**Exhibit 10.2**

 

[***] Certain informationon this page has been omitted and filed separately with the Securities andExchange Commission.  Confidentialtreatment has been requested with respect to the omitted portions.

**Ikanos Communications,Inc.2006 Sales Compensation PlanFor Vice President Worldwide Sales**

Version 2.7

**1.    ****                       Purpose**

1.1.                              Attraction,retention and motivation.  The goalof this plan is to attract, retain, and motivate the best salespeople in theindustry through clearly specified sales goals and a pay-for-performancephilosophy.

1.1.1.                     Attraction.  Earn higher than the industry norm throughthe no-cap quarterly revenue-based and margin-based commission and the no-capannual revenue-based and margin-based commission with multiplier.

1.1.2.                     Retention.  Participants are rewarded with an AnnualCommission paid after year end results are final.

1.1.3.                     Motivation.  OEM Design Win Incentives and Strategic TelcoWin Incentives

1.2.                              Communicatethe company goals.  Another goal ofthe Plan is to communicate what the company wants you to focus on:

1.2.1.                     Exceedingquarterly revenue targets

1.2.2.                     Exceedingquarterly margin targets

1.2.3.                     Winningstrategic Telco tenders

1.2.4.                     Winning OEMdesigns and launching new products

1.2.5.                     Teamwork tomeet above goals

1.3.                              Payfor performance.  The companybelieves in pay for performance and rewards sales performance with a no-caprevenue-based commission plan.

**2.    ****                       Overview**

The Ikanos 2006Sales Compensation Plan is composed of:

2.1.                              Salary

2.2.                              PerformancePay

2.2.1.                     Commissionbased on meeting Quarterly Target Revenue and Target Margin Goals

2.2.2.                     AnnualCommission based on exceeding Annual Target Revenue and Target Margin Goals

2.2.3.                     Incentives towin OEM designs and launch new products

2.2.4.                     Incentives towin strategic Telco tenders

2.3.                              StockOptions

2.4.                              Benefits

2.5.                              CarAllowance

 

----

 

**3.    ****                       Definitions**

3.1.                              PerformancePay—Variable compensation calculated based on performance to goals andtypically paid on a quarterly and annual basis.

3.2.                              FAE—FieldApplications Engineers

3.3.                              Salary—Compensationusually referred to as “Base Salary” paid on a regular basis.

3.4.                              Commission—Compensationthat varies as a function of performance against assigned tasks or goals.

3.5.                              Benefits—Aform of compensation allocated to or for the purchase of employee benefits suchas company health care plan/s.  In somecases, the employee may pay some portion of the cost of these benefits

3.6.                              TargetCustomers—OEM’s, Distributors or Contract Manufacturers that purchase productsor services from Ikanos.

3.7.                              TargetOEM Design Wins—Ikanos chipsets that have fulfilled a system vendor’sspecifications and have been designed into a specific end product.

3.8.                              TargetCommission—Variable compensation amount limited to a specific time period.

3.9.                              QuarterlyTarget Revenue Goal—Quarterly revenue target toward which the effort of anemployee is directed.

3.10.                        AnnualTarget Revenue Goal—Fiscal year revenue target toward which the effort of anemployee is directed.

3.11.                        QuarterlyTarget Margin Quota—Quarterly margin target toward which the effort of anemployee is directed.

3.12.                        AnnualTarget Margin QuotaFiscal year margin target toward which the effort of anemployee is directed

3.13.                        ActualRevenue—Net revenue that has been reported by the company following anynecessary review or audit by the Company’s independent CPA’s.

3.14.                        ActualMargin—Calculated as Net Revenue less cost of revenue as reported on un-auditednon-GAAP statement of operations.

3.15.                        Teamwork—Workand activities of a group of employees who individually contribute to theproductivity of the whole.

3.16.                        SalesTeams—A group of employees associated together in work or activities.

3.17.                        SharedQuota—a quota that is shared amongst two or more sales people.

3.18.                        OEM—OriginalEquipment Manufacturer that typically sells and supports equipment to Telco’s.

**4.    ****                       Eligibility**

4.1.                              Salesmanagers, sales directors, sales operations managers and sales vice presidentsare eligible for commissions and incentives under this Plan while employed bythe Company.

4.2.                              FAE’sare eligible for incentives under this Plan while employed by the Company.

**5.    ****                       Deadlines**

5.1.                              Thefollowing Table 1 determines the deadlines involved in the calculation andpayment of your commissions and incentives.

