Exhibit 10.21

 

Cymer, Inc.

Long-Term Incentive Bonus Program

Summary Description

 

Establishment:  The Compensation Committee of Cymer’s Board of Directors adopted
the Long-Term Incentive Bonus Program on October 16, 2007 (“LTIP”) effective
January 1, 2008.

 

Eligibility: Director-level employees and Director-equivalent Individual
Contributor employees and above that are employed by Cymer or its subsidiaries
are eligible to participate in the LTIP.

 

New Hires, Promotions and Eligibility:  Eligible employees first hired or
promoted to an eligible position after January 1st of a fiscal year and on or
prior to September 30th of such fiscal year will not be eligible to receive a
Stock Option under the LTIP for that fiscal year, but such eligible employees
will be eligible to receive a pro-rated target PRSU award under the LTIP for
that fiscal year.  The PRSU award target amount for such newly eligible
employees will be prorated based on the number of days such person is eligible
to participate in the LTIP during such fiscal year in relation to the total
number of days in the fiscal year.  The proration factor will be determined by
dividing the number of days during the fiscal year that such person was eligible
to participate in the LTIP by 365 days.  Those employees first hired or promoted
to an eligible position on or after October 1st of a fiscal year will not be
eligible to receive any Stock Option or PRSU award under the LITP for that
fiscal year.

 

Bonus Targets:  Any potential equity based bonuses paid under the LTIP will be
calculated based on a target dollar amount.  This target dollar amount is
divided into two (2) equity award components to be granted under Cymer’s Amended
And Restated 2005 Equity Incentive Plan or any successor equity incentive plan
(“Incentive Plan”): 50% in time-based vesting stock options (“Stock Options”)
and 50% in performance-based restricted stock units (“PRSUs”).  The Stock
Options and PRSUs will be granted on the first trading day of the applicable
fiscal year.  The target amount opportunity is tied to the position level held
on the first trading day of the fiscal year and is expressed as a dollar value
(i.e., participants at the same position level are eligible to receive equity
awards based upon the same dollar opportunity).

 

Performance Measures: The number of shares subject to the granted PRSU awards
that will vest and become issuable to participants following the applicable
3-year performance period that commences on the first trading day of the fiscal
year that includes the date of grant (“the 3-year performance period”) will be
determined based on Cymer’s relative performance compared to Cymer’s peer
companies as listed on the attached Appendix A (the “peer companies”) over the
3-year performance period, and individual MBO achievement during the 3-year
performance period, such determination based on performance measures approved by
the Compensation Committee of Cymer’s Board of Directors as follows:

 

Financial Performance Metrics:  Cymer’s actual performance measured against two
financial metrics:

 

·                  Revenue Growth relative to peer companies:  60% weighting.

Revenue Growth is defined as the average 1-year growth for three (3) fiscal
years covered in the 3-year performance period.  1-year growth is calculated as
ending fiscal year total revenue divided by prior fiscal year total revenue,
minus one.

 

·                  Net Income Growth relative to peer companies:  40% weighting.

Net Income Growth is defined as the average 1-year net income change as a
percent of revenue for the three (3) years covered in the 3-year performance
period.  One year change is calculated as ending year net income minus prior
year net income, divided by ending year total revenue.  Note:  the net income
change as a percent of revenue calculation is used rather than true net income
growth (ending year net income divided by prior year net income, minus one) as
many peer companies have recently experienced net losses and net income growth
cannot be calculated when one year is a loss.

 

Individual Performance Metrics:  The number of shares subject to PRSUs that will
vest and be issued will be adjusted downward if the participant’s individual
3-year average MBO achievement during the 3-year performance period is less than
100% of the participant’s target MBOs.  For example, if individual average MBO
achievement over the 3-year performance period is 92% of target (100%), the
number of shares subject to PRSUs that will vest and be issued on the payout
date is reduced by 8%.

