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EXHIBIT 10.23 THORATEC CORPORATION
DEFERRED COMPENSATION PLAN SECTION 1. ESTABLISHMENT AND PURPOSES 1.1 Establishment. Thoratec Corporation established effective as of
January 1, 2004, a deferred compensation plan for executives as described
herein, known as the THORATEC CORPORATION DEFERRED COMPENSATION PLAN
(hereinafter called the Plan). 1.2 Purposes. The purposes of the Plan are to (i) enable the Corporation
to attract and retain persons of outstanding competence; (ii) provide means
whereby certain amounts payable by the Corporation to selected executives and
directors may be deferred to some future period; and (iii) provide a means for
possible future allocation of a matching credit by the Corporation to selected
executives and directors. The Plan is intended to constitute an unfunded plan
primarily for the purpose of providing deferred compensation for a select
group of management or highly compensated employees. SECTION 2. DEFINITIONS 2.1 Definitions. Whenever used herein, the following terms shall have the
meanings set forth below: (a) Board means the Board of Directors of the Corporation. (b) Committee means the Nonqualified Deferred Compensation Committee
appointed by the Board. (c) Compensation means the gross Salary, Bonus and Board Fees payable to
a Participant during a Year. (i) Salary. Salary means all regular, basic compensation, before
reduction for amounts deferred pursuant to this Plan or any other plan of the
Corporation, payable in cash to a Participant for services rendered during the
Year, exclusive of any bonuses or incentive compensation, special fees or
awards, allowances, or amounts designated by the Corporation as payments toward
or reimbursement of expenses. (ii) Bonus. Bonus means the Plan bonus payable in cash by the
Corporation to a Participant in a Year under the Corporations Bonus Plan. (iii) Board Fees. Board Fees means the cash compensation payable to
Directors, including any annual retainer and meeting and committee fees.




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(d) Corporation means Thoratec Corporation, a California corporation. (e) Director means a member of the Corporations Board of Directors. (f) Early Retirement Date means the later of the date the Participant
completes ten years of service with the Company or attains age 55. (g) Growth Increment means the net amount of income, appreciation, loss,
etc., earned or suffered on a Participants deferred amounts. (h) Normal Retirement Date means the date the Participants turn age 65. (i) Participant means an individual eligible to participate in the Plan
pursuant to Section 3.1. (j) Trust means the Thoratec Corporation Grantor Trust Agreement
attached hereto as Exhibit A. (k) Year means a calendar year. 2.2 Gender and Number. Except when otherwise indicated by the context,
any masculine terminology used herein also shall include the feminine gender,
and the definition of any term herein in the singular also shall include the
plural. SECTION 3. ELIGIBILITY AND PARTICIPATION 3.1 Eligibility. The Plan is primarily for the purpose of providing
deferred compensation for a select group of management or highly compensated
employees and Directors. Subject to the preceding sentence, the following
persons shall be eligible to participate in the Plan: (a) the elected officers and appointed officers of the Corporation; (b) cardiovascular division senior directors and above; (c) Directors; and (d) any other employee of the Corporation or any direct or indirect
subsidiary of the Corporation designated by the Chair of the Committee or by
the Chief Executive Officer of the Corporation from time to time. 3.2 Ceasing Eligibility. In the event a Participant no longer meets the
requirements for participation in this Plan, he shall become an inactive
Participant. An 2




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inactive Participant shall retain all rights described under this Plan,
except the right to make any further deferrals and the right to receive any
further matching credits, until the time that he again meets the eligibility
requirements of Section 3.1 (and, if applicable, Section 5.1). SECTION 4. ELECTION TO DEFER 4.1 Deferral Election. (a) Subject to the following provisions, prior to the beginning of the
Year, a Participant irrevocably may elect, by written notice to the
Corporation, to defer Salary, Bonus, or Board Fees as set forth below. (i) With respect to Salary deferrals, the deferral percentage elected must
be at least 2% but no greater than 50%, or a flat dollar amount of no less than
$2,000 and no more than 50% of salary. The deferral amount shall be applied to
the Participants Salary for each pay period of the Year to which the deferral
election applies and must be made before November 30 of the year immediately
preceding the Year for which such deferral election applies. (ii) With respect to Bonus deferrals, the deferral percentage elected
shall be 0% to 100% (and/or a flat amount) and shall apply only to the
Participants Bonus payable with respect to service to be performed in the Year
and must be made before November 30 of such Year. (iii) With respect to Board Fees, the deferral percentage elected shall be
0% to 100% and shall apply only to the Participants Board Fees payable with
respect to service to be performed in the Year and must be made before November
30 of the year immediately preceding the Year for which such deferral election
applies. (b) An individual who becomes a Participant at or after the beginning of
the Year may irrevocably elect, by written notice to the Corporation, to defer
all or a percentage of (i) the annual Salary or Board Fees earned by such
Participant for such Year after such election, if such election is made within
sixty (60) days after becoming a Participant, and (ii) the Participants Bonus,
if any, payable with respect to service performed during such Year, if such
election is made before November 30 of such Year. 4.2 Deferral Period. (a) The Participant may elect a deferral period for each separate
deferral. The deferral period may be until a payment date beginning prior to
termination of employment, the date of termination of employment or the
Participants Early or Normal Retirement date. This election, if made, must be
made at least 12 months prior to the scheduled payout date. Notwithstanding
the foregoing, Directors who are not also employees must defer payment until
after their service on the Board ends. 3