 

2

----

5.2.                              Adjustmentsto your Plan Summary for Shared Quotas, OEM Design Win Targets, and StrategicTelco Wins may be approved prior to the beginning of each quarter on the datesbelow by the CEO.

5.3.                              Inthe event that OEM Design Win Claim Forms or Strategic Telco Win Claim Formsare not submitted by the Plan participant before the deadline then the OEMDesign Win and/or the Strategic Telco Win shall not be paid for the currentquarter.

5.4.                              Providedthat the Plan participants submit their Claim Forms, in the event of a delay indisbursement of payment, you will be eligible for a recoverable draw for theamount of 50% of your performance pay for that quarter.

**Table1.  Deadlines**
| **Deadlines 2006**                                                                             | ** ** | **Q1** | ** ** | **Q2** | ** ** | **Q3** | ** ** | **Q4** | ** ** |
|-----------------------------------------------------------------------------------------------------|------------|--------|------------|--------|------------|--------|------------|--------|------------|
| ** **                                                                                          |       |   |       |   |       |   |       |   |       |
| **Sales—Adjustments  to your Plan Summary for the following quarter**                          |       | [***]  |       | [***]  |       | [***]  |       | [***]  |       |
| ** **                                                                                          |       |   |       |   |       |   |       |   |       |
| **Sales—Last  day to ship Products**                                                           |       | [***]  |       | [***]  |       | [***]  |       | [***]  |       |
| ** **                                                                                          |       |   |       |   |       |   |       |   |       |
| **Sales—OEM  Design Win and Strategic Telco Win Claim Forms submitted from Sales to  Finance** |       | [***]  |       | [***]  |       | [***]  |       | [***]  |       |
| ** **                                                                                          |       |   |       |   |       |   |       |   |       |
| **Finance—Complete  Review of Claims when submitted**                                          |       | [***]  |       | [***]  |       | [***]  |       | [***]  |       |
| ** **                                                                                          |       |   |       |   |       |   |       |   |       |
| **HR,  Finance—PANs Completed**                                                                |       | [***]  |       | [***]  |       | [***]  |       | [***]  |       |
| ** **                                                                                          |       |   |       |   |       |   |       |   |       |
| **HR—CEO  signed off**                                                                         |       | [***]  |       | [***]  |       | [***]  |       | [***]  |       |
| ** **                                                                                          |       |   |       |   |       |   |       |   |       |
| **Payroll—Payments Disbursed**                                                                 |       | [***]  |       | [***]  |       | [***]  |       | [***]  |       |

 

**6.    ****                       Salary**

6.1.                              TheCompany will pay you a regular fixed salary paid in 26 (US employees) or 12(international office employees) pay periods based on your Plan Summary.

**7.    ****                       Commissionon Revenue**

7.1.                              TargetRevenue.  The attached CompensationPlan Summary as published to the Compensation Committee sets your TargetQuarterly Revenue and your Target Annual Revenue at the time the 2006 SalesPlan is approved.  In the event that theCompensation Plan Summary revenue is increased your Plan Summary revenue targetshall not be increased.  In the eventthat the Compensation Plan Summary revenue is decreased, you may be eligiblefor a change to your Plan Summary if approved by the 

 

3

----

CEO.  The PlanSummary lists your Target Quarterly Revenue and Target Annual Revenue. A copyof the Compensation Plan Summary is attached.

7.2.                              TargetCommission.  Your Plan Summary liststhe dollar amounts of your Target Quarterly Commission and your Target AnnualCommission.

7.3.                              Calculationof Quarterly Revenue Commission. Quarterly Revenue Commission shall be calculated as follows unlessotherwise limited in your Plan Summary:

Quarterly RevenueCommission = (Actual Quarterly Revenue/Target Quarterly Revenue)*TargetQuarterly Revenue Commission

7.4.                              Calculationof Annual Revenue Commission.  Ifyour Actual Annual Revenue is over 100% of your Target Annual Revenue, then youare eligible for the Annual Revenue Commission. Annual Revenue Commission shall be calculated as follows:

Annual Revenue Commission= 2 * ((Actual Annual Revenue/Target Annual Revenue)-1) * Target Annual RevenueCommission

