exv10w1



 



Exhibit 10.1


Officer

Incentive Compensation Plan



Effective October 1, 2003



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KULICKE & SOFFA INDUSTRIES, INC.



OFFICER INCENTIVE COMPENSATION PLAN




	A.	 	Purpose



The purpose of the Kulicke & Soffa Industries, Inc. (K&S) Officer Incentive
Compensation Plan is to:



	•	 	Motivate Participants to achieve financial, business, and individual
results consistent with the Company’s business strategy; and,
	 
	•	 	Provide Plan Participants with the opportunity to earn a portion of
their total compensation based on the financial results of the Company
and their individual efforts.




	B.	 	Effective Date



This Plan is effective October 1, 2003. This Plan and its attachments
constitute the entire Officer Incentive Compensation Plan and supersede any
other oral or written agreements. The Plan will be administered on a Fiscal
Half-Year basis.



	C.	 	Amendment and Termination



The Board of Directors may, at any time and without prior notice to
Participants, terminate the Plan or amend it in such respects as the Board, in
its discretion, deems to be in the best interest of the Company. In the event
of Plan termination, the Board of Directors shall determine, in its sole
discretion, whether no Awards, partial Awards, or full Awards shall be made
with respect to the Fiscal Half-Year in which the termination occurs.



	D.	 	Plan Administration



This Plan shall be operated and administered by the Compensation Committee of
the Board of Directors. Decisions by the Compensation Committee on all matters
involving the interpretation and administration of this Plan shall be final and
binding.



	E.	 	Eligibility and Participation



Only employees who are Officers of the Company are eligible to participate in
the Plan.


An employee shall participate with respect to a Fiscal Half-Year if he is an
Officer on the first day of such Fiscal Half-Year or becomes an Officer during
the Fiscal Half-Year.


Participants in this Plan will not be eligible to participate concurrently in
any other Company bonus or incentive program, including Success Share and Sales
Incentive Plans.


Inclusion in this Plan does not constitute a guarantee of employment or
specific earnings. Nothing in this Plan shall act as an express or implied
contract, a guarantee or commitment for an employee to be or to continue to be
a Participant in the Plan, to receive payments under the Plan, or to be
retained in the employment of Kulicke & Soffa Industries, Inc.



	F.	 	Overall Plan Components



The Plan is based on Corporate and Individual Performance Goals with Incentive
Awards made as a percentage of the Incentive Target as set forth below:



	 	1.	 	Corporate (K&S company-wide) Performance Goals: These goals
consist of the financial objective or objectives to be achieved on a
Company-wide basis as established by the Compensation Committee at



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	 	 	 	the beginning of the Fiscal Half-Year. A more detailed definition of
financial criteria will be provided in the specific information that
is prepared for each Participant. The Finance Department is the
official source to provide the K&S Corporate financial results for the
Fiscal Half-Year used to calculate Incentive Awards under this Plan.
	 
	 	2.	 	Individual Performance Goals: These are specific qualitative
or quantitative goals established for an individual Participant.
These will be developed by the Participant and the person to whom he
or she reports, subject to approval by the Compensation Committee.
Objectives may be established that encompass the full Plan Year or
longer, with milestones established for each Fiscal Half-Year that
can be measured and evaluated for Incentive Award purposes.
	 
	 	3.	 	Modification of Goals. Organizational changes or other
business events during the Fiscal Half-Year may require an
adjustment of the Performance Goals.
	 
	 	4.	 	Incentive Target: This is the amount to be paid when 100% of
all Goals are met. The Incentive Target, prior to any pro-rating
(as provided in Section I), will be based on the individual’s grade
level in the Company and other factors that influence the Total
Targeted Compensation level. The Incentive Target shall be weighted
with respect to Corporate and Individual Performance Goals as set
forth below:




	 	 	The Incentive Target is allocated as follows:




	 	 	 	 	 	 	 	 	 
	Salary	 	 	 	 	 	Individual
	Grade	 	Corporate Goals	 	Goals
	
	 	
	 	

	20
	 	 	100	%	 	 	 	 
	18/19
	 	 	90	%	 	 	10	%
	16/17
	 	 	80	%	 	 	20	%




	 	 	The weighting with respect to Corporate Goals may be further subdivided
if the Corporate Performance Goals are based on multiple financial
objectives or metrics. The Committee will determine the weighting for
each objective or metric. The Compensation Committee may, in its
discretion, adjust the allocation of the Incentive Target by adjusting
the percentages set forth above with respect to Corporate Goals and
Individual Goals with respect to any Participant, provided that the sum
of such adjusted percentages equals 100%.




