Exhibit 10.1
 

MIPS Technologies, Inc.
Performance-Based Bonus Plan for Executives
Effective July 1, 2011
(adopted by the Board of Directors on September 9, 2011)

1.
Purpose. The purpose of the MIPS Technologies, Inc. Performance-Based Bonus Plan
for Executives (the “Plan”) is to enhance employee retention, to incentivize
selected employees to strengthen their focus on key corporate financial goals,
and to align individual and group actions with the corporate financial
performance objectives on behalf of the stockholders.

2.
Eligibility. The CEO and other executives or employees as recommended by the CEO
and approved by the Compensation and Nominating Committee of the Board of
Directors shall be eligible to participate in the Plan.  An eligible employee
must be an employee in good standing at MIPS Technologies, Inc. or one of its
subsidiaries at the completion of each Plan period and at the time of
payout.  The Board of Directors shall retain in its sole discretion the
authority to approve payments to the CEO.  Upon the recommendation of the CEO,
the Compensation and Nominating Committee shall in its sole discretion approve
payments to other participating executives or employees.

3.
Plan Period.  Each Plan period shall be the MIPS Technologies, Inc. fiscal year.

4.
Financial Plan.  The financial plan is the Statement of Operations approved
annually by the Board of Directors for the upcoming fiscal year which includes
the overall corporate revenue and pro forma operating margin goals to be used
for the corporate performance calculations below.  The calculations described
below shall be based on the actual revenue and pro forma operating margin
derived on the same basis as the financial plan goals approved by the Board of
Directors.

5.
Calculation of Payments.  Individual payouts shall be calculated as follows:

a.  
A specific percentage of base salary shall be established for each selected
participant as the target for “on Plan” compensation.  For the CEO, the target
shall be 90%.  For the senior executive staff, the target shall be: (i) 40% for
the Vice President of Corporate Development and the Vice President of Sales,
(ii) 50% for the Chief Financial Officer, the General Counsel, and the Vice
President of Marketing, and (iii) 60% for the Vice President of
Engineering.   Other selected participants may have other targets as determined
by the CEO.  A participant’s base salary multiplied by the target percentage
shall be referred to as the “Target Bonus Amount.”

b.  
The Target Bonus Amount shall be multiplied by a “Multiplier”, which is
calculated by adding the following two components together: (i) an individual
performance component (the “Individual Component”), and (ii) an overall
corporate performance component (the “Corporate Component”).  The Individual
Component of the Multiplier shall be based on scale of 0 to 2 (calculated in
accordance with Section 5.c. below) and shall constitute one-fifth of the
Multiplier.  The Corporate Component of the Multiplier shall be based on a scale
of 0 to 2 (calculated in accordance with Section 5.d. below) and shall
constitute four-fifths of the Multiplier.  After multiplying the Individual
Component by 0.2 (i.e., one-fifth) and the Corporate Component by 0.8 (i.e.,
four-fifths), the resulting products shall be added together to form the
Multiplier (which sum will be a number between 0 and 2).

c.  
For participants other than the CEO, the Individual Component of the Multiplier
shall be based on the participant’s performance against a set of goals
established by the CEO.  At the end of the fiscal year, the CEO shall determine
the Individual Component of the Multiplier for each participant in this Plan
(other than the CEO).  In the case of the CEO, the Individual Component of the
Multiplier shall be based on the CEO’s performance against a set of goals
established by the Compensation and Nominating Committee.  At the end of the
fiscal year, the Compensation and Nominating Committee shall determine the
Individual Component of the Multiplier for the CEO.

d.  
In calculating the Corporate Component of the Multiplier, the following applies:

i.  
The Corporate Component of the Multiplier shall be zero if either actual
corporate revenue or pro forma operating margin is less than 80% of the approved
financial plan.

ii.  
The Corporate Component of the Multiplier shall be one if both actual corporate
revenue and pro forma operating margin are exactly at financial plan numbers.