7.5.                              NoCap on Commissions.  Quarterly andAnnual Commission on Revenue shall not be capped.

**8.    ****                       Commissionon Margin**

8.1.                              TargetMargin.  The Compensation PlanSummary as published to the Ikanos Board of Directors sets your TargetQuarterly Margin and your Target Annual Margin at the time the 2006 Sales Planis approved.  In the event that theCompensation Plan Summary revenue is increased your Plan Summary revenue targetshall not be increased.  In the eventthat the Compensation Plan Summary revenue is decreased, you may be eligiblefor a change to your Plan Summary if approved by the CEO.  The Plan Summary lists your Target QuarterlyMargin and Target Annual Margin

8.2.                              TargetMargin Commission.  Your Plan Summarylists the dollar amounts of your Target Quarterly Margin Commission and yourTarget Annual Margin Commission.

8.3.                              Calculationof Quarterly Margin Commission. Quarterly Margin Commission shall be calculated as follows:

Quarterly MarginCommission = (Actual Quarterly Margin/Target Quarterly Margin) * TargetQuarterly Margin Commission

8.4.                              Calculationof Annual Margin Commission.  If yourActual Annual Margin is over 100% of your Target Annual Margin, then you areeligible for the Annual Margin Commission. Annual Margin Commission shall be calculated as follows:

Annual Margin Commission= 2 * ((Actual Annual Margin/Target Annual Margin)-1) * Target Annual MarginCommission

8.5.                              NoCap on Commissions.  Quarterly andAnnual Commission on Revenue shall not be capped.

**9.    ****                       OEM DesignWin Incentives**

9.1.                              TargetOEM Design Wins.  Your Plan Summarylists your Target OEM Customers and Products that are eligible for OEM DesignWin Incentives.  The list includesopportunities to win new OEM customers and to launch new products with existingOEM customers.  You may request to havenew Design Win opportunities added to your list of targets by submitting anamended Plan Summary to your immediate supervisor.  If you have not obtained the appropriatesignatures on the amended Plan Summary by the end of the fiscal quarter for thefollowing quarter, your new Design Win opportunities will not be included inyour compensation for the following quarter.

9.2.                              TargetOEM Design Win Incentive Amount. Your Plan Summary lists the dollar amount of your OEM Design WinIncentive.

 

4

----

9.3.                              QualifyingOEM Design Wins.  To qualify for anOEM Design Win Incentive, the OEM customer and product must be listed on yourPlan Summary before the beginning of each quarter.  Each OEM Design Win shall be assigned aweighting factor measured in points and listed in your Plan Summary.  Points shall be assigned in reference torevenue and margin opportunity or by strategic significance.

9.4.                              ClaimingOEM Design Win Incentive.  Paymentsfor OEM Design Wins result from timely filed claim forms that meet salesdirector win requirements submitted to and approved by the finance department.

9.5.                              LateClaim Forms.  If you fail to submityour Claim Form on the dates specified in Table 1 above, then your claim willnot be included in that quarter’s compensation. You may submit a new claim form in the following fiscal quarter underthis Plan.  If you fail to submit yourclaim form in the fourth fiscal quarter of this year, then your claim will notbe included in this year’s compensation calculations.

9.6.                              Calculationof OEM Design Win Incentive.  OEMDesign Win Incentives shall be calculated as dollars per point times the TargetOEM Design Win points.  The dollars perpoint and points per Target OEM Customer are listed in your Plan Summary.

9.7.                              OEMDesign Win Not Achieved in the Quarter Specified.  In the event that an OEM Design Win is notachieved in the quarter specified in your plan summary, the OEM Design Winrolls into the following quarter, including Q4 2005 to Q1 2006.

**10.  ****                      StrategicTelco Win Incentive**

10.1.                        TargetStrategic Telco Customers.  Your PlanSummary lists your Target Strategic Telco Customers eligible for StrategicTelco Win Incentives.  You may request tohave new Strategic Telco Win opportunities to be added to your list of targetsby submitting an amended Plan Summary to your immediate supervisor.  If you have not obtained the appropriatesignatures on the amended Plan Summary by the end of the fiscal quarter for thefollowing quarter, your new Strategic Telco Win opportunities will not beincluded in your compensation for the following quarter.

10.2.                        StrategicTelco Win Incentive Amount.  YourPlan Summary also states the dollar amount of your Strategic Telco WinIncentive.

