EXHIBIT 10.5

PLX TECHNOLOGY, INC.
2012 VARIABLE COMPENSATION PLAN

 1.           Introduction - The Company hereby adopts this Plan, effective as
of January 1, 2012. The purpose of the Plan is to reward performance and to
retain all employees of PLX Technology, Inc. This document constitutes the
written instrument under which the Plan is maintained.

2.           Definitions

a.  
“Annual Operating Plan” or “AOP” is management’s projected operating plan for
2012 approved at the meeting of the Company’s Board of Directors on December 8,
2011.

b.  
“Cause” means (i) conviction of a felony or a crime of moral turpitude; (ii)
misconduct that results in harm to the Company; (iii) material failure to
perform assigned duties; or (iv) willful disregard of lawful instructions from
the chief executive officer of the Company or the Board of Directors relating to
the business of the Company or any of its affiliates.

c.  
“Code” means the Internal Revenue Code of 1986, as amended, and the regulations
issued with respect thereof.

d.  
“Committee” means the Compensation Committee of the Company’s Board of
Directors.

e.  
“Company” means PLX Technology, Inc., a Delaware corporation including its
wholly-owned subsidiaries.

f.  
“Disability” means that a Participant (i) is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, or (ii) is, by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, receiving income replacement benefits for a period of not less
than 3 months under an accident and health plan covering employees of the
Participant’s employer.

g.  
“Eligible Employee” means each full-time employee who becomes an employee of the
Company no later than September 30, 2012 who is not eligible under sales
incentive plans.

h.  
“Executive” means those individuals holding the titles listed as Executive
Participants in Exhibit A.

a.  
“Non-Executive” means Participant that does not mean the definition of
Executive.

b.  
 “Normal Retirement Age” means age sixty (60).

c.  
“Participant” means each Eligible Employee who is designated from time to time
by the Committee in writing or, for Non-Executive Eligible Employees, by the
Chief Executive Officer.

d.  
“Plan” means the PLX Technology, Inc. 2012 Variable Compensation Plan, as set
forth in this document and as hereafter amended.

e.  
“Retirement” means the termination of employment after Normal Retirement Age.

3.           Variable Compensation Award

a.  
Each Non-Executive Participant in the Plan has an adjusted target variable
compensation expressed as a percentage of their base salary as shown in Exhibit
A. The target variable compensation for Non-executive employees consists of five
segments: Revenue (10%), Gross Margin (10%), Non-GAAP spending (10%),
performance to group and or functional goals (40%) and performance to personal
objectives (30%).  A Participant cannot receive more than 100% of that
Participant’s adjusted target variable compensation for group or personal
objectives and cannot receive more than 200% of that Participant’s position
target variable compensation.  The scoring of the Participant’s performance
against the group and individual goals will be measured in the Company’s
Performance Management system.

b.  
Each Executive Participant in the Plan has an adjusted target variable
compensation expressed as a percentage of their base salary as shown in Exhibit
A. The target variable compensation for Executive employees consists of five
segments: Revenue (20%), Gross Margin (20%), Non-GAAP spending (20%),
performance to group and or functional goals (20%) and performance to personal
objectives (20%).  A Participant cannot receive more than 100% of that
Participant’s adjusted target variable compensation for group or personal
objectives and cannot receive more than 200% of that Participant’s position
target variable compensation.  The scoring of the Participant’s performance
against the group and individual goals will be measured in the Company’s
Performance Management system.

 
 
 

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c.  
Performance to operating metrics

i.  
The Company must have positive non-GAAP net income before any of the following
operating metrics-based elements would apply.  The following operating metrics
are based on the Company’s 2012 full year operating results.

ii.  
Revenue – For each percent that revenues are above or below the AOP, the
Participant’s revenue-related variable compensation target will be increased or
reduced by ten (10) percent.  The amount cannot be less than zero and is subject
to the aggregate limitation in Section 3.

iii.  
Gross Margin – For each percentage point that gross margin is above or below the
AOP, the Participant’s gross margin-related variable compensation target will be
increased or reduced by forty (40) percent.   The amount cannot be less than
zero and is subject to the aggregate limitation in Section 3.

iv.  
Non-GAAP Spending – For each percent that non-GAAP spending is above or below
the AOP, the Participant’s revenue-related variable compensation target will be
reduced or increased by twenty (20) percent.  The amount cannot be less than
zero and is subject to the aggregate limitation in Section 3.

d.  
Adjustment of AOP – If a significant transaction that was not contemplated in
the AOP occurs during 2012 and has the effect of modifying Revenue, Gross Margin
or Non-GAAP Spending expectations, the Compensation Committee may make
adjustments to the AOP to reflect those changes.