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(b) However, notwithstanding the above, payments of deferred amounts shall
be made on the earliest to occur of: (i) Death, (ii) Total and permanent disability (as defined in the Corporations long
term disability plan), or (iii) Termination of employment other than Early or Normal Retirement. (c) The Participant may elect to receive an unscheduled withdrawal at
any time, subject to a penalty equal to 10% of the amount received. The
penalty shall be retained by the Corporation or paid from the Trust to the
Corporation. Any Participant who makes an unscheduled withdrawal may not
participate in the Plan until the January 1 following the 12 month anniversary
of the unscheduled withdrawal. 4.3 Manner of Payment Election. Generally, payments are to be made in one
lump sum. However, in the case of Early or Normal Retirement the Participant
also may elect to have the deferred amount paid either in a lump sum or in up
to ten (10) (or, if less, his total years of service with the Corporation)
substantially equal annual installments; provided, however, at such time a
Participant may also specify a date within the installment period to receive
all then remaining deferred amounts in a lump sum. Also a Participant may
elect to receive pre-termination payments in equal annual installments for up
to four (4) years. Notwithstanding the foregoing, any Participant with less
than two years of service with the Corporation must receive a lump cash sum
distribution. 4.4 Modification, Corporate Discretion. Notwithstanding the foregoing, a
Participant may change the timing of any post-employment payments of deferred
amounts by written election made prior to the Year in which deferred amounts
are to be paid. Once a Participant has elected to receive a payment after he
or she terminates employment with the Corporation, that election may not be
changed to a commencement date prior to termination except for unscheduled or
hardship withdrawals. Also, while a Participants election with respect to
pre-termination payments is irrevocable once it is made, the Corporation may in
its sole discretion defer any pre-termination payment of deferred amounts to
the first Year in which the deduction of the payment would not actually be
limited by Section 162(m) of the Internal Revenue Code. As of the end of each
calendar quarter, a Participant may elect to cease any further deferrals, but
in such case may not make any deferrals for the remainder of the calendar year. 4.5 Denial of Participation. In the event payment of deferred amounts
commences because of long term disability or hardship, no deferrals may be made
for a 4




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period of twelve months following the last payment date in connection with
such disability or hardship. SECTION 5. MATCHING CREDITS 5.1 Effective Date and Eligibility. Effective at such date as determined
by the Board, the Corporation shall credit matching credits to Participants
under this Plan. (a) Time and Amount of Matching Contributions. At such time, if any, that
this Section 5 is activated by the Board the Corporation shall credit matching
credits under this Plan during each calendar quarter for the benefit of each
eligible Participant. The matching formula shall be determined by the Board at
the time it activates this Section 5. 5.2 Payment. Payment of matching credits shall begin at the same time the deferrals to
which they relate are paid or would have been paid in the case of financial
hardship or unscheduled withdrawals. SECTION 6. DEFERRED COMPENSATION AND
MATCHING CREDITS ACCOUNTS 6.1 Participant Accounts. (a) Deferred Compensation Accounts. The Corporation shall establish and
maintain individual bookkeeping accounts in respect of deferrals made by a
Participant called a Deferral Account. A Participant shall have separate
Deferral Accounts for deferred amounts to be paid after termination of
employment and those paid during employment. A Participants Deferral Account
shall be credited with the dollar amount of any amount deferred as of the date
the amount deferred otherwise would have become due and payable. (b) Matching Credits Accounts. The Corporation shall establish and
maintain an individual bookkeeping account in respect of matching credits by
the Corporation for the benefit of an eligible Participant to be known as a
Matching Account. 6.2 Growth Increments on Accounts. The Corporation will provide the
opportunity for Growth Increments to be earned on the balance of a
Participants Cash and Matching Accounts. The Committee will have the
authority to select, from time to time, funds or investment for use in indexing
and thus determining the Growth Increment. Each Account shall be credited
daily with a Growth Increment (which can be a negative number to reflect a loss
of value) computed on the balance in the Accounts 5




