Exhibit 10.40

 

LATTICE SEMICONDUCTOR CORPORATION

 

EXECUTIVE INCENTIVE PLAN

 

2002 RESTATEMENT

 

The Lattice Semiconductor Executive Incentive Plan (the “Plan”), originally
approved by the Board of Directors on August 13, 1990 and subsequently restated
in 1992 and 1999, is hereby restated in its entirety.

 

1.  Purpose

 

The purpose of the Plan is to provide Lattice Semiconductor Corporation (the
“Company”) with an effective and competitive bonus plan that enables the Company
to attract and retain senior management, and to provide incentives that promote
the financial objectives of the Company, thereby enhancing shareholder value. 
The executive cash compensation program of the Company is highly leveraged on
the basis of Company profitability.

 

2.  Administration

 

This Plan shall be administered by the Compensation Committee of the Board of
Directors (the “Administrator”), which is composed entirely of independent
outside directors.  The Compensation Committee is responsible for setting and
administering the policies which govern both cash compensation and stock
ownership programs.  The Compensation Committee meets without the Chief
Executive Officer’s presence, on at

 

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least an annual basis, to evaluate and review the Company’s compensation plans
and reports their findings to the full Board of Directors.

 

The Administrator shall interpret the Plan, determine eligibility to
participate, and generally be responsible for seeing that the purposes of the
Plan are accomplished.  The Administrator may delegate all of part of its
administrative duties to others.

 

3.  Plan Year

 

The Plan Year shall be the Company’s fiscal year.

 

4.  Eligibility

 

The Chief Executive Officer, President and certain Vice Presidents and Directors
of the Company shall be eligible to participate in the Plan.  Vice Presidents
and Directors will be eligible upon selection by the Chief Executive Officer.

 

5.  Computation of Bonus

 

The total bonus amount available for distribution under the Plan shall equal
seven percent (7%) of the Company’s operating income.  For this purpose,
operating income shall mean the amount determined by the Company from its
official financial statements in accordance with generally accepted accounting
principles with the exception that one-time in-process research and development
and intangible asset amortization charges are to be excluded from the
calculation.  The bonus computation will be made on a quarterly basis.

 

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6.  Allocation of Bonus

 

The bonus amount will be allocated among the eligible participants according to
the following criteria (see Exhibit A for formula calculating individual
amounts):

 

a).                                   participant’s base salary;

 

b).                                  participant’s position;

 

c).                                   participant’s performance to objectives as
determined by the Chief Executive Officer.

 

The bonus amount allocated to the Chief Executive Officer will be calculated
solely as a function of 6a) x 6b) above according to the formula in Exhibit A.

 

7.  Time of Payment

 

Bonus payment will be made to eligible participants on a quarterly basis within
90 days after the end of the Company’s fiscal quarter.

 

8.  Terminated Participants

 

A participant who terminates his/her employment with the Company, either
voluntarily or involuntarily, forfeits any undistributed bonus amount that
he/she might otherwise have been eligible to receive.

 

9.  Amendment/Termination

 

The Company may amend or terminate this Plan at any time by action of the
Compensation Committee of the Board of Directors.

 

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10.  Interpretation

 

All questions of interpretation under this Plan shall be decided by the
Compensation Committee of the Board of Directors of the Company, whose judgement
shall be final and binding.

 

 

 

Lattice Semiconductor Corporation

 

 

 

By:

/s/ Cyrus Tsui

 

 

 

 

Chief Executive Officer

 

 

 

February 5, 2002

 

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EXHIBIT A

FORMULA FOR CALCULATION OF BONUSES

 

I.

TOTAL BONUS EARNED DURING PERIOD (“TB”):

 

 

 

TB = Operating Income x 7%

 

 

 

 

II.

BONUS CALCULATION FOR CEO (“Bp”):

 

 

 

Bp = [ (S x W) / T ] x TB

 

 

 

 

III.

BONUS CALCULATION FOR PLAN PARTICIPANTS EXCEPT

 

 

 

CEO (“B”):

 

 

 

B = [ (S x W) / T ] x TB x IP

 

 

 

 

IV.

KEY:

 

 

 

S  =  Annual Base Salary

 

 

 

W = Weighting according to position:

 

 

 

 

CEO

50%

 

 

 

President

50%

 

 

 

Vice President Sales

40%

 

 

 

Other Vice Presidents

35%

 

 

 

Directors

25%

 

 

 

 

T  = Weighted total of all salaries (“S”) multiplied by the position weighting
(“W”)

 

 

 

IP = Individual performance as determined by CEO

 

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