Exhibit 10.1
BROADCOM CORPORATION
2005 PERFORMANCE BONUS PLAN
     I. PURPOSES OF THE PLAN
          A. The Broadcom Corporation 2005 Performance Bonus Plan (the “Plan”)
is intended to promote the interests of Broadcom Corporation (the “Company”) and
its shareholders by establishing a compensation program to provide executives
and other key employees with incentive awards tied to the achievement of goals
relating to the performance of the Company and/or the achievement of individual
performance goals.
          B. The Plan shall be in effect for the Company’s fiscal year ending
December 31, 2005 (the “Plan Year”), and bonuses may be earned under the Plan on
the basis of the Company’s financial performance for such Plan Year.
     II. PLAN ADMINISTRATION
          A. The Plan shall be administered by the Compensation Committee of the
Company’s Board of Directors. The Compensation Committee in its capacity as
administrator of the Plan (the “Plan Administrator”) shall have full power and
authority (subject to the express provisions of the Plan ) to:
               (i) establish the performance objectives to be attained for the
Plan Year in order for participants to become entitled to bonus payments under
the Plan;
               (ii) determine the actual bonus (if any) to be paid to each
participant based on actual performance relative to the established objectives
for the Plan Year; and
               (iii) determine whether the bonus payments are to be made in
cash, restricted stock units (“RSUs”) covering shares of the Company’s Class A
common stock (the “Common Stock”) that may vest and become issuable over a
designated service period measured from the start date of the Company’s 2006
fiscal year or that may be fully vested and issuable when awarded, or a
combination of cash and RSUs.
          B. The Plan Administrator shall also have full power and authority to
interpret and construe the provisions of the Plan, to adopt rules and
regulations for the administration of the Plan and to determine an individual’s
eligibility for participation in the Plan and the amount of the actual bonus (if
any) to be paid to him or her.
          C. Decisions of the Plan Administrator shall be final and binding upon
all parties who may have an interest in the Plan or any bonus amount payable
under the Plan.
III. PARTICIPATION
          A. The individuals who shall participate in the Plan for the Plan Year
shall be limited to (i) the executive officers of the Company, (ii) all other
employees of the Company (or its subsidiaries) at the level of Director or above
and (iii) any other employees of the Company

 

--------------------------------------------------------------------------------

 

(or its subsidiaries) identified by the Company’s Chief Executive Officer as key
contributors to the Company’s growth and financial success and selected for
participation in the Plan by the Plan Administrator.
          B. A participant shall cease to participate in the Plan and shall not
be entitled to any bonus payment under the Plan if that participant ceases
Employee status for any reason prior to the date that bonuses are paid under the
Plan (the “Distribution Date”); provided, however, that:
     (i) a participant who ceases Employee status prior to the Distribution Date
by reason of death or Disability may be entitled to receive a pro-rated bonus
based upon the number of days which such individual remained in active Employee
status during the Plan Period (as defined below); and
     (ii) the Plan Administrator shall have complete discretion to make
individual bonus awards under Article V of the Plan to one or more participants
who terminate Employee status for any other reason prior to the Distribution
Date, when the Plan Administrator deems the special circumstances of the
participant’s termination warrant a bonus award under the Plan.
          C. For purposes of the Plan:
     (i) A participant shall be deemed to have ceased Employee status by reason
of a Disability if such cessation of Employee status is occasioned by his or her
inability to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which is expected to result
in death or has lasted or can be expected to last for a continuous period of
twelve (12) months or longer.
     (ii) A participant shall be deemed to continue in Employee status for so
long as that individual remains in the employ of the Company or any subsidiary
of the Company;
     (iii) The Plan Period shall mean the period beginning with the first day of
the Plan Year and ending with the Distribution Date.
     (iv) Each corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company shall be considered to be a subsidiary
of the Company, provided that each such corporation (other than the last
corporation in the unbroken chain) owns, at the time of determination, stock
possessing more than fifty percent (50%) of the total combined voting power of
all classes of stock in one of the other corporations in such chain.
          D. A participant who is absent from active Employee status for a
portion of the Plan Period by reason of an authorized leave of absence shall not
be deemed to have ceased Employee status during the period of that leave.
However, such participant’s bonus may be pro-rated based on the portion of the
Plan Period during which that individual is in active working status and not on
such leave of absence, unless the Plan Administrator otherwise deems it

