Exhibit
10.40


 


LATTICE
SEMICONDUCTOR CORPORATION


 


EXECUTIVE
INCENTIVE PLAN


 


2002
RESTATEMENT


 


The Lattice Semiconductor Executive Incentive Plan
(the “Plan”), originally approved by the Board of Directors on August 13,
1990 and subsequently restated in 1992 and 1999, is hereby restated in its
entirety.


 


1. 
Purpose


 


The purpose of the Plan is to provide Lattice
Semiconductor Corporation (the “Company”) with an effective and competitive
bonus plan that enables the Company to attract and retain senior management,
and to provide incentives that promote the financial objectives of the Company,
thereby enhancing shareholder value. 
The executive cash compensation program of the Company is highly
leveraged on the basis of Company profitability.


 


2. 
Administration


 


This Plan shall be administered by the Compensation
Committee of the Board of Directors (the “Administrator”), which is composed
entirely of independent outside directors. 
The Compensation Committee is responsible for setting and administering
the policies which govern both cash compensation and stock ownership
programs.  The Compensation Committee
meets without the Chief Executive Officer’s presence, on at


 

















 


least an annual basis, to evaluate and review the
Company’s compensation plans and reports their findings to the full Board of
Directors.


 


The Administrator shall interpret the Plan, determine
eligibility to participate, and generally be responsible for seeing that the
purposes of the Plan are accomplished. 
The Administrator may delegate all of part of its administrative duties
to others.


 


3. 
Plan Year


 


The Plan Year shall be the Company’s fiscal year.


 


4. 
Eligibility


 


The Chief Executive Officer, President and certain
Vice Presidents and Directors of the Company shall be eligible to participate
in the Plan.  Vice Presidents and
Directors will be eligible upon selection by the Chief Executive Officer.


 


5. 
Computation of Bonus


 


The total bonus amount available for distribution
under the Plan shall equal seven percent (7%) of the Company’s operating
income.  For this purpose, operating
income shall mean the amount determined by the Company from its official
financial statements in accordance with generally accepted accounting
principles with the exception that one-time in-process research and development
and intangible asset amortization charges are to be excluded from the
calculation.  The bonus computation will
be made on a quarterly basis.


 

















 


6. 
Allocation of Bonus


 


The bonus amount will be allocated among the eligible
participants according to the following criteria (see Exhibit A for formula
calculating individual amounts):


 


a).                                   participant’s
base salary;


 


b).                                  participant’s
position;


 


c).                                   participant’s
performance to objectives as determined by the Chief Executive Officer.


 


The bonus amount allocated to the Chief Executive
Officer will be calculated solely as a function of 6a) x 6b) above according to
the formula in Exhibit A.


 


7. 
Time of Payment


 


Bonus payment will be made to eligible participants on
a quarterly basis within 90 days after the end of the Company’s fiscal quarter.


 


8. 
Terminated Participants


 


A participant who terminates his/her employment with
the Company, either voluntarily or involuntarily, forfeits any undistributed
bonus amount that he/she might otherwise have been eligible to receive.


 


9. 
Amendment/Termination


 


The Company may amend or terminate this Plan at any
time by action of the Compensation Committee of the Board of Directors.


 

















 


10. 
Interpretation


 


All questions of interpretation under this Plan shall
be decided by the Compensation Committee of the Board of Directors of the
Company, whose judgement shall be final and binding.


 


 


	
   

  	
  Lattice Semiconductor Corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Cyrus Tsui

  	
   

  
	
   

  	
   

  
	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  February 5, 2002

  



 

















 


EXHIBIT
A


FORMULA FOR
CALCULATION OF BONUSES


 


	
  I.

  	
  TOTAL BONUS EARNED DURING PERIOD (“TB”):

  
	
   

  	
   

  
	
   

  	
  TB = Operating Income x 7%

  
	
   

  	
   

  
	
   

  	
   

  
	
  II.

  	
  BONUS CALCULATION FOR CEO (“Bp”):

  
	
   

  	
   

  
	
   

  	
  Bp = [ (S x W) / T ] x TB

  
	
   

  	
   

  
	
   

  	
   

  
	
  III.

  	
  BONUS CALCULATION FOR PLAN PARTICIPANTS EXCEPT

  
	
   

  	
   

  
	
   

  	
  CEO (“B”):

  
	
   

  	
   

  
	
   

  	
  B = [ (S x W) / T ] x TB x IP

  
	
   

  	
   

  
	
   

  	
   

  
	
  IV.

  	
  KEY:

  
	
   

  	
   

  
	
   

  	
  S  =  Annual Base Salary

  
	
   

  	
   

  
	
   

  	
  W = Weighting according to position:

  
	
   

  	
   

  
	
   

  	
   

  	
  CEO

  	
  50%

  	
   

  
	
   

  	
   

  	
  President

  	
  50%

  	
   

  
	
   

  	
   

  	
  Vice President Sales

  	
  40%

  	
   

  
	
   

  	
   

  	
  Other Vice Presidents

  	
  35%

  	
   

  
	
   

  	
   

  	
  Directors

  	
  25%

  	
   

  
	
   

  	
   

  
	
   

  	
  T  = Weighted
  total of all salaries (“S”) multiplied by the position weighting (“W”)

  
	
   

  	
   

  
	
   

  	
  IP = Individual performance as determined by CEO