EXHIBIT 10.2
InterDigital
Annual Employee Bonus Plan
Purpose
This Annual Employee Bonus Plan (“Plan”) is designed to provide an effective
means to motivate and compensate eligible employees, on an annual basis, through
cash and/or stock award bonuses based on the achievement of business and
individual performance objectives during each calendar year (“Plan Year”). The
Plan is intended to be the Company’s primary vehicle for the granting of
bonuses. However, the Company may, in certain limited circumstances, grant
bonuses outside of this Plan, in the sole discretion of the Company.
The compensation contemplated under this Plan is considered “pay for
performance,” in that any payout under the Plan is subject to the achievement of
specific performance goals by the Company and by each individual during the Plan
Year. The Company believes that such compensation can be a highly effective form
of compensation that can enhance the employer-employee “stakeholder”
relationship. In addition, the Company hopes that by providing short-term
incentive compensation, the Company will motivate and increase the retention
rate among its employees, which, in turn, will enhance the Company’s long-term
value.
Who Is Eligible?
All regular full-time or part-time employees1 will be eligible to receive a
bonus under the Plan, unless an employee: (i) is not working actively at the
time of the payout of the bonus or at least as of March 15th of the year
following the end of the Plan Year (unless such person was involuntarily
terminated other than for intentional wrongdoing after the end of the Plan Year,
but before the bonus was paid), (ii) was working actively for the Company for
less than ninety (90) days during the Plan Year, (iii) received an individual
performance appraisal rating of less than “2.75” (Meets Job Requirements) for
the Plan Year, or (iv) was involuntarily terminated for unsatisfactory
performance or misconduct, such determination to be made in the C.E.O.’s sole
discretion (or the Compensation Committee in the case of Section 16 Officers)
based upon documented or other objective substantiation.
The Compensation Committee may grant exceptions to the above eligibility
criteria in its sole discretion. The Chief Administrative Officer may grant
exceptions to the above eligibility criteria for non-executive employees who
have worked through the end of the third quarter of a Plan Year, provided,
however, that any bonus so awarded may not exceed $25,000. In addition,
employees who meet the eligibility requirements set out above but were not
regular full-time or part-time employees for the full Plan Year will be paid any
bonus on a pro rata basis.2 The pro rata amount will be calculated based on the
employee’s income, i.e., base salary / regular pay and other eligible earned
income, if applicable, paid during the Plan Year.
How Does the Plan Work?
Each employee is assigned a target bonus. The target bonus is a percentage of
the employee’s annual base salary in effect as of the end of the Plan Year. If
the Company or Department achieves certain business performance results and the
employee achieves certain individual goals, then the employee will receive the
target bonus. Company or Department business performance results will be
measured based on either the Company’s Annual Goals, as
 

1   “Regular full-time” and “regular part-time” employees are defined in the
Company’s employee handbook and specifically exclude “seasonal/casual employees”
(which are also defined in the Company’s employee handbook).   2   Employees who
do not work a full Plan Year because they were out of work on an approved leave
of absence for part of the plan year will be paid any bonus on a pro rata basis
by calculating the bonus based on the actual amount of eligible base income
earned during the Plan Year. If the Employee is paid for part of the leave
through PTO or other eligible accrued form of income (not including STD or
worker’s compensation payments), this income will be included in the base salary
calculation.

 

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approved by the Compensation Committee, for the C.E.O., C.F.O, President of the
Company’s patent holding subsidiaries and other Sr. Officers or based on
Departmental Goals, as approved by the Department Head and the C.E.O, for all
other levels of employees. If the actual results of the Company or Department
business performance for the year exceed or fall short of the targets, then the
target bonus will be adjusted up or down, depending upon the level of business
and individual achievement. The specific adjustments and an example of how the
bonus is calculated are described below.
The business performance goals will be determined by the Compensation Committee
for the C.E.O., C.F.O, President of the Company’s patent holding subsidiaries
and other Sr. Officer levels, and the business performance goals for each
Department will be determined by the Department Head and C.E.O and will be
communicated to the employees, normally in the first quarter of each Plan Year.
The assessment of individual performance goals will be accomplished through the
employee’s annual performance rating. The business and individual performance
goals are intended to be reasonable “stretch” goals.
The impact of actual business/departmental or individual performance during the
Plan Year on the bonus paid varies between positions, with the bonus for the
Company officers and senior level management employees being more dependent upon
overall Company/Department performance, while the bonuses for lower level
management and non-management employees being more dependent upon individual
performance. The relative weighting of the business/departmental and individual
performance goals in the calculation of the total bonus payout is based on the
employee’s position within the Company and their ability to directly impact and
be held accountable for the Company’s/Department’s overall performance.
The Annual Target Bonus for each band, and the associated weighting factors, are
as follows:

                          Band           Percentage of Bonus     (In the event a
Participant changes bands during           Related to Business   Percentage of
Annual the Plan Year, the Annual Target   Annual Target   Performance   Target
Bonus Bonus will be calculated based on the Participant’s   Bonus   (either
Company   Related to Individual actual band at year-end)   (% of base salary)  
or Departmental)   Performance
C.E.O.
    75 %     75 %     25 %
C.F.O. / President of patent holding subsidiaries
    50 %     75 %     25 %
Other Sr. Officer
    40 %     75 %     25 %
Functional VP
    35 %     75 %     25 %
Senior Director
    25 %     60 %     40 %
Director / Functional Equivalent
    20 %     60 %     40 %
Senior Manager / Functional Equivalent
    15 %     40 %     60 %
Manager / Functional Equivalent
    10 %     40 %     60 %
Non-Management
    4%/6%/8 %                
 
  (based on grade level)     25 %     75 %

In each Plan Year, the portion of the Annual Target Bonus related to business
performance may be allocated among a number of business goals.
How Do Actual Business and Individual Performance Affect the Bonus to be Paid?
As described above, the bonus consists of two components: the bonus attributable
to business /departmental performance and the bonus attributable to individual
performance. The impact of actual results as compared to business/departmental
and individual goals on any bonus to be paid is described below.
Business Goals. The calculation of the bonus payout for the business performance
will be based upon either the Company’s actual business results measured against
the goals set by the Compensation Committee (for the C.E.O., C.F.O, President of
the Company’s patent holding subsidiaries and other Sr. Officers) or the
Department’s actual business results measured against the goals set by the
Department (for all other bands). If the Company or Department achieves a
specified goal, then 100% of the bonus related to that business goal will be
awarded. If actual results deviate from established business goals, then the
bonus payout amounts will be determined as follows.
Results above the goal: If the Company/Department performance exceeds the
established business goals by a certain percentage (e.g., actual Company
earnings exceed an established goal by ten percent), then the payout of that
portion of the annual target bonus related to that business goal will be
increased by that percentage amount above the goal, up to a maximum of a 100%
increase over the bonus associated with that goal. Thus, if actual
Company/Department

 

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performance on a particular goal exceeds the goal by 10%, then the target bonus
associated with that goal will be increased by 10% (see below):

          Results   Percentage Payout
101%
    101 %
ò
  ò
200%
    200 %

Results below the goal: If the actual business performance falls short of an
established goal by a certain percentage (e.g., actual Company earnings are 10%
less than the earnings goal), then the bonus associated with that business goal
will be decreased by that percentage of the shortfall, with no bonus being
payable for a goal if the goal is missed by more than 20%. The scale for results
below the target is below:

              Percentage Results   Payout
100%
    100 %
90%
    90 %
80%
    80 %
79%
    0 %

The Compensation Committee, in its sole discretion, may determine that a
business goal has been substantially met or has been met to a degree warranting
a higher payout than would otherwise be calculable under this Plan. For example,
the Compensation Committee may determine that one-time charges should be
disregarded in determining the payout under an earnings performance goal.
Individual Performance. The evaluation of the individual performance is the
responsibility of the employee’s supervisor using the Company’s performance
evaluation system. The payout of the bonus related to individual performance
will be based on the employee’s individual appraisal rating given pursuant to
the performance evaluation, as follows:

                  Percentage Payout of         Bonus Related to        
Individual Appraisal Rating       Performance 4.85 – 5.0  
(Outstanding)
  150% 4.70 – 4.84  
( " )
  145% 4.55 – 4.69  
(Exceeds Job Requirements)
  140% 4.40 – 4.54  
( " )
  135% 4.25 – 4.39  
( " )
  130% 4.10 – 4.24  
( " )
  125% 3.95 – 4.09  
( " )
  120% 3.80 – 3.94  
( " )
  115% 3.65 – 3.79  
(Meets Job Requirements)
  110% 3.50 – 3.64  
( " )
  105% 3.35 – 3.49  
( " )
  100% 3.20 – 3.34  
( " )
    95% 3.05 – 3.19  
( " )
    90% 2.90 – 3.04  
( " )
    85% 2.75 – 2.89  
( " )
    80% 2.74 ò  
(Needs Improvement/Unsatisfactory)
      0%

When Will the Bonus Be Paid?
Bonuses will normally be paid under the Plan between February 15 and March 31 of
the year following each Plan Year.