10.3.                        QualifyingStrategic Telco Wins.  To qualify forthis Incentive, the Telco customer must be listed on your Plan Summary beforethe beginning of each quarter. You may request to have new Target Strategic TelcoWin opportunities to be added to your list of targets for the following quarterby submitting an amended Plan Summary to your immediate supervisor.  If you have not obtained the requiredsignatures on the amended Plan Summary by the dates set in the Table 1 above inthe appropriate quarter, your requested new Target Strategic Telco Wins willNOT be included in your compensation for the following quarter.

10.4.                        ClaimingPayments.  Claiming Strategic TelcoPayments for Strategic Telco Wins result from timely filed claim forms thatmeet sales director win requirements submitted to an approved by the financedepartment.

**11.**                         **Payment Process**

11.1.                        OperationsSales Manager will provide to finance analyst and assistant controller asummary commission worksheet signed by the VP of WW sales.  This summary sheet will list, by eligiblesales personnel, the actual revenue by customer, quota, percentage achieved,quarterly revenue commission payment, total design win points, OEM design winincentive payment, and strategic telco incentive payment.

11.2.                        Financeanalyst and assistant controller will sign off on the summary commissionworksheet, after validating summaries from detail reports.  After signing off, finance 

 

5

----

analyst and assistant controller will obtain CFO andCEO signatures on the summary commission worksheet.

11.3.                        After thesummary commission worksheet has been signed, HR will complete requisitepersonnel action notices (PANs) and attach originals of signed summaryworksheet.  VP of HR will sign off onPANs and PANs and summaries will be submitted to Finance for payment.

**12.  ****                      StockOptions**

12.1.                        All FAE’s,sales managers, sales directors, sales operations managers, and sales vicepresidents eligible under this Plan qualify for Stock Options at the date ofhire and also are eligible for consideration for additional stock options basedon their performance during the annual option grant process.

**13.  ****                      Spot Bonus**

13.1.                        All FAE’s,sales managers, sales directors and sales vice presidents are eligible for spotbonuses in accordance with the Company’s bonus policy and practices.

**14.  ****                      Firstquarter of employment guarantee**

14.1.                        From youremployment start date with the Company or any of its subsidiaries to end ofyour first full fiscal quarter, your Performance Pay as defined in your PlanSummary shall be paid at 100% (pro-rated for the numbers of calendar days youwere employed in that quarter).

**15.  ****                      Other Duties**

15.1.                        From timeto time you may be assigned to perform other duties.  These might include, but are not limited to,such tasks as collecting market research data, arranging press tours,participating in technical standards meetings, language translation, andsetting up trade show booths.  Suchduties are a normal part of your job for which the company pays you asalary.  Other duties may be assigned byyour supervisor.

**16.  ****                      EmployeeBenefits**

16.1.                        You willbe eligible to participate in the company employee benefits programs - See HR.

**17.  ****                      Terminationof Employment**

17.1.                        If youremployment is terminated (voluntary or involuntary), you will be eligible for apro-rated % of your target performance pay calculated as follows:

17.1.1.               (Days worked in thequarter / Days in the quarter) * your Earned Quarterly Revenue Commission.  (Days are calendar days)

17.1.2.               No payment forAnnual Revenue Commission.

17.1.3.               OEM Design WinIncentive Claim Forms and the evidence of the win must be submitted before yourlast day of employment for OEM design wins occurring between the first day ofthe quarter and the date your termination. The dollar amount shall be calculated as specified in Section 8.5.

17.1.4.               Strategic WinIncentive Claim Forms and the evidence of the win must be submitted before yourlast day of employment for OEM design wins occurring between the first day ofthe quarter and the date your termination. The dollar amount shall be calculated as specified in Section 9.5.

 

6

----

**18.****                               Changesto the Compensation Plan**

18.1.                        The company may change, quotas,commissions, or any other part of this plan at any time.

**19.  ****                      With-Holding**

19.1.                        Commissions paid to employeeswill be subject to all of the standard with-holding requirements of the countryfrom which they are paid.

**20.****                               GeneralProvisions**

20.1                           Thisplan does not constitute an employment agreement and does not replace Ikanos’ “at-will”employment policy.  This plan supersedesall prior plans.

**21.****                               Approvals**

 

|                                           |   |   |
|------------------------------------------------|--------|--------|
| Chris Smith, Vice President of Human Resources |   | Date   |
|                                           |   |   |
|                                           |   |   |
|                                           |   |   |
| Rajesh Vashist, President and CEO              |   | Date   |

 

7

----