Calculation of PRSU Awards” for a description of adjustments to be made to the
PRSU awards depending upon actual performance.

 

 

(2)

The number of RSUs and PRSUs granted were each calculated by dividing the
adjusted dollar value applicable to such portion of the equity award, dividing
by Cymer’s 30-day average stock price as of January 2, 2009 ($21.88) and
rounding the result to the nearest ten shares.

 

 

(3)

The aggregate fair market value of the RSUs and PRSUs on the grant date
(February 5, 2009) was calculated by multiplying the aggregate number of shares
to be issued in respect of the awards by the closing sales price of our stock on
the grant date ($21.76) and rounding the result to the nearest dollar.

 

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