exv10w1






EXHIBIT 10.1




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. 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.




 









 










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	 	 	 	 	 	 	 	 
	(In the event a Participant changes	 	 	 	 	 	Percentage of Bonus	 	 
	bands during the Plan Year, the	 	 	 	 	 	Related to Business	 	Percentage of Annual
	Annual Target Bonus will be	 	Annual Target	 	Performance	 	Target Bonus
	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 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.



 









 





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



 









 







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. The Compensation Committee may delegate the
authority to amend this Plan to one or more officers of the Company, provided, however, that any
amendment of this Plan that is a “material amendment” (as determined pursuant to NASDAQ Stock
Market Rule 5635(c) and the interpretive material thereunder) must be approved by the Compensation
Committee or by a majority of the Company’s independent directors, as defined for purposes of such
rule.



September 2009