Exhibit 10.3


 


[***] Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.


 


Ikanos
Communications, Inc.

2006 Sales Compensation Plan

For Vice President Worldwide Sales


 


Version 2.6


 


1.             Purpose


 


1.1.          Attraction,
retention and motivation. The goal of this plan is to attract, retain, and
motivate the best salespeople in the industry through clearly specified sales
goals and a pay-for-performance philosophy.


 


1.1.1.       Attraction.
Earn higher than the industry norm through the no-cap quarterly revenue-based and
margin-based commission and the no-cap annual revenue-based and margin-based commission
with multiplier.


 


1.1.2.       Retention.
Participants are rewarded with an Annual Commission paid after year end results
are final.


 


1.1.3.       Motivation.
OEM Design Win Incentives and Strategic Telco Win Incentives


 


1.2.          Communicate
the company goals. Another goal of the Plan is to communicate what the
company wants you to focus on:


 


1.2.1.       Exceeding
quarterly revenue targets


 


1.2.2.       Exceeding
quarterly margin targets


 


1.2.3.       Winning
strategic Telco tenders


 


1.2.4.       Winning
OEM designs and launching new products


 


1.2.5.       Teamwork
to meet above goals


 


1.3.          Pay
for performance. The company believes in pay for performance and rewards
sales performance with a no-cap revenue-based commission plan.


 


2.             Overview


 


The Ikanos 2006 Sales Compensation Plan is
composed of:


 


2.1.          Salary


 


2.2.          Performance
Pay


 


2.2.1.       Commission
based on meeting Quarterly Target Revenue and Target Margin Goals


 


2.2.2.       Annual
Commission based on exceeding Annual Target Revenue and Target Margin Goals


 


2.2.3.       Incentives
to win OEM designs and launch new products


 


2.2.4.       Incentives
to win strategic Telco tenders


 


2.3.          Stock
Options


 


2.4.          Benefits


 


2.5.          Car
Allowance


 


3.             Definitions


 


3.1.          Performance
Pay – Variable compensation calculated based on performance to goals and typically
paid on a quarterly and annual basis.


 

















 


3.2.          FAE
– Field Applications Engineers


 


3.3.          Salary
– Compensation usually referred to as “Base Salary” paid on a regular basis.


 


3.4.          Commission
– Compensation that varies as a function of performance against assigned tasks
or goals.


 


3.5.          Benefits
– A form of compensation allocated to or for the purchase of employee benefits
such as company health care plan/s. In some cases, the employee may pay some
portion of the cost of these benefits


 


3.6.          Target
Customers – OEM’s, Distributors or Contract Manufacturers that purchase products
or services from Ikanos.


 


3.7.          Target
OEM Design Wins – Ikanos chipsets that have fulfilled a system vendor’s
specifications and have been designed into a specific end product.


 


3.8.          Target
Commission – Variable compensation amount limited to a specific time period.


 


3.9.          Quarterly
Target Revenue Goal – Quarterly revenue target toward which the effort of an
employee is directed.


 


3.10.        Annual
Target Revenue Goal - Fiscal year revenue target toward which the effort of an
employee is directed.


 


3.11.        Quarterly
Target Margin Quota - Quarterly margin target toward which the effort of an
employee is directed.


 


3.12.        Annual
Target Margin Quota - Fiscal year margin target toward which the effort of an
employee is directed


 


3.13.        Actual
Revenue – [***]


 


3.14.        Actual
Margin – Gross margin that has been reported by the company following any
necessary review or audit by the Company’s independent CPA’s.


 


3.15.        Teamwork
– Work and activities of a group of employees who individually contribute to
the productivity of the whole.


 


3.16.        Sales
Teams – A group of employees associated together in work or activities.


 


3.17.        Shared
Quota – a quota that is shared amongst two or more sales people.


 


3.18.        OEM
– Original Equipment Manufacturer that typically sells and supports equipment
to Telco’s.


 


4.             Eligibility


 


4.1.          Sales
managers, sales directors, sales operations managers and sales vice presidents
are eligible for commissions and incentives under this Plan while employed by
the Company.


 


4.2.          FAE’s
are eligible for incentives under this Plan while employed by the Company.


 


5.             Deadlines


 


5.1.          The
following Table 1 determines the deadlines involved in the calculation and
payment of your commissions and incentives.


 


5.2.          Adjustments
to your Plan Summary for Shared Quotas, OEM Design Win Targets, and Strategic
Telco Wins may be approved prior to the beginning of each quarter on the dates
below by the CEO.


