Exhibit
10.1


 


 


Silicon Laboratories Inc.


 


2005 Bonus Plan


 


Overview


 


Silicon Laboratories Inc. (“Silicon Labs”) is
committed to sharing its success with the people who make it possible – the
Silicon Labs employees.  The Compensation Committee of the Board of
Directors approved this 2005 Bonus Plan (the “Plan”) to encourage participation
by Silicon Labs employees in achieving company goals and to permit Silicon Labs
employees to share in the rewards of our success.  The term of this Plan
is for the 2005 fiscal year.


 


Eligible Employees


 


To be eligible to participate in the Plan, a
person must be a regular full-time or part-time employee of Silicon Labs or one
of its wholly-owned subsidiaries and not a participant in any other bonus plan
or cash incentive plan (including any sales commission plan).


 


Bonus Calculation


 


Our business strategy has always been for
Silicon Labs to be a growth company with strong profitability. 
Accordingly, bonuses under the Plan will be largely dependent on Silicon Labs’
adjusted operating income as a percentage of revenue, rounded to the nearest
tenth of a percent with 0.05% rounded up (the “Adjusted Operating Income %”). 
Adjustments will be made from time to time at the sole discretion of the
Compensation Committee to include or exclude certain items.  An example of
a potential adjustment would be the exclusion of an expense item such as the
amortization of deferred stock compensation.  Bonuses may also be made
dependent on individual or company performance criteria as established by the
Compensation Committee (or its designee). 
In addition to adjusted operating income, such alternative criteria may
include, without limitation, revenue, revenue by product area(s), gross margin,
gross margin by product area(s) or management-based objectives set by the
Compensation Committee (or its designee) such as the introduction of new
products.


 


Unless an eligible employee receives written
notice from the CEO of Silicon Labs that different bonus criteria is applicable
to such employee, such employee’s bonus will be determined on a quarterly
basis as follows:


 


	
   

  	
   

  	
  Adjusted Operating Income %

  	
   

  	
  Bonus as a percent of Eligible

  Earnings for such Quarter

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maximum

  	
   

  	
  >30

  	
  %

  	
  15

  	
  %

  
	
  Target

  	
   

  	
  25

  	
  %

  	
  10

  	
  %

  
	
  Less than Target

  	
   

  	
  20

  	
  %

  	
  7

  	
  %

  
	
  Less than Target

  	
   

  	
  15

  	
  %

  	
  5

  	
  %

  
	
  Minimum

  	
   

  	
  10

  	
  %

  	
  3

  	
  %

  
	
  No bonus

  	
   

  	
  <10

  	
  %

  	
  0

  	
  %

  



 


As illustrated by the chart above, the bonus is
3% at 10% Adjusted Operating Income %.  The bonus increases by 0.04% for
every 0.1% increase in Adjusted Operating Income % over the 10% minimum until
reaching Adjusted Operating Income % of 20%. Thereafter, the bonus increases by
0.06% for every 0.1% increase in Adjusted Operating Income % until reaching the
Target Adjusted Operating Income % of 25%.  Thereafter, the bonus
increases by 0.1% for every 0.1% increase in Adjusted Operating Income % until 


 





















 


reaching the Maximum at Adjusted Operating
Income % of 30%.  The bonus shall be rounded to the nearest tenth of a
percent with 0.05% rounded up.


 


Eligible Earnings


 


Bonuses are paid as a percentage of Eligible
Earnings earned by such employee during such quarter.  Eligible Earnings
include only an employee’s base salary or hourly wages.  Eligible Earnings
do not include, among other things, disability pay, bonus payments from a
previous bonus period or other payments that are taxable but not considered
regular earnings.  For non-exempt employees, overtime pay would be
considered Eligible Earnings.


 


Timing of Payments


 


Bonus checks will generally be issued within
approximately one month after the end of each quarterly period.


 


General Provisions


 


•Bonuses are
subject to all applicable taxes and other required deductions.


 


•The Plan will
not be available to employees subject to the laws of any jurisdiction which
prohibits any provisions of this Plan or in which tax or other business
considerations make participation impracticable in the judgment of the
Compensation Committee.


 


•The Plan does
not constitute a guarantee of employment nor does it restrict Silicon Labs’
rights to terminate employment at any time or for any lawful reason.


 


•The Plan does
not create vested rights of any nature nor does it constitute a contract of
employment or a contract of any other kind.  The Plan does not create any
customary concession or privilege to which there is any entitlement from year-to-year,
except to the extent required under applicable law.  Nothing in the Plan
entitles an employee to any remuneration or benefits not set forth in the Plan
nor does it restrict Silicon Labs’ rights to increase or decrease the
compensation of any employee, except as otherwise required under applicable law.


 


•The Plan shall
not become a part of any employment condition, regular salary, remuneration
package, contract or agreement, but shall remain gratuitous in all
respects.  Bonuses are not to be taken into account for determining
overtime pay, severance pay, termination pay, or any other form of pay or
compensation.


 


•The Plan is
provided at Silicon Labs’ sole discretion and Silicon Labs may modify or
eliminate it at any time, individually or in the aggregate, prospectively or
retroactively, without notice or obligation. In addition, there is no
obligation to extend or establish a similar plan in subsequent years.


 


•The Plan shall
not be pre-funded. Silicon Labs shall not be required to establish any special
or separate fund or to make any other segregation of assets to assure the
payment of bonuses.


 


•All references
to a quarterly period refer to fiscal quarters of Silicon Labs.


 


•This Plan
constitutes the entire arrangement regarding the Plan, supersedes any prior
oral or written description of the Plan and may not be modified except by a
written document that specifically references this Plan and is signed by the
Silicon Labs CEO.


 





















 


•An employee
must be employed on the first day of the quarter in order to be eligible to
receive a bonus with respect to such quarter.


 


•Employees who
resign or are terminated prior to the actual payment of a bonus shall not
receive a bonus.


 


•Employees who
are separated from employment with Silicon Labs due to divestiture, closure, or
dissolution of a business are not eligible to receive a bonus.


 


•Independent
contractors, consultants, individuals who have entered into an independent
contractor or consultant agreement, temporary employees and contract employees
are not eligible to participate in the Plan.


 


•The bonus for
an otherwise eligible employee who has died prior to the end of a quarter while
actively employed will be paid to the decedent’s estate.