**EXHIBIT
        10.16**
 
 **PLX
        TECHNOLOGY, INC.**
 **2007
        VARIABLE COMPENSATION PLAN**
 (Established
        as of January 1, 2007)
   1.
                Introduction.  The Company hereby adopts the Plan, effective
                  as of January 1, 2007.  The purpose of the Plan is to encourage
                  performance and achieve retention of a select group of executive
                  employees
                  of PLX Technology, Inc.  This document constitutes the written
                  instrument under which the Plan is maintained.
 2.
                Definitions.
 “ Cause ”
means
        (i) conviction of a felony or a crime of moral turpitude; (ii) misconduct
        that
        results in harm to the Company; (iii) material failure to perform assigned
        duties; or (iv) willful disregard of lawful instructions from the chief
        executive officer of the Company or **** the
        Board
        of Directors relating to the business of the Company or any of its
        affiliates.
  “ Code ”
means
        the Internal Revenue Code of 1986, as amended, and the regulations issued
        with
        respect thereof.
  “ Committee ”
means
        the Compensation Committee of the Company’s Board of Directors.
  “ Company ”
means
        PLX Technology, Inc., a Delaware corporation.
  “ Disability ”
means
        that a Participant has become disabled as defined in Code Section 409A(a)(2)(C)
        and any other published interpretive authority, as issued or amended from
        time
        to time. 1
  “ Eligible
        Employee ”
means
        each employee who is eligible for the plan as designated by the Committee
        as set
        forth in approved minutes.
  “ Operating
        Income ”
means
        the Company’s operating income for 2007, excluding (1) share based compensation,
        (2) acquisition-related amortization, (3) variable compensation expenses
        pursuant to the Plan, and (4) any adjustments as deemed necessary by the
        Committee for 2007.
  “ Normal
        Retirement Age ”
means
        age sixty (60).
  “ Participant ”
means
        each Eligible Employee who is designated from time to time by the Committee
        in
        writing.
  “ Plan ”
means
        the PLX Technology, Inc. 2007 Variable Compensation Plan, as set forth in
        this
        document and as hereafter amended.
  “ Plan
        Year ”
means
        the calendar year.
  “ Retirement ”
means
        the termination of employment after Normal Retirement Age.
  3.
            Variable Compensation Amount.  (a)  Calculation
        of Variable Compensation Amount .
        Each
        Participant will receive variable compensation which will comprise a percentage
        of Operating Income and/or percentage of sales revenues, or some combination
        thereof. The percentage of the Company’s Operating Income and percentage of
        sales revenues that is awarded to each Participant as variable compensation
        shall be as designated by the Committee to the Participant in writing.
        Notwithstanding the foregoing, the total variable compensation amount awarded
        to
        any Participant shall not exceed the Participant’s base pay from the Company for
        2007, unless the Committee, in its sole discretion, decides to permit a higher
        variable compensation amount with respect to such Participant based on the
        performance and condition of the Company’s business. Also, at any time prior to
        January 1, 2008, the Committee or the CEO, in his, her, or its sole discretion,
        may reduce any Participant’s variable compensation.
  (b)  Interest
        on Variable Compensation Amount .
        Interest at the Fed Funds Rate on the date the variable compensation is
        designated by the Committee shall accrue on the Participant’s unvested and
        unpaid variable compensation amounts. Subject to the forfeiture provisions
        in
        Section 4(c), interest shall be paid in accordance with the vesting schedule
        established by the committee at the time the variable compensation is
        designated.
  4.
              Payment of Variable Compensation.
 (a)  Timing
        and Form of Payment .
        Subject
        to Sections 4(b), 4(c), 4(d) and 7, each Participant’s variable compensation
        shall vest and be paid as follows:
  (i)  Sixty
        percent (60%) of the Participant’s variable compensation shall vest and be paid
        to the Participant on the last business day in January 2008; and
  (ii)  Twenty
        percent (20%) of the Participant’s variable compensation (i.e. fifty percent
        (50%) of the variable compensation then remaining) shall vest and be paid
        to the
        Participant on the last business day in January, 2009; and
  (iii)  Twenty
        percent (20%) of the Participant’s variable compensation (i.e. one-hundred
        percent (100%) of the variable compensation then remaining) shall vest and
        be
        paid to the Participant on the last business day in January, 2010.