iii.  
The Corporate Component of the Multiplier shall be a maximum of two if the
actual pro forma operating margin exceeds the financial plan by 30% or more,
provided the actual corporate revenue is equal to or exceeds the approved
financial plan revenue number.  Notwithstanding the foregoing, the Board may
determine, in its discretion, in the event that the Corporate Component of the
Multiplier is greater than one, that such Corporate Component will be one.

iv.  
The Corporate Component of the Multiplier is determined by adding the following
three sub-components together:  (a) A number between zero (0) and one half (0.5)
determined by taking actual revenue for the plan period and calculating on a
linear proportional basis from 80% to 100% of the financial plan number; (b) a
number between zero (0) and one half (0.5) determined by taking actual pro forma
operating margin for the plan period and calculating on a linear proportional
basis from 80% to 100% of the financial plan number; and (c) a number between
zero (0) and one (1.0) determined by taking actual pro forma operating margin
for the plan period and calculating  on a linear proportional basis from 100% to
130% of the financial plan number.

 
v.
For purposes of this bonus Plan, the actual pro forma operating margin shall be
derived on the same basis as the financial plan which generally shall be by
taking GAAP operating margin less non cash costs (such as for 123R stock based
compensation and certain other amortized costs) and other exceptional charges
(such as for acquisitions or restructurings).

e.  
At the end of the fiscal year, the bonus payable under this Plan shall be
calculated using the following sequence:

i.  
the Target Bonus Amount shall be calculated.

ii.  
the Individual Component shall be determined by the CEO (or in the case of the
CEO, by the Compensation and Nominating Committee) and then multiplied by 0.2.

iii.  
the Corporate Component shall be determined based on company performance for the
fiscal year and then multiplied by 0.8.

iv.  
the Individual Component and the Corporate Component shall be added together to
form the Multiplier.

v.  
the Target Bonus Amount shall be multiplied by the Multiplier.

f.  
For the avoidance of doubt, a participant in this Plan shall be eligible for a
bonus (in accordance with the terms of this Plan) if one component of the
Multiplier is zero as long as the other component of the Multiplier is greater
than zero.

g.  
The Board of Directors and the Compensation and Nominating Committee, as
applicable, shall have discretion to vary the amount of the Multiplier in light
of the CEO’s and other executive’s or employee’s performance to goals,
notwithstanding the above calculation.

6.
Determination Date and Payments.  No bonus shall be considered earned under this
Plan unless and until the Board and the Compensation and Nominating Committee
(as applicable) have determined that bonuses will be paid under the Plan, and
have approved the amount of bonus which shall be paid to each participant (such
date, the “Determination Date”).  No pro rata bonus may be earned prior to the
Determination Date.  Payments will be paid in cash after the Determination Date,
typically within two months after the completion of each Plan period, unless the
participant has exercised a right under a company established plan to defer such
payment, in which case, when applicable, payment in accordance with the
requirements of Section 409A of the Internal Revenue Code of 1986, as amended,
will be made in accordance with such deferral plan and applicable law.   In
order to be eligible to earn a bonus, a participant must be employed on the
Determination Date unless otherwise determined by the Compensation and
Nominating Committee in its sole discretion.

 
 

7.
Amendment or Termination of Plan.  The Plan shall continue in effect until
modified or eliminated by the Board of Directors.  The Board of Directors may
amend, modify or terminate the plan at any time without the consent of any
person.

8.
Example.  For purposes of these examples, assume a participant has a base salary
of $200,000 and a target percentage of 50% (i.e. the Target Bonus Amount is
$100,000).

·  
Example 1: If the Individual Component equals 1 and the Corporate Component
equals 2, the participant would be entitled to a bonus of: $180,000.

·  
Example 2: If the Individual Component equals 0 and the Corporate Component
equals 1.4, the participant would be entitled to a bonus of: $112,000.

·  
Example 3: If the Individual Component equals 1 and the Corporate Component
equals 0.4, the participant would be entitled to a bonus of: $52,000.

·  
Example 4: If the Individual Component equals 0 and the Corporate Component
equals 0, the participant would be entitled to a bonus of: $0.