Exhibit 10.1

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Avago Performance Bonus (“APB”)

FY2010 Plan Document

 

Document: Annual Performance Bonus

 

Applicability: Regular exempt,non-exempt,

non-commissioned, non-bargaining unit employees

Approved: December 1, 2009

  Effective Date: November 1, 2009

Re-Approve:

  Review date: Annual

Purpose

The purpose and scope of the Avago Performance Bonus Plan Document is to define
the process of the award annual incentive bonus and to ensure that the
parameters are managed consistently across the Avago Technologies (the
“Company”).

Introduction

The Company has established the Avago Performance Bonus (“Program”) for eligible
Employees. The objectives of this discretionary Program are to:

 

  •  

Share the success of the company

 

  •  

Reward employees for outstanding business results,

 

  •  

Foster teamwork, and

 

  •  

Retain employees

Program Period

Incentive awards under the Program are based on Corporate performance and
Business Division or Function performance measured against predetermined targets
for each Program Period. The Program Period begins on the first day of each
fiscal year and ends on the last day of the fiscal year.

Eligibility

At the beginning of each fiscal year Program Period, the Company will determine
Program participation eligibility for all employment positions for such Program
Period.

Prior to the beginning of the Program Period the criteria for participation in
the Program will be set by the Company at its sole discretion.

Participation in the Program during a Program Period is not a guarantee of
on-going employment nor does it create any right to participate in the Program
during any subsequent Program Period.

 

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Conditions of Eligibility: All regular full-time and regular part-time employees
who are:

 

  •  

Not on a Sales Incentive Program (SIP);

 

  •  

In active regular employment status before the first day of the fourth quarter
of the fiscal year performance period.

 

  •  

In regular active employment status on the Avago Performance Bonus (APB) payout
date

Description

The performance results for the Program Period are based on a weighting system
comprised of Corporate performance and Business Division/Function performance.

 

Corporate Performance    Corporate performance for the Program Period will be
based on the attainment of Company targets as defined for the specific fiscal
year: Targets are set by the CEO and Compensation Committee of the Board of
Directors. Attainment measurements and targets are maintained by Finance.
Business Division or Function Performance    Business Division or Function
performance for the Program Period will be based on the attainment of Business
Division or Function goals. Goals are set by Business Division or Function VPs
and approved by the CEO and Compensation Committee of the Board of Directors.
Attainment measurements and targets are maintained by Finance. Program Award
Determination    The Program award payout (“Program Award”) for each participant
will be determined as follows.

Definitions:

 

  1. Eligible Earnings: Represents base wages earned during the performance
period and excludes overtime pay, shift differential, week-end differential,
disability payments, or other allowances.

Total eligible earnings for the Program Period will be adjusted for part-time
status, unpaid LOA, hire date or re-hire date.

 

  2. Attainment %: Payout on performance achieved for each Business attainment
goal between the threshold and the maximum will be linearly interpolated.

 

  3. Performance Multiplier: Based on the performance rank of each participant
with payout multipliers as follows:

 

•    Rank 1     1.5 times the on-target bonus •    Rank 2     1.0 times the
on-target bonus •    Rank 3     0.5 times the on-target bonus

 

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  4. Target Bonus Percent: Percent of eligible earnings that will be paid if the
Company and Business Division/Function attainment is 100% of goals. This percent
is assigned to job levels as follows:

 

•   ICA

    5 %   

•   ICB

     

•   Entry

    7 %   

•   Career

    9 %   

•   Expert

    12 %   

•   Master

    15 %   

•   Fellow

    20 %   

•   People Manager

   

•   Supervisor

  10 %   

•   Operating Manager

  12 %   

•   Integrating Manager

  17 %   

•   Senior Manager I & II

  30 %   

Target Bonus Percent is prorated based on eligibility and job level change
during the performance period.

Any exceptions require approval from the VP of Human Resources and the CEO

 

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Payout

There are two payouts in the FY2010 annual Program Period.

Interim Payment: The first payout is an interim payout made after the end of the
first fiscal half which is calculated using the annual formula with the
following additional criteria:

 

  •  

Achievement of first half corporate metrics

 

  •  

Performance Rank in place from prior year

 

  •  

Capped at 100% for rank 1 and rank 2 employees

 

  •  

Capped at 50% for rank 3 employees

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Metric

   Weight   Achievement %
Threshold for
Minimum
Payout   Payout at
Minimum
Attainment
Threshold   Payout
at
Target
100%   Payout at
Maximum
Attainment
Maximum

Revenue Growth

   25%   39%   50%   100%   100%

Operating Profit

   25%   81%   50%   100%   100%

Business Division or Function Results *

   N/A   Division/Function

Specific

     

Final Payment: The fiscal year end payout is made after the end of the fiscal
year and is calculated using the annual formula based on:

 

  •  

Actual achievement against full fiscal year Corporate and Division/Function
metrics

 

  •  

Current year performance rank

 

  •  

Less the interim payment

 

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Metric

   Weight   Achievement %
Threshold for
Minimum
Payout   Payout at
Minimum
Attainment
Threshold   Payout
at
Target
100%   Payout at
Maximum
Attainment
Maximum

Revenue Growth

   25%   53%   50%   100%   150%

Operating Profit

   25%   81%   50%   100%   150%

Business Division or Function Results *

   50%   Division/Function

Specific

  50%   100%   150%

Policies and Practices

Various considerations may impact the administration and payout of the Program.
Such considerations may include but are not limited to the following

 

  1. Program Administration: The Company will establish guidelines for the
Program in line with corporate strategies and objectives. The Company has final
authority as to any issues related to the interpretation and the administration
of the Program, including the resolution of any unusual circumstances.