  4.           Payment of Variable Compensation Award

a.  
Vesting, Timing and Form of Payment.

i.  
Subject to Sections 4(b), 4(c), 4(d) and 7, each Non-executive Participant’s
Award Payment Amount shall vest on January 1, 2013 and be paid on the last
business day in January 2013.

ii.  
Subject to Sections 4(b), 4(c), 4(d) and 7, for Executive Participants, one
hundred percent (100%) of the first $1,200,000 of the Pool assigned to
Executives shall vest on January 1, 2013 and be paid to the Participants on the
last business day in January 2013.

a.  
Aggregate amounts for the Executive Participant group that exceed $1,200,000
shall be paid as follows:

b.  
Sixty percent (60%) of the amount in excess of $1,200,000 will be allocated to
the Executive Participants and shall vest on January 1, 2013 and be paid to the
Executive Participants on the last business day in January, 2013,

c.  
Twenty percent (20%) of the amount in excess of $1,200,000 will be allocated to
the Executive Participants and shall vest on January 1, 2014 and be paid to the
Executive Participants on the last business day in January, 2014 and

d.  
Twenty percent (20%) of the amount in excess of $1,200,000 will be allocated to
the Executive Participants and shall vest on January 1, 2015 and be paid to the
Executive Participants on the last business day in January, 2015.

e.  
Interest on Award Payment Amount - Interest at the Fed Funds Rate as of the last
business day in January 2013 shall accrue on the Participant’s unvested and
unpaid Award Payment Amount. Subject to the forfeiture provisions in Section
4(c), interest shall be paid in accordance with the vesting schedule established
by the Committee at the time the Award Payment is made.

b.  
Distribution in the event of Retirement, termination as a result of Disability
or termination without Cause - If a Participant terminates employment because of
Retirement or Disability, or the Company terminates a Participant’s employment
without Cause, the Participant shall be entitled to payment of all of his or her
Award Payment Amount according to the schedule in Section 4(a), provided that if
termination under these conditions occurs prior to January 1, 2013, the amount
of the Variable Compensation Award payable will be the Award Payment Amount
calculated pursuant to Section 3, multiplied by the number of days employee was
employed in 2012 by the Company and then divided by 365 days, and all remaining
amounts payable under Variable Compensation Award for 2012 shall be forfeited.

c.  
Forfeiture - If the Company terminates a Participant’s employment for Cause or
if the Participant’s employment is terminated for any reason not identified in
4(b), he or she shall forfeit all or any portion of his or her entire Award
Payment Amount for 2012 (as set forth in Section 3) which is not yet vested and
payable under the schedule set forth in Section 4(a) as of the date of
termination.

 
 
 

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d.  
Timing of Distribution to a Beneficiary - If a Participant dies while still
employed by the Company or after termination due to Retirement, Disability, or
termination by the Company without Cause but before receiving a distribution of
all of his or her Award Payment Amount according the schedule in Section 4(a),
then the vesting of the Participant’s Award Payment Amount shall be fully
accelerated such that one-hundred percent (100%) of the Award Payment Amount, as
calculated pursuant to Section 4(b) hereof (with the amount prorated to the date
of death in the event death occurs prior to January 1, 2013), will be
distributed to his or her beneficiary as a lump sum distribution on the last
business day in January, 2013 following the Participant’s death.

e.  
Beneficiary Designation - Each Participant must designate a beneficiary to
receive a distribution of his or her Variable Compensation Award if the
Participant dies before such amount is fully distributed to him or her. To be
effective, a beneficiary designation must be signed, dated and delivered to the
Committee. In the absence of a valid or effective beneficiary designation, the
Participant’s surviving spouse will be his or her beneficiary or, if there is no
surviving spouse, the Participant’s estate will be his or her beneficiary. If a
married Participant designates anyone other than his or her spouse as his or her
beneficiary, such designation will be void unless it is signed and dated by the
Participant’s spouse.

5.           Withholding - The Company will withhold from any Plan distribution
all legally required taxes and deductions.

6.           Administration - The Committee has the full and exclusive
discretion to interpret and administer the Plan. All actions, interpretations
and decisions of the Committee are conclusive and binding on all persons, and
will be given the maximum possible deference allowed by law. Subject to the
provisions of the Plan, the Committee shall have full authority to select, in
its sole discretion the Participants to whom Variable Compensation Awards will
be granted.

