Exhibit 10.01
SILICON IMAGE, INC.
Employee BONUS PLAN FOR FISCAL YEAR 2007
1. Purpose
     The purpose of this Bonus Plan (this “Plan”) is to provide financial
incentives for certain executive1 and non-executive2 employees (“Executives” and
“Non-Executives”, respectively) of Silicon Image, Inc. (the “Company”) to meet
and exceed the Company’s annual financial goals.
2. Eligibility
     Executives and Non-Executives of the Company selected by the Committee (the
“Participants” and each a “Participant”) shall be eligible to participate in
this Plan; provided however, that neither Executives and Non-Executives who are
entitled to participate in any Company Business Development- or Sales-incentive
plan nor employees who begin their employment with the Company on or after
October 1, 2007 are eligible to participate in this Plan. Participation in this
Plan is on a fiscal year basis and at the sole discretion of the Compensation
Committee of the Company’s Board of Directors (the “Committee”).
3. Administration
     a. This Plan shall be administered by the Committee which may delegate
specific administrative tasks to others as appropriate for administration of
this Plan.
     b. Subject to the provisions of this Plan, the Committee shall have
exclusive authority to designate Participants, the amount of each bonus under
this Plan (“Bonus”), the date when any performance goals are measured, and the
date when Bonus (if any) will be paid.
     c. The Committee shall have all discretion and authority necessary or
appropriate to administer this Plan, including, but not limited to, the power to
interpret this Plan, to prescribe, amend and rescind rules and regulations
relating to it, and to make all other determinations necessary or advisable in
the administration of this Plan, and such determination shall be final and
binding upon all persons having an interest in this Plan.
     d. A majority of the Committee shall constitute a quorum, and the acts of a
majority of the members present at a meeting at which a quorum is present or any
action taken without a meeting by a writing executed by all of the members of
the Committee shall constitute the act of the Committee.
     e. The Committee may employ attorneys, consultants, accountants, or other
persons. The Committee and the Company and its officers and directors shall be
entitled to rely upon the advice, opinion, or valuations of any such persons. No
member of the Committee shall be personally liable for any action,
determination, or interpretation taken or made with respect to this Plan, unless
such action is determined by final adjudication to be criminal misconduct,
willful misconduct or demonstrates bad faith by the member. In such event, the
member shall be liable for future expenses, including legal fees, including
fines and penalties, resulting from the final adjudication.
 

1   “Executive” means an employee of the Company at the level of Vice President
or above employed by the Company or any affiliated Company as determined by the
Committee.   2   “Non-Executive” means an employee of the Company, other than an
Executive, employed by the Company or any affiliated Company as determined by
the Committee.

 

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4. Bonus Pool Establishment and Allocation
     Subject to the terms and conditions of this Plan, the Company will
establish a cash bonus pool if:

  •   Actual revenue3 for the fiscal year ending December 31, 2007 (“Actual
Revenue”) equals or exceeds 100% of the planned revenue for the fiscal year
(“Plan Revenue”) established in the Annual Operating Plan approved by the Board
of Directors (“Annual Operating Plan”); and     •   Pro forma earnings before
interest, tax, depreciation and amortization, excluding stock compensation
expense4 (“Pro forma EBITDA”) equals or exceeds 100% of the planned earnings
before interest, tax, depreciation and amortization, excluding stock
compensation expense, for the fiscal year (“Plan EBITDA”) established in the
Annual Operating Plan. The determination as to whether Pro forma EBITDA equals
or exceeds Plan EBITDA shall be made after taking into account the compensation
expense associated with the establishment of the cash bonus pool.

     4.1 Executive Participants’ Bonus Pool
     The amount of the cash bonus pool for Executive Participants will be equal
to a function of the extent to which (a) Actual Revenue equals or exceeds 100%
of Plan Revenue, and (b) Pro forma EBITDA equals or exceeds 100% of Plan EBITDA.
For Executives

                          Percent Achievement of   Percent Achievement of  
Representative Pool   Representative Pool Annual Revenue or   Annual
Year-to-Date   Attributable to   Attributable to EBITDA   Target Funding Level  
Revenue Attainment   EBITDA
100%
    100.0 %   $ 850,000     $ 850,000  
115%
    200.0 %   $ 1,700,000     $ 1,700,00  
125%
    300.0 %   $ 2,550,000     $ 2,550,000  

     
Notes:
  (1) Dollars are representative based on estimated headcount and payroll.
Actual figures may vary.
 
   
 
  (2) Actual amounts between the breakpoints shown above will be calculated on
straight line basis between the breakpoints.
 
   
 
  (3) For upside payments, growth must be deemed to be “organic” rather than
“acquired”, except as included in the Company’s Annual Operating Plan. The
Annual Operating Plan included the January 2007 acquisition of sci-worx.
 
   
 
  (4) Funding targets for 2007 include accrual for bonus pool at 100%
achievement. Any upside bonus pool funding must “self fund,” i.e., determination
of Pro forma EBITDA will be after bonus accrual at target plus any bonus upside.