 


5.3.          In
the event that OEM Design Win Claim Forms or Strategic Telco Win Claim Forms
are not submitted by the Plan participant before the deadline then the OEM
Design Win and/or the Strategic Telco Win shall not be paid for the current
quarter.


 


2

















 


5.4.          Provided
that the Plan participants submit their Claim Forms, in the event of a delay in
disbursement of payment, you will be eligible for a recoverable draw for the amount
of 50% of your performance pay for that quarter.


 


Table 1. Deadlines


 


	
  Deadlines 2006

  	
   

  	
  Q1

  	
   

  	
  Q2

  	
   

  	
  Q3

  	
   

  	
  Q4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sales -
  Adjustments to your Plan Summary for the following quarter

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sales –
  Last day to ship Products

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sales -
  OEM Design Win and Strategic Telco Win Claim Forms submitted from Sales to
  Finance

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Finance
  - Complete Review of Claims when submitted

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  HR,
  Finance – PANs Completed

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  HR – CEO
  signed off

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Payroll -
  Payments Disbursed

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  



 


6.             Salary


 


6.1.          The
Company will pay you a regular fixed salary paid in 26 (US employees) or 12
(international office employees) pay periods based on your Plan Summary.


 


7.             Commission on Revenue


 


7.1.          Target
Revenue. The Annual Operating Plan as published to the Ikanos Board of
Directors sets your Target Quarterly Revenue and your Target Annual Revenue at
the time the 2006 Sales Plan is approved. In the event that the Annual
Operating Plan revenue is increased your Plan Summary revenue target shall not
be increased. In the event that the Annual Operating Plan revenue is decreased,
you may be eligible for a change to your Plan Summary if approved by the Vice
President of Worldwide Sale and the CEO. The Plan Summary lists your Target
Quarterly Revenue and Target Annual Revenue. A copy of the Annual Operating
Plan is attached.


 


7.2.          Target
Commission. Your Plan Summary lists the dollar amounts of your Target
Quarterly Commission and your Target Annual Commission.


 


7.3.          Calculation
of Quarterly Revenue Commission. Quarterly Revenue Commission shall be calculated
as follows unless otherwise limited in your Plan Summary:


 


Quarterly Revenue Commission = (Actual
Quarterly Revenue/Target Quarterly Revenue)*Target Quarterly Revenue Commission


 


3

















 


7.4.          Calculation
of Annual Revenue Commission. If your Actual Annual Revenue is over 100% of
your Target Annual Revenue, then you are eligible for the Annual Revenue
Commission. Annual Revenue Commission shall be calculated as follows:


 


Annual Revenue Commission = 2*((Actual Annual
Revenue/Target Annual Revenue)-1)*Target Annual Revenue Commission


 


7.5.          No
Cap on Commissions. Quarterly and Annual Commission on Revenue shall not be
capped.


 


8.             Commission on Margin


 


8.1.          Target
Margin. The Annual Operating Plan as published to the Ikanos Board of
Directors sets your Target Quarterly Margin and your Target Annual Margin at
the time the 2006 Sales Plan is approved. In the event that the Annual
Operating Plan revenue is increased your Plan Summary revenue target shall not
be increased. In the event that the Annual Operating Plan revenue is decreased,
you may be eligible for a change to your Plan Summary if approved by the Vice
President of Worldwide Sales and the CEO. The Plan Summary lists your Target
Quarterly Margin and Target Annual Margin


 


8.2.          Target
Margin Commission. Your Plan Summary lists the dollar amounts of your
Target Quarterly Margin Commission and your Target Annual Margin Commission.


 


8.3.          Calculation
of Quarterly Margin Commission. Quarterly Margin Commission shall be
calculated as follows:


 


Quarterly Margin Commission = (Actual
Quarterly Margin/Target Quarterly Margin)*Target Quarterly Margin Commission


 


8.4.          Calculation
of Annual Margin Commission. If your Actual Annual Margin is over 100% of
your Target Annual Margin, then you are eligible for the Annual Margin
Commission. Annual Margin Commission shall be calculated as follows:


 


Annual Margin Commission = 2*((Actual Annual
Margin/Target Annual Margin)-1)*Target Annual Margin Commission


 


8.5.          No
Cap on Commissions. Quarterly and Annual Commission on Revenue shall not be
capped.


 


9.             OEM Design Win Incentives


 


9.1.          Target
OEM Design Wins. If you believe you have earned an OEM Design Win Incentive
from one of your listed OEM Design Wins (listed in your Plan Summary), [***] AND,
depending on the region, shipments of at least [***] CO ports for Asia and
EU and [***] CO ports for North America or a minimum of [***] CPE ports regardless
of which region. Shipments must occur before the date of your claim. Lastly an
OEM Design Win Claim Form must be submitted prior to the dates specified in
Table 1 above.