 

--------------------------------------------------------------------------------

 

appropriate under the circumstances to provide that individual with a full bonus
for the Plan Period.
     IV. BONUS POOL
          A. The Plan Administrator shall take each of the following actions
during the Plan Year:
     (i) The Plan Administrator shall establish the specific performance
objectives that must be attained for the Plan Year for a bonus pool to be
created under the Plan for that year. The performance objectives may be based on
one or more of the following financial measures: (a) net revenue, (b) pro forma
gross margin, (c) pro forma operating margin, (d) pro forma earnings per share
and/or (e) change in the price per share of the Common Stock relative to the
stock prices of an identified peer group.
     (ii) The Plan Administrator shall determine the bonus pool for the Plan
Year. The target bonus pool for the Plan Year shall be ten million dollars
($10,000,000). The maximum bonus pool payable under the Plan in the event the
Company exceeds each of the established performance objectives shall be limited
to fifteen million dollars ($15,000,000). The actual dollar amount of the bonus
pool to be awarded for the Plan Year shall be determined on the basis of the
Company’s actual performance relative to each of the performance objectives
established for the Plan Year. Accordingly, each performance objective shall be
measured separately in terms of actual percentage attainment and shall be
weighted equally in determining the actual size of the bonus pool. For example,
if five (5) performance objectives are established, then each objective at one
hundred percent (100%) attainment will account for twenty percent (20%) of the
total target bonus pool or two million dollars ($2,000,000). No bonus pool will
be established with respect any performance objective, unless the Company
attains at least a specified percentage of that objective, with such
specification to be made by the Plan Administrator at the time each performance
objective is established.
          B. In determining whether the established performance objectives based
on pro forma gross margin, pro forma operating margin and pro forma earnings per
share are attained, the Plan Administrator shall apply the dollar amounts which
the Company reports for those items in accordance with U.S. generally accepted
accounting principles (“GAPP”), as adjusted for non-cash, non-recurring,
extraordinary and certain other items. The dollar amount of the actual bonus
pool shall be determined by the Plan Administrator as soon as administratively
practicable following the completion of the audit of the Company’s 2005
financial statements by the Company’s independent registered public accounting
firm.
     V. INDIVIDUAL BONUS AWARDS
          A. The actual bonus award to be made to (i) each participant who is an
executive officer of the Company shall be determined at the sole discretion of
the Plan Administrator and (ii) each participant who is not an executive officer
of the Company shall be determined at the discretion of the Plan Administrator,
based upon the recommendation of the Company’s management.

 

--------------------------------------------------------------------------------

 

