EXHIBIT 10.1

 

SRS LABS, INC.

 

NON-EMPLOYEE DIRECTOR COMPENSATION POLICY

 

On January 28, 2005, the Board of Directors of SRS Labs, Inc. (the “Company”)
approved the following compensation policies with respect to the Company’s
non-employee directors.  These policies were adopted by the Board and may be
changed from time-to-time by the Board.

 

Cash Compensation.    Directors who also are employees of the Company are not
paid any fees or remuneration, as such, for their service on the Board or on any
Board committee.  Each non-employee director of the Company will receive an
annual retainer of $12,000.  In addition, the chairs and members of the standing
committees of the Board will receive the following supplemental annual
retainers:

 

Committee

 

Chair

 

Members

 

Audit

 

$

12,000

 

$

9,000

 

Compensation

 

$

11,000

 

$

8,000

 

Nomination & Corporate Governance

 

$

8,000

 

$

6,000

 

 

The lead director will also receive a supplemental annual retainer of $4,000.
All non-employee directors of the Company will also receive a $1,000 fee per
meeting for each Board meeting attended, and all non-employee director committee
members will also receive a $500 fee per meeting for each committee meeting
attended. In addition, each non-employee director who resides outside the
Southern California area is entitled to receive reimbursement for reasonable
travel expenses in accordance with the Company’s travel expense policy, with
respect to each Board or Board committee meeting held in Southern California
that such non-employee director attends in person.   For Board or Board
Committee meetings held outside the Southern California area, each non-employee
director is entitled to receive reimbursement for reasonable travel expenses in
accordance with the Company’s travel policy for meetings such non-employee
director attends in person.

 

Non-employee Directors’ Plan.    Each non-employee director is eligible to
receive stock options under the SRS Labs, Inc. Amended and Restated 1996
Non-employee Directors’ Stock Option Plan (the “Non-employee Directors’ Plan”),
a non-discretionary, formula stock option plan.  Under the Non-employee
Directors’ Plan, (a) each non-employee director who first becomes a member of
the Board is granted an option to purchase 10,000 shares of Common Stock
automatically upon election to the Board of Directors which vests upon the date
of grant, and (b) each non-employee director is granted an option to purchase
15,000 shares of Common Stock automatically effective at the close of business
on the date of each of the Company’s annual meeting of stockholders at which
such non-employee director is elected which vests in three equal annual
installments commencing on the first anniversary of the applicable date of
grant.

 

Incentive Plan.    Each non-employee director also is eligible to receive awards
under the Company’s Amended and Restated 1996 Long-Term Incentive Plan (the
“Incentive Plan”), a discretionary plan currently administered by the
Compensation Committee.  Under the Board’s policy, each non-employee member of
the Board of Directors will be granted an option to purchase 30,000 shares of
the Company’s Common Stock pursuant to the Incentive Plan, effective as of the
close of business on the date of each annual meeting of stockholders at which
such non-employee director is re-elected as a non-employee director or continues
in office as an incumbent director, with the following terms and conditions: (a)
the options shall be subject to all terms and conditions of the Incentive Plan;
(b) the options shall vest as follows: 1/4th to vest one year after the date of
grant; and 1/16th every three months during the next three successive years
thereafter; (c) the options shall have a term of 10 years from the date of
grant; and (d) the exercise price shall be the fair market value of the
Company’s Common Stock on the date of grant.

 

--------------------------------------------------------------------------------