Exhibit 10.1

 

ADAPTEC, INC.

 

Adaptec Incentive Plan Document

Fiscal Year 2005

 

1.             Plan Name and Effective Date

 

The name of the plan is the Adaptec Incentive Plan (the “AIP”). The AIP is
effective for Adaptec’s 2005 fiscal year from April 1, 2004 through March 31,
2005 (“Fiscal Year 2005”).

 

2.             Purpose

 

The purpose of the AIP is to provide a direct financial incentive for eligible
executives, managers and individual contributors to make a significant
contribution to Adaptec’s established goals in order to help Adaptec’s
stockholders realize increased value from their investment.

 

3.             Eligibility

 

All full or part-time exempt employees in grade 21 and above are eligible to
participate in the AIP. Employees in grades 21 and above working in Singapore
are not eligible to participate in the AIP except for 8 or 9 key managers and
executives as determined by the Compensation Committee of Adaptec’s Board of
Directors (the “Compensation Committee”). All eligible employees must have
worked for Adaptec at least six months and must still be an employee of Adaptec
at the time payments are made, as discussed below, in order to qualify to
participate in the AIP. Commissioned sales employees, temporary employees and
independent contractors are not eligible to participate in the AIP.  All Adaptec
employees that are eligible to participate in the AIP are deemed to be
“Participants” in the AIP.

 

4.             Timing of AIP Payments

 

Except for holdback payments as described in Section 8 below, payments that
become due under the AIP will be paid to Participants as soon as
administratively feasible after the overall budget is approved by the
Compensation Committee following the close of the second quarter of Fiscal Year
2005 or the fourth quarter of Fiscal Year 2005, as applicable.

 

5.             Funding the AIP Pool

 

The AIP reinforces two key goals that support Adaptec’s strategic plans:
maximizing Adaptec’s revenue (“Revenue”) and maximizing Adaptec’s Operating
Profit Before Taxes (“OPBT”).  In order for the Compensation Committee to fund
the AIP incentive pool (the “AIP Pool”) and in order for Participants to be
eligible to receive payments

 

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from the AIP Pool, Revenue and OPBT each must meet minimum thresholds as
determined by the Compensation Committee.

 

The matrix for determining the size of the AIP Pool for Adaptec’s Q1 and Q2
performance is set forth in Chart A and the matrix for determining the size of
the AIP Pool for Adaptec’s Q3 and Q4 performance is set forth in Chart B. The
size of the AIP Pool will be determined by the amount that each of Adaptec’s
Revenue and OPBT exceeds the minimum thresholds established by the Compensation
Committee; as Revenue and OPBT increase, the AIP Pool will increase as set forth
in Chart A and Chart B. Revenue and OPBT are each weighted equally in
determining the size of the AIP Pool.  In addition, the Compensation Committee
may increase or decrease the size of the AIP Pool by 25% based on Adaptec’s
performance during Fiscal Year 2005.

 

If the Revenue and OPBT minimum thresholds set by the Compensation Committee are
both not met, then no AIP Pool will be established. Notwithstanding the
foregoing, in extraordinary and extenuating circumstances, the Compensation
Committee may determine to fund the AIP Pool and make payments to Participants
if Revenue and/or OPBT do not meet the established minimum thresholds.  In all
cases, the Compensation Committee must review and approve the funding of the AIP
Pool.

 

Chart A

 

 

 

Q1 and Q2

 

 

 

AIP Pool

 

Revenue

 

OPBT

 

 

 

(in millions)

 

(in millions)*

 

(in millions)**

 

 

 

6.38

 

X + 26.00

 

Y + 6.50

 

100% Payout==>

 

5.88

 

X + 24.00

 

Y + 6.00

 

 

 

5.38

 

X + 22.00

 

Y + 5.50

 

 

 

4.88

 

X + 20.00

 

Y + 5.00

 

 

 

4.38

 

X + 18.00

 

Y + 4.50

 

 

 

3.88

 

X + 16.00

 

Y + 4.00

 

 

