Fiscal Year 2009 Executive Incentive Compensation Program of Exar Corp.



 Exhibit 10.1 
 PLAN DOCUMENT 
 Fiscal Year 2009 Senior Executive Incentive 
 Compensation Program 
  

	1.0	Summary 

 The Exar Corporation (the “Company”) Fiscal Year
2009 Senior Executive Incentive Compensation Program (the “Plan”) is a variable cash incentive program designed to motivate participants to achieve the Company’s financial goals and operational and strategic goals and to reward them
for performance against those goals. 
  

	2.0	Eligibility 

 Participants are approved solely at the discretion of
the Compensation Committee of the Board of Directors (the “Board”) when acting on behalf of the full Board. All executive officers are eligible to be considered for participation. The President/CEO may recommend others with the approval of
the Compensation Committee. 
  

	3.0	Administration 

 The Compensation Committee is ultimately
responsible for administering the Plan, and has designated the Management Committee, consisting of the President/CEO, the Senior Vice President/CFO, and the Vice President of Human Resources to administer the Plan. The Board, in its sole discretion,
may amend or terminate the Plan, or any part thereof, at any time and for any reason without prior notice. 
  

	4.0	Award Determination 

 The Management Committee will recommend target
incentives for each participant other than the target award for the President/CEO. Payments will be calculated using a formula that includes (a) the participant’s Fiscal Year Base Salary (the “Salary”), (b) the
participant’s Target Incentive (the “Target”), (c) the participant’s Maximum Target (the “Max Target”), (d) a “Company Modifier”, and (e) and an “Individual Modifier”. The Modifiers
may be greater than 100% with higher than target levels of achievement. The Compensation Committee will assign and approve the Target Incentive and Max Award for the President/CEO and determine the award payout. The President/CEO will recommend to
the Compensation Committee Target Awards and Max Awards for other senior executives. 
  

	5.0	Definitions 

  

	 	5.1	The Salary 

 This is the annual base salary, paid in the Plan’s
fiscal year, exclusive of any bonuses, incentive payments or awards, auto allowance, and such extras or perquisites over base pay. 
  

	 	5.2	The Target 

 The Target Incentive is expressed as a percentage of
Salary. Each participant will have a Target Incentive, as approved by the Compensation Committee. 
  

	 	5.3	The Max Target 

 The Max Target Award is expressed as a percentage
of Salary. No participant may receive an award greater than the Max Target. Participants may receive an award greater than the Max Target upon recommendation of the CEO and with the approval of the Compensation Committee. 
  

	 	5.4	The Company Modifier (70%) 

 The Compensation Committee approves a
Company Modifier for all participants by assessing the Company’s financial performance against pre-established fiscal year financial goals for revenue and operating margin and may include other financial goals as deemed appropriate. An “on
target” Company performance yields an 80% modifier. See Attachment 1, “Percentage of Financial Bonus Earned by Level of Budget Achievement.” 








	 	5.5	The Individual Modifier (30%) 

  

	 	5.5.1	President/CEO 

 The Compensation Committee will evaluate the
performance of the President/CEO at the conclusion of the fiscal year based upon the achievement of pre-established Company financial goals and individual objectives. The Compensation Committee will assign an Individual Modifier to the formula for
calculation of the final award payout. An “on target” performance yields a 100% modifier. 
  

	 	5.5.2	Other Participants 

 The President/CEO will assess the performance
of other participants at the conclusion of the fiscal year based upon each participant’s achievement of pre-established objectives. The President/CEO will recommend an Individual Modifier to the formula for calculation of the final award
payout. An “on target” performance yields a 100% modifier. The President/CEO will forward these recommendations to the Compensation Committee for review and approval. 
  

	6.0	Funding of the Incentive Plan for Individual Payouts 

  

	 	6.1	General 

 Funding is derived from corporate financial results and
individual objectives. Revenue and operating margin combined are weighted 70% of the total incentive award; the remaining 30% is based upon individual objectives. Payout of the 30% is not reliant on achievement of the financial results for funding
purposes. 
  

	 	6.2	Calculation for Individual Payout 

 The individual payout is
determined by factoring the participant’s actual Fiscal Year 2009 base salary, individual target award percentage, actual corporate revenue and operating margin results, and individual objectives. 
  

	7.0	Other Plan Provisions 

 7.1 It is recognized that certain
unforeseen events or inequities could develop in the Plan as established. Any merger and/or acquisition may require modification of thresholds and targets. Consideration will be given to unusual circumstances. The Compensation Committee may give
such consideration and the Compensation Committee’s decision will be final. 
 7.2 The portion of the Plan attributable to Company financial
achievement will not be funded unless there is funding and payout for the Fiscal Year 2009 Key Employee Incentive Program. 
 7.3 Payments will be
made in accordance with the final annual statements as audited by the Company’s independent Certified Public Accountants. Amounts earned should be paid as soon as administratively possible after the Company’s filing of Form 10-K.

 7.4 The Plan is to be in force for Fiscal Year 2009, and only those who are in the employ of the company and still a member of the eligible
executive group through the date of payout will qualify for payments. 
  

			
	Attachments:	  	 1.      Fiscal Year 2009 Percentage of Financial Bonus Earned by Level of Budget
Achievement

		  	 2.      Example of Individual Calculation/Formula for Payment









 Attachment 1 
 Percentage of Financial Bonus Earned 
 By level of Budget achievement 
  

										
	 Operating Margin
	  	+2	%	 	70%	 	100%	 	130%
	  	Budget	%	 	40%	 	  80%	 	  90%
	  	-2	%	 	  0%	 	    0%	 	  20%
					
		  			 	-4%	 	Budget	 	  +4%
		  			 		 	Revenue $	 	

  

			
	Note:	 	Bonus payout 30% MBO, 70% Financial
		 	Financial results after bonus payout








 Attachment 2 
 Example: 
  

					
	 Base Salary
	  	:	  	$200K
	 Target Award
	  	:	  	40% ($80K)

  

					
	Components:	  	Results	  	Modifier %
			
	 a.      % of FY’09 Projected Revenue Achievement
	  	-3%	  	
			
	 b.      % of FY’09 Operating Margin (before stock based compensation) Achievement
	  	+3%	  	
			
	 c.      Company Modifier based on a & b (See Matrix Attachment 1) – 70% of Total Short-Term Incentive

	  	70%	  	49%
			
	 d.      Individual Modifier (Based on FY’09 Individual Objectives) – 30% of Total Short-Term Incentive

	  	90%	  	27%
			
	 e.      Combined Modifier
	  		  	76%

  

													
	Calculation:	 	 	 	 	 	 	 	 	 	 	 	 
	$200K	 	 x
	 	40%	 	x	 	76%	 	=	 	$60,800
	¿	 		 	¿	 		 	¿	 		 	¿
	Base
Salary	 		 	Target
Award	 		 	Combined
Modifier	 		 	Payout