	 	5.	 	Incentive Awards: Payment of all Incentive Awards will be
made within 90 days after financial statements become available for
the Plan’s Fiscal Half-Year.



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	G.	 	Definitions



This list is intended to provide definitions for most business terms used in
this Plan Document, but may not be all inclusive of terms used.


Award or Incentive Award - the incentive payment made to a Participant under
this Plan which is based on the achievement of Performance Goals and the
Participant’s Incentive Target.


Base Salary - the annualized rate of base compensation paid to a Participant at
the beginning of the Fiscal Half-Year or, if an employee becomes a Participant
subsequent to the first day of the Fiscal Half-Year, his or her annualized rate
of base compensation at the time of eligibility.


Board of Directors - the Board of Directors of K&S Industries Inc.


Breakeven - the Company has attained a Net Profit of greater than $0 for the
Fiscal Half-Year.


Compensation Committee - the Compensation Committee of the Board of Directors.


Company – Kulicke & Soffa Industries, Inc. and any successor thereto.


Corporate Performance Goals – goals that reflect financial results expected on
a Company-wide basis for the Fiscal Half-Year.


Fiscal Year - the business year, October 1 through September 30. The first
Fiscal Half-Year ends on March 31.


Goal or Target – the desired level of performance to be achieved on a Corporate
or Individual level. Above Target denotes performance above the designated
Target level.


Incentive Target - the percentage of a Participant’s Base Salary established as
the basis for his or her Incentive Award when 100% of all Goals are achieved.
The actual Incentive Award, if any, may equal, exceed, or fall below the
Incentive Target.


Individual Performance Goals - goals that reflect results expected from the
Participant during the Fiscal Half-Year.


Net Profit  - the net income as reported in SEC filings (which amount has been
determined after taking into account all incentive compensation to be paid
under this Plan or other plans of the Company with respect to the Fiscal
Half-Year) adjusted for



	•	 	Asset impairment of goodwill or intangibles
	 
	•	 	Current effect of an accounting change
	 
	•	 	Unanticipated required accounting entries (such as expensing stock options)



Officer - an employee who has been designated by the Board of Directors as an
Officer of the Company.


Participant - an Officer of the Company to whom participation has been extended
under the Plan.


Plan - the Kulicke & Soffa Industries Inc. Officer Incentive Compensation Plan.


Plan Year - the Fiscal Year of the Company which begins on October 1 and ends
on the following September 30.


Salary Grade – the grade level for each position established by the Company and
applied on a worldwide basis to all positions.


Threshold – performance at the minimum level specified for achievement of
Corporate or Individual Performance Goals. Performance below this level will
result in an Incentive Award of zero.


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Total Targeted Compensation - the total cash compensation opportunity for a
Participant. Total Targeted Compensation is comprised of Base Salary and an
incentive percentage. The total of these components is intended to be
competitive with the Total Targeted Compensation of similar positions based on
salary survey data for that country and employment market.


Weighted Incentive Target - for a particular Goal or financial metric, the
product obtained by multiplying an individual’s Incentive Target by the Weight
given to that Goal or financial metric.



	H.	 	Performance and Payment Levels



Threshold and Above Target for Corporate and Individual Performance Goals shall
be as defined below.



	•	 	Threshold performance for Corporate Performance Goals is 85% of Target.
	 
	•	 	Threshold for Individual Performance Goals is Breakeven, i.e.; Breakeven must be achieved in order for Incentive Awards for
Individual Performance Goals to be paid.
	 
	•	 	Above Target performance for Corporate Performance Goals will be awarded for achievement above 100% up to 150% of Target.
At 150% of Target, a maximum award of 120% of the Weighted Incentive Target can be achieved.
	 
	•	 	If the actual performance level falls between Threshold and Target performance, or Target and Above Target performance, the
result will be calculated through straight-line interpolation. See page 4.
	 
	•	 	If the measured performance levels at the close of the Fiscal Half-Year do not meet Threshold levels, no Incentive Awards
will be earned.



