Exhibit 10.9


 


COHERENT, INC.


 


VARIABLE COMPENSATION PLAN


 


SECTION 1

BACKGROUND, PURPOSE AND DURATION


 


1.1        Effective Date.  The Plan was adopted effective as of October 4, 2009 and will remain in effect until
terminated by the Board or the Administrator.


 


1.2        Purpose of the Plan.  The Plan is intended to increase shareholder
value and the success of the Company by motivating selected employees (a) to
perform to the best of their abilities and (b) to achieve the Company’s
objectives.


 


SECTION 2

DEFINITIONS


 


The following
words and phrases shall have the following meanings unless a different meaning
is plainly required by the context:


 


2.1        “Actual Award”
means as to any Performance Period, the actual award (if any) payable to a
Participant under the Plan for the Performance Period, subject to the
Administrator’s authority under Section 3.4 to modify the award.


 


2.2        “Administrator”
means the Compensation Committee of the Board or officers of the Company as
delegated by the Compensation Committee of the Board.  The Compensation Committee of the Board may
appoint different officers to administer the Plan with respect to different
groups of Employees and/or Participants.


 


2.3        “Affiliate” means
any corporation or other entity (including, but not limited to, partnerships
and joint ventures) controlled by the Company.


 


2.4        “Base Salary” means
as to any Performance Period, the Participant’s annualized salary rate on the
last day of the Performance Period.  Such
Base Salary shall be before both (a) deductions for taxes or benefits, and
(b) deferrals of compensation pursuant to Company sponsored plans and
Affiliate sponsored plans.


 


2.5        “Board” means the
Board of Directors of the Company.


 


2.6        “Bonus Pool” means
the pool of funds established by the Company for distribution to Participants.


 


2.7        “Company” means
Coherent, Inc., a Delaware corporation, or any successor thereto.


 


2.8        “Disability” means a
permanent and total disability determined in accordance with uniform and
nondiscriminatory standards adopted by the Administrator from time to time.


 

















 


2.9        “Employee” means
any employee of the Company or of an Affiliate, whether such individual is so
employed at the time the Plan is adopted or becomes so employed subsequent to
the adoption of the Plan; provided, however that any Plan payout to a part-time
employee Participant shall be pro-rated based upon their scheduled hours of
work.


 


2.10      “Fiscal Year” means
the fiscal year of the Company.


 


2.11      “Participant” means
as to any Performance Period, an Employee who has been selected by the
Administrator for participation in the Plan for that Performance Period.


 


2.12      “Performance Period”
means the period of time for the measurement of the performance criteria that
must be met to receive an Actual Award, as determined by the Administrator in
its sole discretion.  A Performance
Period may be divided into one or more shorter periods if, for example, but not
by way of limitation, the Administrator desires to measure some performance
criteria over 12 months and other criteria over 3 months.  Multiple, overlapping Performance Periods (of
different durations) may be in effect at any one time.


 


2.13      “Plan” means this
Variable Compensation Plan, as set forth in this instrument and as hereafter
amended from time to time.


 


2.14      “Target Award” means
the target award, at 100% performance achievement, payable under the Plan to a
Participant for the Performance Period, as determined by the Administrator in
accordance with Section 3.2.


 


2.15      “Termination of Service”
means a cessation of the employee-employer relationship between an Employee and
the Company or an Affiliate for any reason, including, but not by way of
limitation, a termination by resignation, discharge, death, Disability,
retirement, or the disaffiliation of an Affiliate, but excluding any such
termination where there is a simultaneous reemployment by the Company or an
Affiliate.


 


SECTION 3

SELECTION OF PARTICIPANTS AND DETERMINATION OF AWARDS


 


3.1        Selection of
Participants.  The Administrator, in
its sole discretion, shall select the Employees who shall be Participants for
any Performance Period.  Participation in
the Plan is in the sole discretion of the Administrator, and shall be
determined on a Performance Period by Performance Period basis.  Accordingly, an Employee who is a Participant
for a given Performance Period in no way is guaranteed or assured of being
selected for participation in any subsequent Performance Period or
Periods.  Unless determined otherwise by
the Administrator, in its discretion, any Employee who is a participant in a
Company commission plan or program or is party to an agreement with the Company
which provides for payment of commissions will not be eligible to be a Participant in the Plan.


 


3.2        Determination of Target
Awards.  The Administrator, in its
sole discretion, shall establish a Target Award for each Participant.