 

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Calculation of Benefits:

 

Award Determination:  The actual award earned is based on Cymer’s percentile
rank of actual performance as measured relative to peer companies for Revenue
Growth (weighted 60%) and Net Income Growth (weighted 40%):

 

Percent Rank vs. Peers

 

Percent of Target 
Award Earned

 

<40th Percentile

 

0

%

40th– 50th Percentile

 

50

%

50th– 60th Percentile

 

75

%

60th– 70th Percentile

 

100

%

70th– 80th Percentile

 

125

%

80th– 90th Percentile

 

150

%

Greater than 90th Percentile

 

200

%

 

Performance Adjustments:  Adjustments will be made to the target bonus based
upon actual achievement of the established performance metrics.  All
determinations of financial and individual MBO metric performance are subject to
approval by executive management and/or the Compensation Committee of Cymer’s
Board of Directors:

 

·                  Target Revenue Growth Adjustments:

 

·                  no bonus awarded for relative performance to peer companies
below 40th percentile ranking (refer to chart above),

 

·                  above-plan performance multiplier will be applied only to the
PRSU portion of the target revenue growth component bonus amounts when Cymer’s
performance is greater than 90th percentile ranking (refer to chart above)
against peer companies.

 

·                  Target Net Income Growth Adjustments:

 

·                  no bonus awarded for performance below 40th percentile
ranking (refer to chart above),

 

·                  above-plan performance multiplier will be applied only to the
PRSU portion of the target revenue growth component bonus amounts when Cymer’s
performance is greater than 90th percentile ranking (refer to chart above)
against peer companies.

 

·                  Target Individual MBO Adjustments:

 

·                  no bonus amount awarded to a participant whose individual
3-year average MBO performance is below 60% of the 3-year average MBO target,
regardless of Cymer’s financial performance,

 

·                  PRSUs will be adjusted downward based on the individual’s
3-year average MBO achievement if 3-year average MBO achievement is below 100%.

 

Vesting/Performance Period:  The Stock Option portion of the LTIP bonus will be
granted on the first trading day of the applicable fiscal year and will vest
over a four year period commencing on the grant date (25% of the shares vest on
the 1-year anniversary of the grant date, and the balance of the shares vest
monthly thereafter over the remaining 3-years subject to the participant’s
continued service with Cymer through the applicable vesting dates).

 

The PRSU portion of the LTIP bonus will be granted on the first trading day of
the applicable fiscal year.  The PRSU shares will vest and be issued, if at all,
following the end of the 3-year performance period.  The number of PRSU shares
that vest and will be issued to the participant, if any, will be contingent upon
the level of achievement of the performance measures as determined by the
Compensation Committee following the end of the 3-year performance period.  The
PRSU shares that vest upon achievement of the performance measures, as
determined by the Compensation Committee, will be issued during the first
calendar year that follows the 3-year performance period, but no later than 30
days following the completion and certification of financial statements for the
3-year performance period.  A participant must be employed on the last day of
the 3-year performance period in order to be eligible for any shares subject to
the PRSU award to vest and become issuable to the participant.

 

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Terms of Stock Options:  Stock options will be granted in accordance with the
terms of Cymer’s Incentive Plan and the applicable from of stock option
agreement for the Incentive Plan.  Participants will receive a prospectus
describing the terms of the Stock Options according to the Incentive Plan.  The
exercise price of the Stock Options will be the fair market value of Cymer’s
common stock on the date of grant, the first trading day of the applicable
fiscal year.

 

Terms of PRSUs:  The PRSUs will be granted in accordance with the terms of
Cymer’s Incentive Plan and the applicable form of stock unit agreement for the
Incentive Plan.  Participants will receive a prospectus describing the terms of
the PRSUs according to the Incentive Plan.

 

Approval and Process:  Revenue growth and net income growth performance will be
calculated and verified by Finance and approved by the Compensation Committee of
Cymer’s Board of Directors for the performance period.   All determinations of
financial and individual MBO metric performance are subject to approval by
executive management and/or the Compensation Committee of Cymer’s Board of
Directors.  The Compensation Committee has the authority to alter any portion of
the bonus payable to any individual participant under the LTIP.