     The amounts of Bonuses, if any, allocable to individual Executive
Participants will be determined by the Committee in its sole discretion and may
be less than, equal to or greater than target bonus levels.
 

3   Represents the Company’s total product, development, licensing and royalty
revenues for fiscal year 2007 as reported in the Company’s financial statements.
  4   Represents the Company’s total earnings before interest, tax,
depreciation, and amortization, and, excludes stock compensation expense as
accounted for under SFAS No. 123R.

 

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     4.2 Non-Executive Participants’ Bonus Pool
     The amount of the cash bonus pool for Non-Executive Participants will be
equal to a function of the extent to which (a) Actual Revenue equals or exceeds
100% of Plan Revenue, and (b) Pro forma EBITDA equals or exceeds 100% of Plan
EBITDA.
For Non-Executives

                                              Representative Pool Percent
Achievement   Percent Achievement   Representative Pool   Attributable to of
Annual Revenue or   of Annual Year-to-Date   Attributable to   Attainment of
EBITDA   Target Funding Level   Revenue Attainment   EBITDA
100%
    100.0 %   $ 4,000,000     $ 4,000,000  
115%
    200.0 %   $ 8,000,000     $ 8,000,000  

     
Notes:
  (1) Dollars are representative based on estimated headcount and payroll.
Actual figures may vary.
 
   
 
  (2) Actual amounts between the breakpoints shown above will be calculated on
straight line basis between the breakpoints.
 
   
 
  (3) For upside payments, growth must be deemed to be “organic” rather than
“acquired”, except as included in the Company’s Annual Operating Plan. The
Annual Operating Plan included the January 2007 acquisition of sci-worx.
 
   
 
  (4) Funding targets for 2007 include accrual for bonus pool at 100%
achievement. Any upside bonus pool funding must “self fund,” i.e., determination
of Pro forma EBITDA will be after bonus accrual at target plus any bonus upside.

     The amounts of Bonuses, if any, allocable to individual Non-Executive
Participants will be determined by Company management and submitted to the
Committee for approval and may be less than, equal to or greater than target
bonus levels.
5. Payment
     Bonuses under this Plan will be distributed, if any, as soon as reasonably
practicable following (i) public disclosure of the Company’s financial results
for the fiscal year ended December 31, 2007, (ii) calculation of Actual Revenue
and Pro forma EBITDA, and (iii) any determination of the amounts of the bonus
pool applicable to Executive Participants and Non-Executive Participants.
Participants must be employed by the Company as employees at the time of
computation and distribution in order to be eligible to receive payment of
Bonuses, if any, unless otherwise determined by the Compensation Committee.
Participants employed by the Company prior to January 1, 2007 shall be eligible
to receive payment of a full Bonus. Participants who began their employment with
the Company after January 1, 2007 but prior to October 1, 2007 shall be eligible
to receive payment of a pro-rated Bonus (based on the full days of such
Participant’s employment). Participants who begin their employment on or after
October 1, 2007 shall not be eligible to receive payment of a Bonus. In
addition, participants must complete all mandatory training(s) within the time
noted in the notice to employees to be eligible to receive payment of a Bonus.
The Committee may impose additional eligibility requirements on payment of any
Bonuses in its sole discretion. It is the objective of the Committee that the
entire calculated pool be distributed to eligible Participants.
6. General Provisions
     a. No Prior Funding
     No amounts payable under this Plan shall be funded, set aside or otherwise
segregated prior to payment. The obligation to pay the Bonuses shall at all
times be an unfunded and unsecured obligation of

 

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the Company and the Company shall not be required to incur indebtedness to fund
the bonus pool unless otherwise directed to do so by the Committee. Participants
shall have the status of general creditors. This Plan is not qualified under
Section 401(a) of the Internal Revenue Code of 1986, as amended, and is not
subject to any provisions of the Employee Retirement Income Security Act of
1974.
     b. No Obligation to Employ
     Eligibility for participation in this Plan is not evidence of, nor does it
constitute, a contract of employment between the Company and any individual.
Nothing in this Plan will confer or be deemed to confer on any individual any
right to continue in the employ of the Company or limit in any way the right of
the Company to terminate an individual’s employment at any time, with or without
cause. This Plan is not intended to and does not create any legal rights for any
employee.
     c. Amendment or Termination of Plan
     This Plan may be amended or terminated by the Board or the Committee at any
time prior to payment of Bonuses hereunder.
     d. Headings
     The headings of the sections hereof are inserted for convenience only and
shall not be deemed to constitute a part hereof nor to affect the meaning
thereof.
     e. Withholding of Taxes
     To the extent that the Company is required to withhold federal, state,
local or foreign taxes in connection with any benefit realized by a Participant
under this Plan, and the amounts available to the Company for such withholding
are insufficient, it will be a condition to the realization of such benefit that
the Participant make arrangements satisfactory to the Company for payment of the
balance of such taxes required or requested to be withheld.
     f. Choice of Law
     All questions concerning the construction, validity and interpretation of
this Plan will be governed by the law of the State of California. Any Bonus will
not be effective unless such Bonus is made in compliance with all applicable
laws, rules and regulations.