**EXHIBIT 10.31****THORATEC CORPORATION****EXECUTIVE INCENTIVE PLAN (EIP)****Cardiovascular Business****FY 2006**
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**I.** **Objective**   Thoratec’s Executive Incentive Plan, hereinafter referred to as EIP is intended to rewardexecutive personnel who significantly impact and influence Thoratec’s productivity inproportion to their accomplishment of specified objectives.   The purpose of the plan is to ensure maximum return to Thoratec by encouraging greaterinitiative, resourcefulness, teamwork and efficiency on the part of senior management whoseperformance and responsibilities directly affect company profits.   Awarding of the bonus will be based on accomplishing a set of annual objectives, determinedby the Chief Executive Officer (“CEO”) and the Board of Directors, typically at thebeginning of the year. Bonus determinations and payouts will take place after the financialstatements have been prepared for the fiscal year. **II.** **Determination Of The Fund**   The availability of, and participants in, the fund will be set by the CEO and approved bythe Board of Directors as part of the annual budgeting process. **III.** **Effective Date**   The effective date of this program is January 1, 2006, the beginning of the plan year, andwill continue in effect until December 30, 2006, or until terminated or amended by the Boardof Directors. This plan supersedes all prior EIP plans. **IV.** **Eligibility**   Participation in the plan is limited to Officers and others in comparable levels ofresponsibility who have a direct and significant influence on Thoratec’s growth andprofitability. Employees must be regular and not eligible for any other Thoratec commission,bonus or incentive plan in order to be eligible to participate in the EIP.   Participating employees will be determined at the beginning of the fiscal year, or at suchtime during the Fiscal Year that an employee achieves an eligible position. Employees willbe notified of their eligibility and plan objectives, as soon as possible after thedetermination by the CEO or Board of Directors.   Individuals must be employed by Thoratec at the close of the fiscal year in order to beeligible for an award under the EIP except participants who are involuntarily terminated dueto a divestiture, plant closing, reorganization or reduction in force during the plan yearmay receive an award on the prorated basis described in Section VIII, PlanAdministration, Prorated Awards, [subject to approval by the CEO]. These monieswill be paid out at the usual and customary time of payment of all bonuses. For purposes ofthis plan, termination shall mean the day the employee leaves the job, which may notnecessarily be the last day on the payroll. **V.** **Incentive Objectives**   Objectives will be agreed to by the CEO with the Executive Officers reporting to him andwith concurrence by the Board of Directors as necessary. Generally, there will be a minimumof four up to a maximum of seven objectives, which will include two or more financialobjectives. Each objective will be weighted according to itsimportance, which weight will determine the percentage of the bonus awarded for completionof that objective. (See Section VI below.)  After approval, copies of these goals must be submitted to the Vice President ofAdministration. **VI.** **Bonus Opportunity and Award**   The award opportunity will be expressed as a percentage of the participant’s base salary atthe close of the fiscal year. The award will be approved by the Board of Directors or theCEO, and will be consistent with the participant’s peers within the company.   The amount that a participant actually receives for the full fiscal year will be based uponthe extent to which the set objectives have been achieved. The participant will receive apercentage of the total award opportunity corresponding to the percentage of each objectiveaccomplished and the weight assigned to the objective.
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  Evaluations of performance againstmanagement and business plan objectives are made for the full year prior to fiscal year-endpayment. **VII.** **Performance Goal and Payout**   In addition to your individual goals, everyone will have two company-oriented financialgoals that will be achieved according to the following guidelines:                               *(1)*    Revenue Non-GAAP Income Before Tax    Goal Award Goal Award     Threshold = to, or >  = to, or > $*   50% $*   50%Target = to, or >  = to, or > $*   100% $*   100%Note:  If Cardiovascular division revenue is less than $* (95% of target), no payment is earned for that objective. If Cardiovascular NGIBT earningsis less than $* (90% of target), no payment is earned for that objective. If actual results fall between threshold and target, interpolatebetween them to get actual payout percentage. This percentage will be multiplied times the weight given the objective in your individual planto determine the achievement. Quarterly revenue and NGIBT earnings information may be released at the end of each quarter, after earnings havebeen disclosed to the public.  *(1)* Cardiovascular NGIBT earnings is defined as GAAP net income before taxes forthe Cardiovascular division excluding, as applicable, amortization of intangibles,in-process R&D, impairment of intangibles, certain litigation, restructuring and CEOtransition expenses and certain other unusual or non-recurring costs, and also excludingshare-based compensation expense under SFAS No. 123(R) and changes in the value of the“make-whole” provision of our convertible notes and special incentive awards. **VIII.** **OVER-ACHIEVEMENT AWARD OPPORTUNITY/PERFORMANCE ACCELERATOR**   In addition, each EIP participant will receive a [x]**% increase for every [y]**%increase in Cardiovascular NGIBT earnings over the target level. **IX.** **Plan Administration**   **Prorated Awards.**Individuals who are promoted to eligible positions during the planyear, new hires into eligible positions and eligible employees who are either onleave or on active written warning for part of the year may be awarded partial bonusesunder this program, based on the accomplished objectives and their respective weights,subject to the approval of the CEO.   **Transfers.**In the event of transfer of an eligible participant to another position ordepartment, the transferring manager will evaluate EIP results for prorated award (seeProrated Awards above) at the end of the year, and forward copies to the Human ResourcesDepartment. The hiring manager will be responsible for setting the key business planobjectives for the balance of the year, if applicable, and forwarding the original to HumanResources for approval. Awards based on these objectives will be prorated (see ProratedAwards above) as well, for end of the year payment.   **Authority.**The Board of Directors shall have the full power and authority to construe,interpret and administer the plan. All decisions, actions or interpretations of the Boardof Directors shall be final and conclusive and binding on all parties. This program shallbe administered by the Human Resources Department. **X.** **General Provisions** **•** The Executive Incentive Plan for 2006 may be reviewed and revised at the Board’sdiscretion.  **•** Nothing in this plan shall be construed to limit in any way the right of ThoratecCorporation to terminate an employee’s employment at any time, with or without cause ornotice, nor shall it be evidence of any agreement or understanding, expressed orimplied, that Thoratec or any of its subsidiaries will employ an employee in anyparticular position, for any particular period of time, ensure participation in anyincentive programs, or the * Amounts to be determined by the Compensationand Option Committee of the Board of Directors. ** Percentages for [x] and [y] to be determinedby the Compensation and Option Committee of the Board of Directors.
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granting of awards from such programs as they may from timeto time exist or be constituted. Thoratec reserves the right to discontinue or alterthe plan at its sole discretion at any time with or without notice.**ACKNOWLEDGEMENT**I                                          hereby acknowledge that I have received, read andunderstand the 2006 Executive Incentive Plan and agree to the conditions therein.                      **Signature**   **Date**  
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