The Compensation Committee may, in its discretion, increase the amount of the
Incentive Awards otherwise payable to some or all Participants if performance
warrants; provided, however, that any such increases shall be subject to
approval by the Board of Directors if so required by any applicable laws or
rules or regulations.



	I.	 	Change in Employment Status and Eligibility for Award



A Plan Participant who is not an active regular full-time employee and an
Officer of the Company throughout the Fiscal Half-Year, including the last day
of the Fiscal Half-Year, is not entitled to an Award under the Plan except as
otherwise provided below.


In the event of termination of employment due to retirement, death or permanent
disability during the Fiscal Half-Year or of an absence of greater than twelve
(12) work weeks during an approved leave:



	•	 	A Plan Participant may be eligible to receive a prorated Incentive
Award for the Individual Performance Goals component only. The
Participant is not eligible for payment with respect to Corporate
Performance Goals.
	 
	•	 	The proration is based on the Individual Performance Goals actually
achieved by the Participant during the relevant Fiscal Half-Year as
measured by the person to whom the Participant reports, subject to
approval by the Compensation Committee.



In the event of an involuntary termination such as a reduction in force, a Plan
Participant may be eligible to receive a prorated Incentive Award for the
Individual Performance Goals component only based on the Individual Performance
Goals actually achieved by the Participant during the relevant Fiscal Half-Year
as measured by the person to whom the Participant reports, subject to approval
by the Compensation Committee. The Participant is not eligible for payment
with respect to Corporate Performance Goals.


An employee who becomes a Participant subsequent to the beginning of a Fiscal
Half-Year, an employee who becomes ineligible during the Fiscal Half-Year but
continues to be employed by the Company, and a Participant who is absent for
fewer than twelve (12) work weeks on an approved leave during the Fiscal
Half-Year may be eligible for a prorated Incentive Award for both Corporate and
Individual Performance Goals. An Award with respect to Individual Performance
Goals shall be prorated based on the Individual Performance Goals actually


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achieved by the Participant during the relevant Fiscal Half-Year as measured by
the person to whom the Participant reports, subject to approval by the
Compensation Committee. An Award with respect to Corporate Performance Goals
shall be prorated based on the period of time the Participant was an active
full-time employee and an Officer during the Fiscal Half-Year. Notwithstanding
the foregoing, an employee whose participation in the Incentive Compensation
Plan ceases during a Fiscal Half-Year as a result of becoming an Officer
subsequent to the first day of such Fiscal Half-Year shall be eligible to
receive an Award hereunder with respect to the full Fiscal Half-Year. The
Compensation Committee, in its discretion, may make such adjustments as it
deems necessary in order to take into account performance goals under the
Incentive Compensation Plan prior to the date such employee became an Officer.


In all cases eligibility for a prorated Award is contingent on meeting all
other conditions and requirements of the Plan.


Prorating will be calculated in monthly increments. Changes occurring during
the first 15 days of the month will be prorated back to the beginning of the
month; changes occurring from the 16th day of the month will be prorated based
on the 1st of the following month.


Plan Participants whose employment with the Company is terminated for cause or
due to a voluntary resignation prior to the end of the Fiscal Half-Year will
not be eligible for either a full or prorated Incentive Award.



	J.	 	General Provisions



All Incentive Awards shall be subject to tax and withholding under applicable
Country laws and regulations in effect at the time.


All Incentive Awards will be paid in local Country currency.


Participants may not sell, assign, transfer, pledge or encumber any expectation
of or right to an Award under this Plan and any attempt to do so shall be void.


As a condition of receiving benefits under the Plan, all Participants agree to
respect the confidentiality of the Company’s financial information.


This Plan will be construed in accordance with and governed by the laws of The
Commonwealth of Pennsylvania, without reference to principles of conflicts of
law, as to all matters, including, but not limited to, matters of validity,
construction and performance.


Dispute Resolution



The Compensation Committee shall have complete discretion concerning the
determination of Incentive Awards under the Plan and the decision of the
Compensation Committee shall be final and conclusive. Any disputes regarding
incentive eligibility or an Award with respect to a Fiscal Half-Year must be
communicated in writing to the Compensation Committee within ninety (90) days
from the date an Incentive Award would otherwise have been paid with respect to
such Fiscal Half-Year.


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