Exhibit 10.1
Fiscal Year 2011 Annual Cash Incentive Plan of Hutchinson Technology
Incorporated
     Our board of directors has adopted, upon the recommendation of the board’s
compensation committee, an annual cash incentive plan for fiscal year 2011 that
covers executive officers and certain other key employees. The plan is designed
to create an incentive for these officers and employees to achieve goals that
our board of directors believes align with the long-term interests of our
shareholders. The plan incorporates corporate financial measures and divisional
strategic and financial measures.
     Individual payout amounts for achieving target level performance objectives
range from 35% to 100% of base salary for our executive officers. Achievement of
lower threshold performance objectives will result in a payout equal to 50% of a
target level payout, while achievement of higher maximum performance objectives
will result in a payout equal to 200% of a target level payout.
     Fifty percent of the cash incentive opportunity for each executive officer
is based on our achievement of annual corporate financial goals. For fiscal year
2011, 60% of the corporate component is based on the level of annual free cash
flow we achieve during the year, and the remaining 40% is based on our
achievement of positive earnings before taxes during specified portions of the
fiscal year.
     The other 50% of the cash incentive opportunity for each executive officer
is based on achievement of annual divisional goals. For fiscal year 2011, 50% of
the divisional component for our Disk Drive Components Division is based on
reductions in per unit production costs, and the remaining 50% is based on
milestones related to the startup of our Thailand manufacturing facility. For
our BioMeasurement Division, 40% of the divisional component is based on revenue
growth, 30% is based on reducing operating losses, and 30% is based on market
adoption of a new division product.
     For our chief executive officer and chief financial officer, the 50% of the
cash incentive opportunity that is based on divisional goals will be divided so
that 80% of the divisional component is based on the Disk Drive Components
Division goals and 20% is based on the BioMeasurement Division goals. For our
chief technical officer and the president of our Disk Drive Components Division,
the portion of the cash incentive opportunity based on divisional goals will be
based solely on Disk Drive Components Division goals. For the president of our
BioMeasurement Division, the portion of the cash incentive opportunity based on
divisional goals will be based solely on that division’s goals.
     The decision to make cash incentive payments is made annually by our board
of directors upon the recommendation of the compensation committee of our board.
Payments are made in cash in the first quarter of the following fiscal year.