Exhibit 10.1

 

Credence Systems Corporation

2008 Executive Incentive Plan

 

I. INTRODUCTION

 

a. The Objective of the 2008 Executive Incentive Plan (the “Plan”) is to
(i) enhance stockholder value by promoting strong linkages between employee
contributions and company performance; (ii) support achievement of the business
objectives of Credence Systems Corporation (the “Company”); and (iii) promote
retention of participating employees of the Company.

 

b. Participants: This plan applies solely to the President & CEO and the senior
executives reporting directly to the CEO of Credence Systems Corporation.

 

c. Effective Date: This Plan is effective for the fiscal year 2008, beginning
November 4, 2007 through November 1, 2008.  This Plan is limited in time and
expires automatically on November 1, 2008.  All benefits under this Plan are
voluntary benefits.  Participation in this Plan during fiscal year 2008 does not
convey any entitlement to participate in this or future plans or to the same or
similar bonus payment benefits.

 

d. Changes in the Plan: The Company presently has no plans to change the Plan
during the fiscal year. However, the Plan is a voluntary benefit provided by the
Company and by virtue of the fact that bonuses are not a contractual entitlement
and are paid at the sole discretion of the Company, the Company reserves the
right to modify the Plan, in total or in part, at any time.  Any such change
must be in writing and approved by the Board of Directors.  The Board of
Directors reserve the right to interpret the Plan document as needed and such
interpretations will be final, conclusive and binding on all persons, and will
be given the maximum deference permitted by law.

 

e. Entire Agreement: This Plan is the entire agreement between the Company and
the employee regarding the subject matter of this Plan and supersedes all prior
bonus or commission incentive plans, whether with Credence or any subsidiary or
affiliate thereof, or any written or verbal representations regarding the
subject matter of this Plan.

 

 

II. ELIGIBILITY AND INCENTIVE PLAN ELEMENTS

 

a. Eligibility: The participants are eligible for the incentive payout if they
meet the following requirements:

 

·                  Except as otherwise explicitly set forth in the Participant’s
Incentive Target Percentage Schedule (as defined in Section II.c below), are not
currently on a sales incentive or commission plan or any other significant form
of variable compensation (such as a services bonus plan)

 

·                  Have a performance rating of Meets Expectations or above

 

·                  Do not have a performance rating of Needs Development or
lower at the time of calculation

 

·                  Are not on a performance improvement plan at the time of
calculation

 

·                  Have not received a written notice of warning or other
disciplinary action during the year that remains in effect at the time of
calculation

 

AND

 

The participant must be employed in an incentive-eligible position on or before
the first working day of the last fiscal quarter of fiscal year 2008 and must be
employed by the Company on the day the bonus is paid to be eligible for a 2008
incentive payment. Participants may expect to receive their 2008 incentive
payment on or about the end of January 2009.  In no event will any individual
accrue any right or entitlement to any incentive under this Plan unless that
individual is

 

 

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employed by the Company on the day the bonus is paid.  Any exception to the
above must be approved in writing by the Company’s Compensation Committee.

 

b. Annual Earnings through the end of the fiscal year represents the basis for
the incentive calculation.  Nothing in the Plan, or arising as a result of a
Participant’s participation in the Plan, will prevent the Company from changing
a Participant’s annual base salary at any time based on such factors as the
Company in its sole discretion determines appropriate.

 

c. Incentive Target Percentage is a percentage level of base salary determined
by the employee’s position. These targets will be weighted by company and
individual performance, and will be set forth in an Incentive Target Percentage
Schedule for each Participant in substantially the form attached hereto as
Schedule A.

 

d. Individual Performance Factor is based upon the manager’s evaluation of
performance and contribution for the fiscal year.  As a Factor to the incentive
target for the position, this factor can range from 0 to 150%.

 

e. Credence Systems Corporation Performance Factor is based upon the Company
achieving an established worldwide revenue target and a worldwide operating
income target per the 2008 operating plan approved by the Board of Directors of
the Company. The applicable targets for fiscal year 2008 can be amended by the
Board of Directors at any time during the fiscal year. Notwithstanding anything
to the contrary contained herein, the Board of Directors has the discretion to
determine to pay less than the full amount (including to pay zero percent) of
the payout to which any Participant would otherwise be entitled, which
determination will be based upon such factors as the Board of Directors
determines appropriate (including without limitation as a result of the
Company’s or a Participant’s failing to achieve one or more objectives with
respect to the fiscal year).  When the Revenue and Operating Income percentages
fall between the stated percentages on the matrix, the Performance Factor will
be determined using a straight-line interpolation approach. If the Company
exceeds 120% of Revenue and/or Operating Income, the Board of Directors, at its
sole discretion, will determine what, if any, additional amounts may be paid to
Plan participants.  The Company must exceed 80% of both the revenue and
operating income target for any incentive payment.  The Company Performance
factor may be modified at the sole discretion of the Board of Directors in the
event of an extraordinary or exceptional circumstance.

 

 

Company Performance Factor

 

Company
Revenue
Target

 

 

 

Company
Operating
Income
Target

 

 

% of Target

 

Payout

 

% of Target

 

Payout

120%

 

100%

 

120%

 

100%

110%

 

90%

 

110%

 

90%

105%

 

85%

 

105%

 

85%

100%

 

80%

 

100%

 

80%

95%

 

75%

 

95%

 

75%

90%

 

50%

 

90%

 

50%

85%

 

25%

 

85%

 

25%

80%

 

0%

 

80%

 

0%

 

 

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Example:                                         Credence Systems Corporation
Performance

Actual Revenue is 110% of Goal

Actual Operating Income is 120% of Goal

 

Credence Systems Corporation Performance Factor = .5(90%) + .5(100%) = 95%

 

 

f. Transfers and Terminations: Any employee who is a participant in the Plan and
who transfers to a new position not governed by this Plan will be eligible on a
pro-rata basis for the applicable period and paid as defined by the Plan.
Employees who transfer into the Plan from another plan will be subject to
proration as well, and consequently will be eligible to receive an incentive
payment prorated for the time they participate in this Plan during fiscal year
2008. Payments from the Plan are subject to reduction by advances, unearned
commission advances, draws or prorations and appropriate withholdings. Any
exceptions to the Plan must be in writing and approved by the Board of
Directors.

 

A participant must be employed as of the day the bonus is paid to be eligible
for any incentive payment. If an employee terminates prior to the date the bonus
is paid, the employee will not be eligible for such incentive payment.

 

 

III. PRACTICES AND PROCEDURES

 

a. Procedure:

 

·                  A copy of the Plan will be made available to each
participant.

 

·                  All incentive payments will be made after all required or
elected withholdings have been deducted.

 

b. Governing Law: This Plan is governed by the law of California and the parties
hereby submit to the exclusive jurisdiction of the County of Santa Clara,
California courts.

 

 

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SCHEDULE A

 

INCENTIVE TARGET PERCENTAGE SCHEDULE

 

 

Position

 

Target

 

Company
Performance

 

Individual
Performance

 

SVP, WW Field Operations

 

0.60

 

0.8

 

0.2

 

SVP, R&D

 

0.60

 

0.8

 

0.2

 

VP, Business Operations

 

0.60

 

0.8

 

0.2

 

CFO

 

0.60

 

0.8

 

0.2

 

SVP, Manufacturing Ops

 

0.60

 

0.8

 

0.2

 

President & CEO

 

1.00

 

0.8

 

0.2

 

SVP & General Counsel

 

0.60

 

0.8

 

0.2

 

VP, Human Resources

 

0.60

 

0.8

 

0.2

 

 

 

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