  (b)  Distribution
        in the Event of Retirement, Disability or Termination without
        Cause .
        If a
        Participant terminates employment because of Retirement or Disability, or
        the
        Company terminates a Participant’s employment without Cause, the Participant
        shall be entitled to payment of all of his or her variable compensation
        according to the schedule in Section 4(a), provided that if termination under
        these conditions occurs prior to January 1, 2008, the variable compensation
        amount payable will be the variable compensation amount pursuant to Section
        3(a)
        multiplied by the number of days employee was employed in 2007 by the Company
        and then divided by 365 days, and all remaining variable compensation amounts
        for 2007 shall be forfeited.
  (c)  Forfeiture .
        If a
        Participant terminates his or her employment for any reason other than
        Retirement, Disability, or termination by the Company without Cause, or if
        the
        Participant’s employment is terminated for Cause, he or she shall forfeit all or
        any portion of his or her entire variable compensation for 2007 (as set forth
        in
        Section 3(a)) which is not yet due and payable under the schedule set forth
        in
        Section 4(a) as of the date of termination.
  (d)  Timing
        of Distribution to a Beneficiary .
        If a
        Participant dies while still employed by the Company or after termination
        due to
        Retirement, Disability, or termination by the Company without Cause but before
        receiving a distribution of all of his or her variable compensation according
        the schedule in Section 4(a) then the vesting of the Participant’s variable
        compensation shall be fully accelerated such that one-hundred percent (100%)
        of
        the variable compensation will be distributed to his or her beneficiary as
        a
        lump sum distribution on the January 31 following the Participant’s death;
        otherwise, the forfeiture provisions of Section 4(c) shall apply.
  (e)  Beneficiary
        Designation .
        Each
        Participant must designate a beneficiary to receive a distribution of his
        or her
        variable compensation if the Participant dies before such amount is fully
        distributed to him or her. To be effective, a beneficiary designation must
        be
        signed, dated and delivered to the Committee. In the absence of a valid or
        effective beneficiary designation, the Participant’s surviving spouse will be
        his or her beneficiary or, if there is no surviving spouse, the Participant’s
        estate will be his or her beneficiary. If a married Participant designates
        anyone other than his or her spouse as his or her beneficiary, such designation
        will be void unless it is signed and dated by the Participant’s
        spouse.
  5.  Withholding .
        The
        Company will withhold from any Plan distribution all required federal, state,
        local and other taxes and any other payroll deductions that may be required.
  6.  Administration .
        The
        Plan is administered and interpreted by the Company. The Company has delegated
        to the Committee certain responsibilities under the Plan. The Committee has
        the
        full and exclusive discretion to interpret and administer the Plan. All actions,
        interpretations and decisions of the Committee are conclusive and binding
        on all
        persons, and will be given the maximum possible deference allowed by
        law.
  7.  Amendment
        or Termination .
        Through
        December 31, 2007, the Committee, in its sole and unlimited discretion, may
        amend or terminate the Plan at any time, without prior notice to any
        Participant. After January 1, 2008, the Committee may amend or terminate
        the
        Plan provided that any such amendment does not reduce or increase any benefit
        to
        which a Participant has accrued and is otherwise entitled to under the terms
        of
        the Plan, nor accelerate the timing of any payment under the Plan.
        Notwithstanding the foregoing to the contrary, the Company reserves the right
        to
        the extent it deems necessary or advisable, in its sole discretion, to
        unilaterally alter or modify the Plan and any variable compensation awards
        made
        thereunder to ensure that the Plan and variable compensation awards provided
        to
        Participants who are U.S. taxpayers are made in such a manner that either
        qualifies for exemption from or complies with Code Section 409A; provided,
        however, that the Company makes no representations that the Plan or any variable
        compensation awarded thereunder will be exempt from or comply with Code Section
        409A and makes no undertaking to preclude Code Section 409A from applying
        to the
        Plan or any variable compensation awarded thereunder. The Plan shall
        automatically terminate on the date when no Participant (or beneficiary)
        has any
        right to or expectation of payment of further benefits under the
        Plan.
