exv10w1







	 	 	 	 	 



Exhibit 10.1









SENIOR MANAGEMENT BONUS PLAN



PURPOSE



The Senior Management Bonus Plan (the “Plan”) was adopted to promote a shared sense of
responsibility for growth and financial success of Pixelworks, Inc. (the “Company”). The Plan is
intended to motivate and reward Plan Participants for both Company and individual performance.




DEFINITIONS




	 	 	 
	Plan Participant

	 	An employee of the Company or its subsidiaries, approved by the
Plan Administrator for participation in the Plan.
	 
	 	 
	Performance Measures

	 	Revenue, EBITDA and other operational objectives approved by the
Plan Administrator for the applicable year. The Plan
Administrator will establish the specific targets each year for
the performance measures to be used under the Plan for that year.
	 
	 	 
	Target Bonus

	 	A percentage of base pay intended to be paid to a Plan
Participant if 100% of Performance Measures are achieved. The
Plan Administrator will establish the Target Bonus each year for
each Participant in the Plan.
	 
	 	 
	Overachievement 

Bonus

	 	A multiple of the Target Bonus to be paid to a Plan Participant
for a particular year if performance goals established by the
Plan Administrator are exceeded by a specified amount. The Plan
Administrator will establish the Overachievement Bonus (if any)
each year for each Plan Participant.
	 
	 	 
	Bonus Payout

	 	The actual bonus awarded to the Plan Participant.
	 
	 	 
	Plan Administrator

	 	The Compensation Committee of the Company’s Board of Directors.
The Plan Administrator may assign certain administrative duties
related to the Plan to employees of the Company.
	 
	 	 
	Plan Year

	 	The calendar year to which a particular bonus opportunity relates.
	 
	 	 
	Termination

	 	As to a particular Plan Participant, the cessation of the Plan
Participant’s employment with the Company or its subsidiaries for
any reason.






PARTICIPATION



An employee must meet the following criteria to participate in the Plan:




 









 









	 	•	 	Be a regular full-time employee of the Company or any of its subsidiaries in a Director,
Principal Architect, Senior Director, Fellow, Chief Architect, Senior Fellow, Vice
President, Chief Financial Officer (“CFO”), President and/or Chief Executive Officer
(“CEO”) role, or equivalent position and approved by the Plan Administrator for
participation in the Plan for the applicable Plan Year;
	 
	 	•	 	Be employed in an eligible position for a minimum of three months during the Plan Year;
and
	 
	 	•	 	Be actively employed by the Company on the day bonuses are paid to Plan Participants
under the Plan. If a Plan Participant has a Termination for any reason before the payment
date, the Plan Participant will not be entitled to any payment of a bonus under the Plan
and no bonus (or portion thereof) shall be considered to have been earned regardless of how
long he or she was employed during or after the Plan Year (subject to the discretion of the
Plan Administrator as provided herein).





TARGET BONUS



Two specific Performance Measures must be achieved for any bonus amounts to be paid under the Plan:





	(1)	 	Revenue must meet or exceed a baseline target that has been established by the Plan
Administrator for the year.
	 
	(2)	 	Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) must meet or exceed
a baseline target that has been established by the Plan Administrator for the year.




If both of the above requirements are met, bonuses will be calculated based on attainment of
specific Performance Measures related to each of the following:





	(1)	 	Revenue
	 
	 	 	The bonus, if any, related to this measure is based on the excess of actual revenue over the
baseline target, up to a specified maximum amount.
	 
	(2)	 	Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”)
	 
	 	 	The bonus, if any, related to this measure is based on the excess of actual EBITDA over a
baseline target, up to a specified maximum amount.
	 
	(3)	 	Operational Objectives
	 
	 	 	The bonus, if any, related to various operational measures is based on whether or not the
specified objectives were achieved.




The Plan Administrator will assign a weight to each of the Performance Measures. The weight
assigned represents the maximum percentage of the Target Bonus that can be earned for that
Performance Measure when all of the goals related to the Performance Measure are met. The weight
assigned to each of the Performance Measures varies by Plan Participant, based on the Plan
Participant’s position / function with the Company.






 









 








OVERACHIEVEMENT BONUS



An Overachievement Bonus may be paid to Plan Participants if performance goals established by the
Plan Administrator for the applicable Plan Year are exceeded by a specified amount.




DISCRETIONARY ELEMENT



The CEO may recommend to the Plan Administrator adjustments to bonus amounts. Notwithstanding any
other provision herein, the Plan Administrator may, in its sole discretion (whether or not at the
recommendation of the CEO), adjust (either in a positive or negative manner as to any particular
bonus) the bonus amount for any Plan Participant hereunder based on the Plan Participant’s
individual performance, extraordinary results or other factors considered appropriate by the Plan
Administrator. The Plan Administrator may also award a discretionary bonus to any employee of the
Company (regardless of performance) based on such factors as it in its sole discretion considers
appropriate.




AWARD DISTRIBUTION



Bonus payouts will be based on the Plan Participant’s actual salary paid during the Plan Year.
Salary will include all base pay, but will exclude any allowances, bonus payments and all other
compensation.




PRO-RATA AWARDS



If the Plan Participant is promoted, demoted, or changes job responsibilities during the year,
his/her Target Bonus will be re-evaluated by the Plan Administrator. If a change is warranted, it
will be effective on the date of the change in responsibilities for the balance of the year. Bonus
amounts will be subject to adjustment on a pro-rata basis for any changes in an individual’s status
as a Plan Participant based on the percentage of time spent as a participant in the plan. If a
Plan Participant is no longer in an eligible position due to a change in responsibilities or
demotion at the time bonuses are paid under the Plan, the Plan Participant will not be entitled to
payment of any bonus under the Plan.



All pro-rata awards will be determined by using the salary actually paid to the Plan Participant
during the portion of the Plan Year that the individual was a Plan Participant.



Notwithstanding the foregoing, the Plan Administrator may provide for a Plan Participant to receive
a pro-rata share of an award for a Plan Year if he or she leaves the Company or any of its
subsidiaries during the year due to death, retirement, or extended disability.




PLAN ADMINISTRATION AND AUTHORITIES



All bonus awards must be approved by the Plan Administrator.



This Plan is not a contract of employment nor a contract as to any particular bonus or other
compensation opportunity. It creates no rights for any Plan Participant to continue employment
with the Company for any length of time, nor does it create any rights for any Plan Participant or
any obligations on the part of the Company in any other respect. The Plan is simply a general
framework on which the Company may base its bonus determinations. Notwithstanding anything else
contained herein to the contrary, the Company reserves the right, in its sole discretion, to amend,
modify or terminate the Plan at any time and in any manner. Any such amendment must be in writing
and signed by an authorized officer of the Company.





 









 







The Plan Administrator shall administer the Plan, select the Plan Participants and establish the
terms and amounts of any bonus award under the Plan as set forth herein. The Plan Administrator
shall have the authority to construe and interpret the Plan and any other document relating to the
Plan. All actions taken and all interpretations and determinations made by the Company in respect
of the Plan shall be conclusive and binding on all persons and shall be given the maximum deference
permitted by law.