 

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An Example of How the Bonus Is Calculated
     Assume an entry-level management employee is earning a base salary of
$50,000 and is employed for the full Plan Year. The employee has an annual
target bonus of 10% of base salary ($5,000). The Department previously
established two business targets of equal weight for the Plan Year. The actual
results for the first goal were 4% below the goal; the actual results for the
second goal were 2% above the goal. The employee achieves an individual
performance appraisal of “3.3”. The employee’s bonus would be calculated as
follows:

                                      A                 Percentage of   B      
      Bonus Relating to   Result as a   C         Performance   Percentage  
Percentage   A x C Performance Factor   Factor   of Goal   Payout   Weighted
Result
Goal One
                    96 %     19.00 %
 
    20 %     96 %   (1 to 1 ratio)     (96% x 20 %)
Goal Two
                    102 %     20.40 %
 
    20 %     102 %   (1 to 1 ratio)     (102% x 20 %)
Individual Performance
                            57 %
 
    60 %     95 %     95 %     (60% x 95 %)
Total
    100 %     N/A       N/A       96.40 % Bonus Calculation     Base Salary x
Weighted Result x Annual Target
Bonus = Bonus to be paid
$50,000 x 96.40% x 10% = $4,820  

Who Will Receive Bonus Payments in Common Stock?
For the C.E.O., C.F.O, President of the Company’s patent holding subsidiaries,
other Sr. Officer and Functional Vice President bands or technical equivalent
positions (i.e., “Fellow”), the Compensation Committee may, in its discretion,
pay up to 30% of the bonus in restricted common stock pursuant to the 2009 Stock
Incentive Plan, as amended. If restricted common stock is to be paid in lieu of
cash, the number of shares to be granted will be calculated as follows:

     
Number of Shares =
  Up to 30% of Bonus
 
  Closing Common Stock Price on the
Date Prior to the Grant as Reported in
the Wall Street Journal

The Company will reimburse the employee, on a grossed-up basis, for any tax
liability (including, in the event of a Change of Control, any excise tax
liability under Section 4999 of the Internal Revenue Code, as amended, or any
successor provision that may apply to such restricted stock payment) associated
with the grant of restricted stock. Tax liability will be calculated using
maximum tax rates. The stock will be registered but will be subject to a
two-year holding period. The Company will not impose any other material
restrictions (other than those set out in the 2009 Stock Incentive Plan or
required by law) or forfeiture provisions, including no forfeiture provisions
applicable to termination of employment except in the case of termination during
the two-year holding period for intentional wrongdoing.
Miscellaneous
The establishment of this Plan, any provisions of this Plan, and/or any action
of the Compensation Committee or any Company officer with respect to this Plan,
does not confer upon any employee the right to continued employment with the
Company. The Company reserves the right to dismiss any employee at will (at any
time, with or without prior notice, with or without cause), or otherwise deal
with an employee to the same extent as though the Plan had not been adopted.
The Company may, at its discretion, provide for any federal, state or local
income tax withholding requirements and Social Security or other tax
requirements applicable to the accrual of payment of benefits under the Plan,
and all such determinations shall be final and conclusive.
Payment of bonuses awarded under this Plan shall be made no later than March 15
of the year following the Plan Year in which the services relating to such bonus
award were rendered. The resolution of any questions with respect

 

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to payments and entitlements pursuant to the provisions of this Plan shall be
determined by the Compensation Committee, in its sole discretion, and all such
determinations shall be final and conclusive.
This Plan may be terminated or revoked by the Compensation Committee, at its
sole discretion, at any time and amended by the Compensation Committee, at its
sole discretion, from time to time without the approval of any employee,
provided that such action does not reduce the amount of any Bonus payment below
an amount equal to the amount that would have been payable to the eligible
employee with respect to the Plan Year in which the termination, revocation or
amendment of the Plan occurs under the terms of the Plan as in effect
immediately prior to such termination, revocation or amendment, applied on a pro
rata basis.
June 2009