  8.  Claims
        Procedure .
        Any
        person who believes he or she is entitled to any payment under the Plan may
        submit a claim in writing to the Committee. If the claim is denied (either
        in
        full or in part), the claimant will be provided a written notice explaining
        the
        specific reasons for the denial and referring to the provisions of the Plan
        on
        which the denial is based. The notice will describe any additional information
        needed to support the claim. The denial notice will be provided within ninety
        (90) days after the claim is received. If special circumstances require an
        extension of time (up to ninety (90) additional days), written notice of
        the
        extension will be given within the initial ninety-day period. In the event
        that
        the claim relates to a Participant’s benefits payable due to Disability under
        the Plan, the time periods in this section shall be replaced with a 45 day
        initial period and a 30 day extension period.
  9.  Appeal
        Procedure .
        If a
        claimant’s claim is denied, the claimant (or his or her authorized
        representative) may apply in writing to the Committee for a review of the
        decision denying the Claim. The claimant (or representative) then has the
        right
        to review pertinent documents and to submit issues and comments in writing.
        The
        Committee will provide written notice of its decision on review within sixty
        (60) days after it receives a review request. If additional time (up to sixty
        (60) days) is needed to review the request, the claimant will be given written
        notice of the reason for the delay. In the event that the appeal relates
        to a
        Participant’s benefits payable due to Disability under the Plan, the 60 day time
        period in this section shall be replaced with a 45 day period.
  10.  Source
        of Payments .
        All
        payments under the Plan will be paid in cash from the general funds of the
        Company. No separate fund will be established under the Plan, and the Plan
        will
        have no assets. Any right of any person to receive any payment under the
        Plan is
        no greater than the right of any other general unsecured creditor of the
        Company. This Plan shall be binding upon the Company’s successors and assigns.
  11.  Inalienability .
        A
        Participant’s rights to benefits under the Plan are not subject in any manner to
        anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
        attachment, or garnishment by creditors of the Participant or the Participant’s
        beneficiary.
  12.  Applicable
        Law .
        The
        provisions of the Plan will be construed, administered and enforced in
        accordance with ERISA and, to the extent applicable, the laws of the State
        of
        California.
  13.  Severability .
        If any
        provision of the Plan is held invalid or unenforceable, its invalidity or
        unenforceability will not affect any other provision of the Plan, and the
        Plan
        will be construed and enforced as if such provision had not been
        included.
  14.  No
        Right of Continued Employment .
        THIS
        PLAN DOES NOT GIVE ANY PARTICIPANT THE RIGHT TO BE RETAINED AS AN EMPLOYEE.
        SUBJECT TO THE TERMS OF ANY WRITTEN EMPLOYMENT AGREEMENT TO THE CONTRARY,
        THE
        COMPANY SHALL HAVE THE RIGHT TO TERMINATE OR CHANGE THE TERMS OF EMPLOYMENT
        OF A
        PARTICIPANT AT ANY TIME AND FOR ANY REASON WHATSOEVER, WITH OR WITHOUT
        CAUSE.
  1 Code
        Section 409A(a)(2)(C) provides the following definition of
“disabled”:
  For
        purposes of subparagraph (A)(ii), a participant shall be considered disabled
        if
        the participant—
  (i)  is
        unable
        to engage in any substantial gainful activity by reason of any medically
        determinable physical or mental impairment which can be expected to result
        in
        death or can be expected to last for a continuous period of not less than
        12
        months, or
  (ii)  is,
        by
        reason of any medically determinable physical or mental impairment which
        can be
        expected to result in death or can be expected to last for a continuous period
        of not less than 12 months, receiving income replacement benefits for a period
        of not less than 3 months under an accident and health plan covering employees
        of the participant’s employer.
  IN
        WITNESS WHEREOF, PLX Technology, Inc., by its duly authorized officer, has
        executed the Plan on the date indicated below.
   **PLX
        TECHNOLOGY, INC.**
  /s/
        Michael J. Salameh
 Name:
        Michael J. Salameh
 Title:
        Chief Executive Officer