 


9.2.          Target
OEM Design Win Incentive Amount. Your Plan Summary lists the dollar amount
of your OEM Design Win Incentive.


 


9.3.          Qualifying
OEM Design Wins. To qualify for an OEM Design Win Incentive, the OEM
customer and product must be listed on your Plan Summary before the beginning
of each quarter. Each OEM Design Win shall be assigned a weighting factor
measured in points and listed in your Plan Summary. Points shall be assigned in
reference to revenue and margin opportunity or by strategic significance.


 


9.4.          Claiming
OEM Design Win Incentive. If you believe you have earned an OEM Design Win
Incentive from one of your listed OEM Design Wins (listed in your Plan
Summary), then you must complete and submit as OEM Design Win Claim Form to the
VP of WW Sales AND shipments of at least [***] CO ports or at least [***] CPE
ports to a Target 


 


4

















 


OEM Customer must occur before the date of your claim. Lastly an OEM
Design Win Claim Form must be submitted prior to the dates specified in Table 1
above.


 


9.5.          Late
Claim Forms. If you fail to submit your Claim Form on the dates specified
in Table 1 above, then your claim will not be included in that quarter’s
compensation. You may submit a new claim form in the following fiscal quarter
under this Plan. If you fail to submit your claim form in the fourth fiscal
quarter of this year, then your claim will not be included in this year’s
compensation calculations.


 


9.6.          Calculation
of OEM Design Win Incentive. OEM Design Win Incentives shall be calculated
as dollars per point times the Target OEM Design Win points. The dollars per
point and points per Target OEM Customer are listed in your Plan Summary.


 


9.7.          OEM
Design Win Not Achieved in the Quarter Specified. In the event that an OEM
Design Win is not achieved in the quarter specified in your plan summary, the
OEM Design Win rolls into the following quarter, except for Q4.


 


10.          Strategic Telco Win Incentive


 


10.1.        Target
Strategic Telco Customers. Your Plan Summary lists your Target Strategic
Telco Customers eligible for Strategic Telco Win Incentives. You may request to
have new Strategic Telco Win opportunities to be added to your list of targets
by submitting an amended Plan Summary to your immediate supervisor and the VP
of Sales for signature approval. If you have not obtained the appropriate signatures
on the amended Plan Summary by the end of the fiscal quarter for the following
quarter, your new Strategic Telco Win opportunities will not be included in
your compensation for the following quarter.


 


10.2.        Strategic
Telco Win Incentive Amount. Your Plan Summary also states the dollar amount
of your Strategic Telco Win Incentive.


 


10.3.        Qualifying
Strategic Telco Wins. To qualify for this Incentive, the Telco customer
must be listed on your Plan Summary before the beginning of each quarter. You
may request to have new Target Strategic Telco Win opportunities to be added to
your list of targets for the following quarter by submitting an amended Plan
Summary to your immediate supervisor and the VP of Worldwide Sales for
signature approval. If you have not obtained the required signatures on the
amended Plan Summary by the dates set in the Table 1 above in the appropriate
quarter, your requested new Target Strategic Telco Wins will NOT be included in
your compensation for the following quarter.


 


10.4.        Claiming
Strategic Telco Wins. If you believe you have earned a Strategic Telco Win
from one of your Strategic Telcos (as listed in your Plan Summary) then
complete and submit a Strategic Telco Win Claim Form to the VP of WW Sales
along with evidence which shall include, but is not limited to, any of the
following forms:


 


	
  •

  	
  Telco or OEM press release or Ikanos joint press release stating
  Ikanos has been selected by the Telco or OEM for the Telco deployment;

  
	
   

  	
   

  
	
  •

  	
  Official written communication from Telco or OEM to Ikanos stating
  that Ikanos has been selected by the Telco or OEM for the Telco deployment;

  
	
   

  	
   

  
	
  •

  	
  Official meeting minutes sent to all attendees of a CEO-to-CEO or
  CEO-to-GM meeting at either Telco or OEM where the customer CEO or GM
  officially states that Ikanos has been selected for the Strategic Telco
  deployment;

  
	
   

  	
   

  
	
  •

  	
  Official meeting minutes sent to all attendees of a VP-to-VP or
  VP-to-GM meeting at either Telco or OEM where the customer VP or GM
  officially states that Ikanos has been selected for the Strategic Telco
  deployment; or

  



 


5

















 


	
  •

  	
  Written certification by Ikanos VP of Sales and CEO stating that the
  Strategic Telco has been won.