 

3.38

 

X + 14.00

 

Y + 3.50

 

 

 

2.88

 

X + 12.00

 

Y + 3.00

 

 

 

2.38

 

X + 10.00

 

Y + 2.50

 

 

 

1.88

 

X + 8.00

 

Y + 2.00

 

 

 

1.38

 

X + 6.00

 

Y + 1.50

 

 

 

0.88

 

X + 4.00

 

Y + 1.00

 

 

 

0.00

 

X + 2.00

 

Y + 0.50

 

 

 

0.00

 

X

 

Y

 

 

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Chart B

 

 

 

Q3 and Q4 

 

 

 

AIP Pool

 

Revenue

 

OPBT

 

 

 

(in millions)

 

(in millions)*

 

(in millions)**

 

 

 

7.50

 

A + 30.00

 

B +7.50

 

 

 

7.00

 

A + 28.00

 

B +7.00

 

 

 

6.50

 

A + 26.00

 

B +6.50

 

 

 

6.00

 

A + 24.00

 

B +6.00

 

100% Payout==>

 

5.50

 

A + 22.00

 

B +5.50

 

 

 

5.00

 

A + 20.00

 

B +5.00

 

 

 

4.50

 

A + 18.00

 

B +4.50

 

 

 

4.00

 

A + 16.00

 

B +4.00

 

 

 

3.50

 

A + 14.00

 

B +3.50

 

 

 

3.00

 

A + 12.00

 

B +3.00

 

 

 

2.50

 

A + 10.00

 

B +2.50

 

 

 

2.00

 

A + 8.00

 

B +2.00

 

 

 

1.50

 

A + 6.00

 

B +1.50

 

 

 

1.00

 

A + 4.00

 

B +1.00

 

 

 

0.50

 

A + 2.00

 

B +0.50

 

 

 

0.00

 

A

 

B

 

 

6.             Calculation of Payments

 

Chart C shows the targeted incentives by a Participant’s grade/position and as a
percentage of a Participant’s base salary if Adaptec were to reach the 100%
funding level set forth in Chart A and Chart B, as applicable. Chart C also
shows what percentage of the eligible employee population would be targeted to
receive an incentive payment.

 

Chart C

 

Participants: AIP Payments (for six months)

 

Grade/Position

 

Target % of Base Salary

 

Target Receiving

 

Chief Executive Officer

 

85

%

100

%

Chief Financial Officer

 

60

%

100

%

Vice President/General Manager

 

50

%

100

%

Vice President

 

40

%

100

%

31-33

 

25

%

70-90

%

29-30

 

15

%

70-90

%

27-28

 

12

%

70-90

%

24-26

 

10

%

70-90

%

21-23

 

8

%

70-90

%

 

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7.             AIP Payments

 

Once the AIP Pool amount is determined for each six-month period, the actual
payment to a Participant is based on the Participant’s performance and can range
from 0 to 200% of target incentive amount. In no case will the sum of all
payments exceed the amount funded by the AIP. All payments from the AIP Pool
made to Section 16(b) officers of Adaptec will be recommended by Adaptec’s CEO
and will be reviewed by the Compensation Committee. In addition, the
Compensation Committee will approve the CEO’s payment from the AIP Pool.

 

8.             Holdback AIP Payments for Executive Participants

 

Payments under the AIP that are to be made to Participants with a position of
Vice President or higher (“Executive Participants”) for first and second fiscal
quarter achievements will be paid as follows.  Fifty percent (50%) of payments
earned by Executive Participants during the first half of Fiscal Year 2005 will
be paid at the same time as AIP payments are made to other Participants and
fifty percent (50%) will be held back pending the performance of Adaptec in the
second half of Fiscal Year 2005. This holdback will be paid to Executive
Participants at the same time that other Participants receive payments under the
AIP following the close of the fourth quarter of Fiscal Year 2005 and could be
funded at 0% to 150% depending on how Adaptec performs relative to the Revenue
and OPBT thresholds established by the Compensation Committee.

 

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