 

  2. Management Discretion: The Company will set the Program performance
targets. The Company may, at its sole discretion, at any time alter, amend,
suspend or in any other way modify the Program to align with the changing needs
of the Company without prior notification to any participant.

 

  3. Payment Authorization: Employees will be eligible to participate in the APB
program period on a prorata basis based upon hire date and dependent upon being
actively employed before the first day of the fourth quarter of the current
fiscal year and being actively employed and on Avago payroll through to the APB
payout date. All awards must be approved by the CEO and Compensation Committee.
The program award will be paid in full, as soon as administratively feasible,
following the end of a Program Period.

 

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  4. Termination: Any employee may be excluded from Program participation, at
any time, at the sole discretion of the Company. In order to receive a Program
Award payment for the applicable Program Period, an employee must be (1) on the
payroll, and (2) an eligible participant of the Program at the time of payout.
The company will not seek repayment of a valid bonus payout if the employee
terminates employment after payment for the previous performance period.

 

  5. Pro-rated payments: Pro-rated payment will only be made in cases as set
forth below:

 

  •  

Position changes from non-sales to sales (on SIP) or from sales (on SIP) to non-
sales.

 

  •  

Reclassification from one job level to another (upward or downward).

 

  •  

Transfer between Business Divisions or Functions during the fiscal year of the
performance period.

 

  •  

Termination for Disability: In the event a participant terminates employment
with the Company for disability reasons, such employee will be considered
eligible for completed plan periods in which the employee participated.

 

  •  

Termination upon Death: Upon the death of a participant, the award will be
considered fully vested for all completed plan periods in which the employee
participated. Payment will be made to legal beneficiaries, as designated by the
employee and on file the Company.

 

  6. Right of Employment and Payment: Management reserves the right, at its sole
discretion, to restrict participation in the Program at any time. Participation
under this Program does not affect the employment status of the participant and
does not imply continued employment with Company. Either participant or Company
may terminate the employment relationship at any time, for any reason, with or
without cause.

Payments made under the Program are not an element of the participant’s salary
or base compensation (“Compensation”) and shall not be considered as part of
such Compensation in the event of severance, redundancy, resignation or any
other situation unless required by local law. The granting and receipt of
payments under the Program is voluntary and at the Company’s sole discretion,
and does not constitute a claim for further payments regardless of how many
times such payments have previously been granted to the participant.

 

  7. Unfunded Status/Right of Assignment: No assets are reserved for this
Program and no person has a right or interest in Company assets as a result of
the existence of this Program. No right or interest in the Program may be
assigned or transferred, or subject to any lien, directly, by operation of law
or otherwise, including without limitation, bankruptcy, pledge, garnishment,
attachment, levy or other creditor’s process.

 

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  8. Taxes: All awards payable under the Program are taxable as ordinary income
in the year of payment and subject to applicable taxes and withholdings.
Employees on a temporary relocation are paid and taxed from their home country.

 

  9. Plan Amendment or Termination: The Company may amend or terminate this
Program at any time. While the Company intends that any amendment or termination
would be prospective, the Company reserves the right to act retroactively
without prior written notice to the participants.

 

  10. Final Decision: The Chief Executive Officer (“CEO”) will make the final
determination as to the eligibility for participation in the Program and any
other applicable terms. All decisions made by the CEO regarding this Program
shall be final, and shall not be subject to review or appeal.

This Program shall be governed by the laws of the State of California, without
regard to choice-of-law provisions.

 

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APPENDIX

Payout Examples at Target:

The examples of the interim and the final payouts are based on the following
assumptions.

 

  •  

Employed full time during the entire fiscal year

 

  •  

Annual Eligible Earnings in local currency is 100,000

 

  •  

Performance Rank is 1

 

  •  

Bonus target is 12%

 

  •  

Corporate attainment for 1st half and fiscal year both at 100%

 

  •  

Division attainment at 100%

Interim Payment: The first payout is an interim payout made after the end of the
first fiscal half which is calculated using the annual formula with the
following additional criteria:

 

  •  

Achievement of first half corporate metrics (excludes Division metrics)

 

  •  

Performance Rank in place from prior year

 

  •  

Capped at 100% for rank 1 and rank 2 employees

 

  •  

Capped at 50% for rank 3 employees

 

Metric

   Weight   Achievement %
Threshold for
Minimum
Payout   Payout at
Minimum
Attainment
Threshold   Payout
at
Target
100%   Payout at
Maximum
Attainment
Maximum

Revenue Growth

   25%   39%   50%   100%   100%

Operating Profit

   25%   81%   50%   100%   100%

Business Division or Function Results *

   N/A   Division/Function

Specific

     

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Final Payment: The fiscal year end payout is made after the end of the fiscal
year and is calculated using the annual formula based on:

 

  •  

Actual achievement against full fiscal year Corporate and Division/Function
metrics

 

  •  

Current year performance rank

 

  •  

Less the interim payment

 

Metric

   Weight   Achievement %
Threshold for
Minimum
Payout   Payout at
Minimum
Attainment
Threshold   Payout
at
Target
100%   Payout at
Maximum
Attainment
Maximum

Revenue Growth

   25%   53%   50%   100%   150%

Operating Profit

   25%   81%   50%   100%   150%

Business Division or Function Results *

   50%   Division/Function

Specific

  50%   100%   150%

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