  



 


10.5.        Awarding
Strategic Telco Wins. Strategic Telco Win Incentives shall be awarded upon
claim forms signed by the Vice President of Human Resources and the CEO. Each
Strategic Telco Win may only be claimed once.


 


11.           Payment Process


 


11.1.        Operations
Sales Manager will provide to finance analyst and assistant controller a
summary commission worksheet signed by the VP of WW sales. This summary sheet
will list, by eligible sales personnel, the actual revenue by customer, quota,
percentage achieved, quarterly revenue commission payment, total design win
points, OEM design win incentive payment, and strategic telco incentive
payment.


 


11.2.        Finance
analyst and assistant controller will sign off on the summary commission
worksheet, after validating summaries from detail reports. After signing off,
finance analyst and assistant controller will obtain CFO and CEO signatures on
the summary commission worksheet.


 


11.3.        After
the summary commission worksheet has been signed, HR will complete requisite
personnel action notices (PANs) and attach originals of signed summary
worksheet. VP of HR will sign off on PANs and PANs and summaries will be
submitted to Finance for payment.


 


12.          Stock Options


 


12.1.        All
FAE’s, sales managers, sales directors, sales operations managers, and sales
vice presidents eligible under this Plan qualify for Stock Options at the date
of hire and also are eligible for consideration for additional stock options
based on their performance during the annual option grant process.


 


13.          Spot Bonus


 


13.1.        All
FAE’s, sales managers, sales directors and sales vice presidents are eligible
for spot bonuses in accordance with the Company’s bonus policy and practices.


 


14.          First quarter of employment guarantee


 


14.1.        From
your employment start date with the Company or any of its subsidiaries to end
of your first full fiscal quarter, your Performance Pay as defined in your Plan
Summary shall be paid at 100% (pro-rated for the numbers of calendar days you
were employed in that quarter).


 


15.          Other Duties


 


15.1.        From
time to time you may be assigned to perform other duties. These might include,
but are not limited to, such tasks as collecting market research data,
arranging press tours, participating in technical standards meetings, language
translation, and setting up trade show booths. Such duties are a normal part of
your job for which the company pays you a salary. Other duties may be assigned
by your supervisor.


 


16.          Employee Benefits


 


16.1.        You
will be eligible to participate in the company employee benefits programs - See
HR.


 


17.          Termination of Employment


 


17.1.        If
your employment is terminated (voluntary or involuntary), you will be eligible
for a pro-rated % of your target performance pay calculated as follows:


 


6

















 


17.1.1.     (Days
worked in the quarter / Days in the quarter) * your Earned Quarterly Revenue
Commission. (Days are calendar days)


 


17.1.2.     No
payment for Annual Revenue Commission.


 


17.1.3.     OEM
Design Win Incentive Claim Forms and the evidence of the win must be submitted
before your last day of employment for OEM design wins occurring between the
first day of the quarter and the date your termination. The dollar amount shall
be calculated as specified in Section 8.5.


 


17.1.4.     Strategic
Win Incentive Claim Forms and the evidence of the win must be submitted before
your last day of employment for OEM design wins occurring between the first day
of the quarter and the date your termination. The dollar amount shall be
calculated as specified in Section 9.5.


 


18.          Changes to the Compensation Plan


 


18.1.        The
company may change, quotas, commissions, or any other part of this plan at any
time.


 


19.          With-Holding


 


19.1.        Commissions
paid to employees will be subject to all of the standard with-holding
requirements of the country from which they are paid.


 


20.          General
Provisions


 


20.1 This plan does not constitute an
employment agreement and does not replace Ikanos’ “at-will” employment policy. This
plan supersedes all prior plans.


 


21.          Approvals


 


 


	
   

  	
   

  	
   

  	
   

  
	
  Chris Smith, Vice President of Human Resources

  	
   

  	
  Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Rajesh Vashist, President and CEO

  	
   

  	
  Date

  	
   

  



 


7