EXHIBIT 10.1
Pixelworks, Inc.
2006 Senior Management Bonus Plan, as amended
Bonuses for executive officers of the Company are calculated based on attainment
of planned levels of revenue and non-GAAP income (loss) before income taxes, as
well as the attainment of specified operational goals. Each of the goals is
weighted as follows:
For Chief Executive Officer, Chief Operating Officer (“COO”) and Chief Financial
Officer (“CFO”):

         
Revenue
    33.3 %
Non-GAAP income (loss) before income taxes
    33.3 %
Operational goals
    33.3 %
 
       
 
    100.0 %
 
       

For Vice Presidents (excluding COO and CFO) and middle management:

         
Revenue
    33.3 %
Q1/Q2 Non-GAAP income (loss) before income taxes
    16.6 %
Q3/Q4 Non-GAAP earnings before interest, taxes, depreciation and amortization
(EBITDA)
    16.7 %
Operational goals
    33.3 %
 
     
 
    100.0 %
 
     

Bonuses are calculated as a percentage of each executive officer’s salary as
follows: President and Chief Executive Officer and Executive Vice President and
Chief Operating Officer, 100%; and Vice Presidents, 50%. Maximum bonuses for
middle managers are 10%, 15% or 25% of annual salary, depending on the
respective employees’ level. The revenue and non-GAAP income (loss) before
income taxes goals have escalating components whereby the executive officers
have the opportunity to achieve up to 300% of each respective goal if levels
higher than the base goals are achieved.
If goals are not achieved, bonuses are reduced proportionally. Additionally, the
Company’s Compensation Committee may increase or decrease individual bonuses
based on qualitative factors.
Determination as to whether or not the performance targets have been met is made
quarterly. The payout of bonuses will occur in the first quarter of 2007, upon
approval of the Company’s Compensation Committee.