7.           Amendment or Termination - Through December 31, 2012, the
Committee, in its sole and unlimited discretion, may amend or terminate the Plan
at any time, without prior notice to any Participant. After January 1, 2013, the
Committee may amend or terminate the Plan provided that any such amendment does
not reduce or increase any benefit which a Participant has earned and is
otherwise entitled to under the terms of the Plan, nor accelerate the timing of
any payment under the Plan. Notwithstanding the foregoing to the contrary, the
Company reserves the right to the extent it deems necessary or advisable, in its
sole discretion, to unilaterally alter or modify the Plan and any Variable
Compensation Awards made thereunder to ensure that the Plan and Variable
Compensation Awards provided to Participants who are U.S. taxpayers are made in
such a manner that either qualify for exemption from or comply with Code Section
409A; provided, however, that the Company makes no representations that the Plan
or any Variable Compensation Awards made thereunder will be exempt from or
comply with Code Section 409A and makes no undertaking to preclude Code Section
409A from applying to the Plan or any Variable Compensation Awards made
thereunder. The Plan shall automatically terminate on the date when no
Participant (or beneficiary) has any right to or expectation of payment of
further benefits under the Plan.

8.           Source of Payments - All payments under the Plan will be paid in
cash from the general funds of the Company. No separate fund will be established
under the Plan, and the Plan will have no assets. Any right of any person to
receive any payment under the Plan is no greater than the right of any other
general unsecured creditor of the Company. This Plan shall be binding upon the
Company’s successors and assigns.

9.           Inalienability - A Participant’s rights to benefits under the Plan
are not subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors of the
Participant or the Participant’s beneficiary.
 
 
 

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10.           Applicable Law - The provisions of the Plan will be construed,
administered and enforced in accordance with the laws of the State of California
without reference to its principles of conflicts-of-laws.

11.           Severability - If any provision of the Plan is held invalid or
unenforceable, its invalidity or unenforceability will not affect any other
provision of the Plan, and the Plan will be construed and enforced as if such
provision had not been included.

12.           No Right of Continued Employment - THIS PLAN DOES NOT GIVE ANY
ELIGIBLE EMPLOYEE OR PARTICIPANT THE RIGHT TO BE RETAINED AS AN EMPLOYEE.
SUBJECT TO THE TERMS OF ANY WRITTEN EMPLOYMENT AGREEMENT TO THE CONTRARY, THE
COMPANY SHALL HAVE THE RIGHT TO TERMINATE OR CHANGE THE TERMS OF EMPLOYMENT OF
AN ELIGIBLE EMPLOYEE OR A PARTICIPANT AT ANY TIME AND FOR ANY REASON WHATSOEVER,
WITH OR WITHOUT CAUSE.

13.           Bindings on Successor - The liabilities and obligations of the
Company under this Plan will be binding upon any successor corporation or entity
which succeeds to all or substantially all of the assets and business of the
Company by merger or other transaction.
 
 
IN WITNESS WHEREOF, PLX Technology, Inc., by its duly authorized officer, has
executed the Plan on the date indicated below.

PLX TECHNOLOGY, INC.
   /s/       Ralph Schmitt
Name: Ralph Schmitt
Title: Chief Executive Officer
Date: April 2, 2012
 
 
 

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Exhibit A

Each Participant shall have a variable compensation target based upon their
position and a percentage of their annual salary. The Participant’s target and
adjusted target compensation from the Plan is as follows:
 
Executive Participants
  Position Target    
Adjusted Target
 
CEO:
    100 %     80 %
COO:
    90 %     72 %
CFO:
    90 %     72 %
EVP and GM of Products
    90 %     72 %
VP Sales:
    75 %     60 %
VP Marketing & Bus. Dev.:
    75 %     60 %
VP Operations:
    75 %     60 %
VP Engineering - Switching:
    75 %     60 %
VP Engineering PHY:
    75 %     60 %
VP Engineering Architecture and Applications, PHY:
    75 %     60 %

 
Non-Executive Participants
 
Position Target
   
Adjusted Target
 
Non-Executive VP
    25 %     20 %
Senior Directors
    20 %     16 %
Directors
    15 %     12 %
Sr. Managers or Managers
    10 %     8 %
Individual contributors:
    8 %     6.40 %
Non-exempt employees:
    5 %     4 %

 

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