 

Annual Maximum:  The dollar value of the aggregate annual bonus awards under the
LTIP and the Short-Term Incentive Plan (STIP) may not exceed 15% of Cymer’s
adjusted EBITDA annually (earnings before interest, taxes, depreciation,
amortization and compensation expense attributable to stock options). If the
aggregate bonus amount under both plans exceeds the cap, the bonus pool will be
adjusted downward proportional to 15% of Cymer’s adjusted EBITDA for the year.

 

Disclaimer:  Cymer reserves the right to modify the LTIP at any time. Cymer also
retains the right to award additional incentive compensation outside the LTIP
without regard to the minimum performance metrics or annual maximum limits set
forth in the LTIP.

 

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APPENDIX A

 

List of Peer Companies(1)

 

Advanced Energy Industries, Inc.

Asyst Technologies, Inc.

Axcelis Technologies, Inc.

Brooks Automation, Inc. (USA)

Coherant

FEI Company

FLIR Systems, Inc.

FormFactor, Inc.

MKS Instruments, Inc.

Newport Corporation

Phototronics, Inc.

Varian Semiconductor

Veeco Instruments, Inc.

Agilent Technologies Inc.

Applied Materials, Inc.

KLA-Tencor Corporation

Lam Research Corporation

Leap Wireless International, Inc.

MEMC Electronic Materials, Inc.

Microchip Technology, Inc.

Novellus Systems, Inc.

 

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(1) The applicable list of peer companies will be reconfirmed by Cymer prior to
the beginning of each performance period, commencing with the 2009 performance
period.  If a company is acquired or is no longer an operating entity as of the
end of the performance period, the company will be excluded from the peer list
for that performance period.

 

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APPENDIX B

 

Target Amounts for Fiscal Year 2008

 

The target amounts for fiscal year 2008 performance are as follows:

 

Participant Level

 

 

Target LTI Award Value
(1)

 

Stock Options(2)

 

PRSU Portion (shares)(2)

 

Chief Executive Officer

(3

)

$

1,800,000

 

69,345

 

22,480

 

 

 

 

 

 

 

 

 

 

Chief Operating Officer

(3

)

$

1,350,000

 

52,005

 

16,860

 

 

 

 

 

 

 

 

 

 

Chief Financial Officer

(3

)

$

960,000

 

36,975

 

11,990

 

 

 

 

 

 

 

 

 

 

Senior Vice Presidents

(3

)

$

525,000-350,000

 

20,200-13,485

 

6,560-4,370

 

 

 

 

 

 

 

 

 

 

Vice Presidents and Fellows
(employed in U.S.)

(3

)

$

200,000-$125,000

 

7,710-4,815

 

2,500-1,560

 

 

 

 

 

 

 

 

 

 

Sr Dir, Dir, IC VI and IC V
(employed in U.S.)

(3

)

$

60,000-$35,000

 

2,310-1,350

 

750-440

 

 

 

 

 

 

 

 

 

 

Director 1, Director 2, Country
Manager, Vice President 1
(international employees)

(3

)

$

24,500-$17,500

 

945-675

 

310-220

 

 

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(1)                The target amounts for each participant level represents the
LTIP awards that will be made assuming that exactly 100% of the financial and
individual performance target metrics are met.  Please refer to the sections
entitled “Performance Measures” and “Calculation of Benefits” for a description
of adjustments to be made to the bonus targets depending upon actual
performance.

 

(2)                The number of Stock Options was calculated by dividing the
target dollar value applicable to the Stock Options by the Black-Scholes value
on December 14th, 2007, rounding such number to the nearest 10 shares, and
multiplying that result by 1.5.  The number of PRSUs was calculated by dividing
the target dollar value applicable to the PRSU portion of the award and dividing
by Cymer’s 60-day trading average stock price immediately preceding
December 14th, 2007, and rounding to the nearest whole number of shares.

 

(3)                Bonus amounts for above-plan performance are subject to a
200% multiplier.

 

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