 


2

















 


3.3        Bonus Pool.  Each Performance Period, the Administrator,
in its sole discretion, may establish a Bonus Pool.  Actual Awards for the relevant Performance
Period shall be paid from any such Bonus Pool, to the extent it is funded.


 


3.4        Discretion to Modify
Awards.  Notwithstanding any contrary
provision of the Plan, the Administrator may, in its sole discretion and at any
time, (a) increase, reduce or eliminate a Participant’s Actual Award,
and/or (b) increase, reduce or eliminate the amount allocated to the Bonus
Pool.  The Administrator may determine
the amount of any reduction on the basis of such factors as it deems relevant,
and shall not be required to establish any allocation or weighting with respect
to the factors it considers.


 


3.5        Discretion to Determine
Criteria.  Notwithstanding any
contrary provision of the Plan, the Administrator shall, in its sole
discretion, determine the performance requirements applicable to any Target
Award.  The requirements may be on the
basis of any factors the Administrator determines relevant, and may be on an
individual, divisional, business unit or Company-wide basis.  Failure to meet the requirements will result
in a failure to earn the Target Award, except as provided in Section 3.4.


 


3.6        Pro-Ration of Actual
Awards.  Without limiting the
generality of Section 3.4, with respect to any Performance Period, if an
Employee becomes a Participant after the commencement of the Performance
Period, the Participant’s Actual Award shall be pro-rated from the first day of
participation in the Plan based on the number of days during the Performance
Period that the Employee was a Participant in the Plan.


 


3.7        Discretion to Grant
Awards Outside the Plan.  Notwithstanding
any contrary provision of the Plan, the Board or a duly constituted committee
of the Board (or their delegates) may, in its sole discretion and at any time,
grant awards and cash bonuses to Employees and Participants outside the Plan.


 


SECTION 4

PAYMENT OF AWARDS


 


4.1        Right to Receive
Payment.  Each Actual Award shall be
paid in cash solely from the general assets of the Company.  No
provision of the Plan shall require the Company, for the purpose of satisfying
any obligations under the Plan, to purchase assets or place any assets in a
trust or other entity to which contributions are made or otherwise to segregate
any assets, nor shall the Company maintain separate bank accounts, books,
records or other evidence of the existence of a segregated or separately
maintained or administered fund for such purposes.  Participants shall have no rights under the
Plan other than as unsecured general creditors of the Company.


 


4.2        Timing of Payment.  Payment of each Actual Award shall be made as
soon as administratively practicable as determined by the Administrator after
the end of the Performance Period during which the Actual Award was earned, but
in no event later than (a) the 15th day of the third month following the
end of the Company’s taxable year in which the Performance Period has ended, or
(b) March 15th of the calendar year following the calendar year in
which the applicable Performance Period has ended.


 


3

















 


4.3       Form of Payment.  Each Actual Award shall be paid in cash in a
single lump sum.


 


SECTION 5

ADMINISTRATION


 


5.1        Administrator Authority.  It shall be the duty of the Administrator to
administer the Plan in accordance with the Plan’s provisions.  The Administrator shall have all powers and
discretion necessary or appropriate to administer the Plan and to control its
operation, including, but not limited to, the power to (a) determine which
Employees shall be granted awards, (b) prescribe the terms and conditions
of awards, (c) interpret the Plan and the awards, (d) adopt such
procedures and subplans as are necessary or appropriate to permit participation
in the Plan by Employees who are foreign nationals or employed outside of the
United States, (e) adopt rules for the administration, interpretation
and application of the Plan as are consistent therewith, and (f) interpret,
amend or revoke any such rules.


 


5.2        Decisions Binding.  All determinations and decisions made by the
Administrator, the Board, and any delegate of the Administrator pursuant to the
provisions of the Plan shall be final, conclusive, and binding on all persons,
and shall be given the maximum deference permitted by law.


 


5.3        Delegation of
Administration.  The Administrator,
in its sole discretion and on such terms and conditions as it may provide, may
delegate all or part of its authority and powers under the Plan to one or more
directors and/or officers of the Company. 
If the Administrator delegates
any authority for the administration of the Plan, the term “Administrator”
shall include the individuals delegated such authority.