          B. Except as otherwise provided in this Paragraph V.B, no participant
shall accrue any right to receive a bonus award under the Plan unless and until
that participant remains in Employee status through the Distribution Date.
Accordingly, no bonus payment shall be made to any participant who ceases
Employee status prior to the Distribution Date, provided, however, that (i) one
or more participants may be entitled to a pro-rata bonus should their Employee
status terminate under circumstances which entitle them to such a pro-rata bonus
pursuant to the express terms of any other agreement or arrangement to which
they and the Company are parties and (ii) the provisions of Paragraph III.B
shall govern the bonus entitlement of participants whose Employee status
terminates by reason of death, Disability or under other special circumstances
identified by the Plan Administrator.
          C. The Distribution Date for the individual bonus amount for each
participant shall be as soon as administratively practicable following the
completion of the audit of the Company’s 2005 financial statements by the
Company’s independent registered public accounting firm, but in no event shall
such Distribution Date be later than March 15, 2006. The payment may be made in
whole or in part in any of the following forms as determined by the Plan
Administrator in its sole discretion:
     (i) cash; and/or
     (ii) RSUs covering shares of Common Stock that will vest and become
issuable in one or more installments as the participant continues in Employee
status over a designated service period measured from the start date of the
Company’s 2006 fiscal year, provided such deferred method of payment is not
otherwise deemed to result in an impermissible distribution event under
Section 409A of the Internal Revenue Code, or that will be fully vested and
issuable when awarded.
                    The payment in whatever form so authorized by the Plan
Administrator shall be subject to the Company’s collection of all applicable
federal, state and local income and employment withholding taxes, as and when
those taxes become due and payable.
                    To the extent any bonus award is to be paid through RSUs
covering shares of Common Stock, those shares shall be drawn from the authorized
share reserve under the Broadcom Corporation 1998 Stock Incentive Plan, as
amended and restated, and shall accordingly reduce the number of shares of
Common Stock otherwise available for issuance under that plan.
     VI. GENERAL PROVISIONS
          A. The Plan and all rights hereunder shall be construed, administered
and governed in all respects in accordance with the laws of the State of
California without resort to its conflict-of-laws provisions. If any provision
of the Plan shall be held by a court of competent jurisdiction to be invalid or
unenforceable, the remaining provisions of the Plan shall continue in full force
and effect.
          B. The Plan Administrator may at any time amend, suspend or terminate
the Plan, provided such action does not adversely affect the rights and
interests of participants

 

--------------------------------------------------------------------------------

 

accrued to date under the Plan or otherwise impair their ability to earn a bonus
award based upon the performance objectives established by the Plan
Administrator for the Plan Year.
          C. Neither the action of the Company in establishing or maintaining
the Plan, nor any action taken under the Plan by the Plan Administrator, nor any
provision of the Plan itself shall be construed so as to grant any person the
right to remain in Employee status for any period of specific duration, and each
participant shall at all times remain an Employee at will and may accordingly be
discharged at any time, with or without cause and with or without advance notice
of such discharge.
          D. Should a participant die before payment is made of the actual bonus
to which he or she has become entitled under the Plan, then that bonus shall be
paid to the executor or other legal representative of his or her estate.
          E. No participant shall have the right to transfer, alienate, pledge
or encumber his or her interest in the Plan, and such interest shall not (to the
maximum permitted by law) be subject to the claims of the participant’s
creditors or to attachment, execution or other process of law.
          F. The terms and conditions of the Plan, together with the obligations
and liabilities of the Company which accrue hereunder, shall be binding upon any
successor to the Company, whether by way of merger, consolidation,
reorganization or other change in ownership or control of the Company.
          G. No amounts accrued or earned under the Plan shall actually be
funded, set aside or to otherwise segregated prior to actual payment. The
obligation to pay the bonuses which actually become due and payable under the
Plan shall at all times be an unfunded and unsecured obligation of the Company.
Participants shall have the status of general creditors and shall look solely
and exclusively to the general assets of the Company for payment.
          H. Any disputes between the Company and a participant arising out of
or relating to the Plan, his or her entitlement to any bonus award hereunder or
the amount or method of payment of such award shall be settled exclusively by
binding arbitration to be held in the county in which the participant is (or has
most recently been) employed by the Company (or any subsidiary) at the time of
such arbitration. The arbitration proceedings shall be governed by (i) the
national rules of the American Arbitration Association then in effect for the
resolution of employment disputes and (ii) the Federal Arbitration Act. The
decision of the arbitrator shall be final and binding on the parties to the
arbitration and shall be in lieu of the rights those parties may otherwise have
to a jury trial.
          I. The actual performance objectives for the Plan Year, as established
by the Plan Administrator in accordance with the terms of the Plan, shall be set
forth in attached Schedule I.