 


5.4        Indemnification of
Administrator.  The Company shall
indemnify and hold harmless members of the Administrator, or any officer or
employee of the Company delegated authority with respect to the administration
of the Plan, for any expense, liability, or loss, including attorneys’ fees,
judgments, fines, penalties, amounts paid or to be paid in settlement, any
interest, assessments, or other charges imposed thereon, any federal, state,
local, or foreign taxes, and all other costs and obligations, paid or incurred
in connection with any action, determination or interpretation made in good
faith with respect to the Plan or any payments under the Plan.  The Company shall bear all expenses and
liabilities that members of the Administrator, or any officer of the Company
delegated authority with respect to the administration of the Plan, incur in
connection with the administration of the Plan.


 


SECTION 6

GENERAL PROVISIONS


 


6.1        Tax Withholding.  The Company shall withhold all applicable
taxes from any Actual Award, including any federal, state and local taxes
(including, but not limited to, the Participant’s FICA and SDI obligations).


 


6.2        No Effect on Employment
or Service.  Nothing in the Plan
shall interfere with or limit in any way the right of the Company to terminate
any Participant’s employment or service at any time, with or without
cause.  For purposes of the Plan,
transfer of employment of a Participant between the Company and any one of its
Affiliates (or between Affiliates) shall not be deemed a 


 


4

















 


Termination of
Service.  Employment with the Company and
its Affiliates is on an at-will basis only. 
The Company expressly reserves the right, which may be exercised at any
time and without regard to when during a Performance Period such exercise
occurs, to terminate any individual’s employment with or without cause, and to
treat him or her without regard to the effect that such treatment might have
upon him or her as a Participant.


 


6.3        Participation.  No Employee shall have the right to be
selected to receive an award under this Plan, or, having been so selected, to
be selected to receive a future award.


 


6.4        Successors.  All obligations of the Company under the
Plan, with respect to awards granted hereunder, shall be binding on any
successor to the Company, whether the existence of such successor is the result
of a direct or indirect purchase, merger, consolidation, or otherwise, of all
or substantially all of the business or assets of the Company.


 


6.5        Nontransferability of
Awards.  No award granted under the
Plan may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will, by the laws of descent and distribution, or
to the limited extent provided in Section 6.5.  All rights with respect to an award granted
to a Participant shall be available during his or her lifetime only to the
Participant.


 


6.6        Section 409A of
the Code.  It is intended that the
Plan shall be exempt from Section 409A of the Internal Revenue Code of
1986, as amended (“Section 409A”), pursuant to the requirement that all
payments hereunder shall be paid within the applicable short-term deferral
period as set forth in Section 1.409A-1(b)(4) of the final
regulations issued under Section 409A. 
The Administrator shall administer and interpret the Plan in a manner
consistent with this short-term deferral exception and any other regulations or
other Internal Revenue Service guidance issued with respect to Section 409A.


 


SECTION 7

AMENDMENT, TERMINATION AND DURATION


 


7.1        Amendment, Suspension
or Termination.  The Company, by
action of the Board or a duly constituted committee of members of the Board to
whom the Board has delegated the authority to amend or terminate the Plan, in
its sole discretion, may amend or terminate the Plan, or any part thereof, at
any time and for any reason. The amendment, suspension or termination of the
Plan shall not, without the consent of the Participant, alter or impair any
rights or obligations under any Actual Award theretofore earned by such
Participant.  No award may be granted
during any period of suspension or after termination of the Plan.


 


7.2        Duration of the Plan.  The Plan shall commence on the date specified
herein, and subject to Section 7.1 (regarding the Company’s right to amend
or terminate the Plan), shall remain in effect thereafter.


 


5

















 


SECTION 8

LEGAL CONSTRUCTION


 


8.1        Gender and Number.  Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular and the singular shall include the plural.


 


8.2        Severability.  In the event any provision of the Plan shall
be held illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.


 


8.3        Requirements of Law.  The granting of awards under the Plan shall
be subject to all applicable laws, rules and regulations, and to such
approvals by any governmental agencies or national securities exchanges as may
be required.


 


8.4        Governing Law.  The Plan and all awards shall be construed in
accordance with and governed by the laws of the State of California, but
without regard to its conflict of law provisions.


 


8.5        Bonus Plan.  This Plan is intended to be a “bonus program”
as defined under U.S. Department of Labor regulation section 2510.3-2(c) and
shall be construed and administered by the Company in accordance with such
intention.


 


8.6        Captions.  Captions are provided herein for convenience
only, and shall not serve as a basis for interpretation or construction of the
Plan.


 


6