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during the immediately preceding month. The Growth Increment shall be the
sum of the income, capital growth, loss, etc., as selected and determined by
the Committee. 6.3 Charges Against Accounts. There shall be charged against a
Participants Account any payments (excluding payments for fractional shares)
made to the Participant or to his beneficiary in accordance with Section 7. SECTION 7. PAYMENT OF DEFERRED AND MATCHING AMOUNTS 7.1 Payment of Deferred and Matching Amounts. (a) Except in the case of a scheduled pre-employment withdrawal date,
Normal or Early Retirement, the Participants Account balance, including
accumulated Growth Increments attributable thereto, shall be valued as of the
event date provided in Section 4.1 or approval of financial hardship in 7.3.
For scheduled withdrawal, Normal or Early Retirement the Participants Account
Balance will be valued as of November 30 of the year of Retirement. The
payments shall be made in the manner selected by the Participant under Section
4.3 or, in the absence thereof, in a lump sum. The amount of each installment
payment shall be equal to a Participants then distributable Account balance
multiplied by a fraction, the numerator of which is one and the denominator of
which is the number of installment payments remaining. In the case of a
scheduled withdrawal, Normal or Early Retirement, payment shall commence the
first business day in the following January. In the case of hardship, payment
shall be made as soon as administratively practical after termination of
employment. In all other cases, payment shall commence on the beginning of the
month after the date which is 30 days after the event date provided in Section
4.1. 7.2 Acceleration of Payments. If prior to the payment of all or a portion
of his Account, the Participants dies, suffers a total and permanent disability
or terminates employment for other than Early or Normal Retirement, the balance
of any amounts payable shall be paid in a lump sum to the Participant or in the
case of death, to the beneficiaries designated under Section 8. Also,
regardless of the event triggering payment, if a Participants Account balances
total less than Fifty Thousand and No/100 Dollars ($50,000.00) at the time for
the payment specified, such amount shall be paid to the Participant in a lump
sum. 7.3 Financial Emergency. The Committee, in its sole discretion, may alter
the timing or manner of payment of deferred amounts and/or matching amounts in
the event that the Participant establishes, to the satisfaction of the
Committee, severe financial hardship. In such event, the Committee may: (a) provide that all, or a portion of, the amount previously deferred by
the Participant immediately shall be paid in a lump sum payment, 6




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(b) provide that all, or a portion of, the installments payable over a
period of time immediately shall be paid in a lump sum, or (c) provide for such other installment payment schedules as it deems
appropriate under the circumstances, as long as the amount distributed shall
not be in excess of that amount which is necessary for the Participant to meet
the financial hardship. Severe financial hardship will be deemed to have occurred in the event of
the Participants impending bankruptcy, a dependents long and serious illness,
or other events of similar magnitude. The Committees decision in passing on
the severe financial hardship of the Participant and the manner in which, if at
all, the payment of deferred amounts or matching credits shall be altered or
modified shall be final, conclusive, and not subject to appeal. SECTION 8. BENEFICIARY DESIGNATION 8.1 Designation of Beneficiary. A Participant shall designate a
beneficiary or beneficiaries who, upon the Participants death, are to receive
the amounts that otherwise would have been paid to the Participant. All
designations shall be in writing to the Corporation in such form as it
requires or accepts and signed by the Participant. The designation shall be
effective only if and when delivered to the Corporation during the lifetime of
the Participant. The Participant also may change his beneficiary or
beneficiaries by a signed, written instrument delivered to the Corporation.
However, if a married Participant maintains his primary residence in a state
that has community property laws, the Participants spouse shall join in any
designation of a beneficiary or beneficiaries other than the spouse. The
payment of amounts shall be in accordance with the last unrevoked written
designation of beneficiary that has been signed and delivered to the
Corporation. 8.2 Death of Beneficiary. In the event that all of the beneficiaries
named in Section 8.1 predecease the Participant, the amounts that otherwise
would have been paid to the Participant shall be paid to the Participants
estate, and in such event, the term beneficiary shall include his estate. 8.3 Ineffective Designation. In the event the Participant does not
designate a beneficiary, or if for any reason such designation is ineffective,
in whole or in part, the amounts that otherwise would have been paid to the
Participant shall be paid to the Participants estate, and in such event, the
term beneficiary shall include his estate. SECTION 9. RIGHTS OF PARTICIPANTS 9.1 Contractual Obligation. It is intended that the Corporation is under
a contractual obligation to make payments from a Participants account when
due. 7




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Payment of account balances payable in cash shall be made out of the
general funds of the Corporation as determined by the Board. 9.2 Unsecured Interest. No Participant or beneficiary shall have any
interest whatsoever in any specific asset of the Corporation. To the extent
that any person acquires a right to receive payments under this Plan, such
receipt shall be no greater than the right of any unsecured general creditor of
the Corporation. Notwithstanding the above, the Corporation intends to
informally fund for the obligations under this Plan through the Trust. While
contributions to the Trust are discretionary prior to a Change in Control, full
contribution is required in accordance with Section 16.2 upon a Change in
Control. 9.3 Employment. Nothing in the Plan shall interfere with or limit in any
way the rights of the Corporation to terminate any Participants employment at
any time, nor confer upon any Participant any right to continue in the employ
of the Corporation. 9.4 Participation. No employee shall have a right to be selected as a
Participant or, having been so selected, to be selected again as a Participant. SECTION 10. NONTRANSFERABILITY 10.1 Nontransferability. In no event shall the Corporation make any
payment under this Plan to any assignee or creditor of a Participant or a
beneficiary. Prior to the time of a payment hereunder, a Participant or a
beneficiary shall have no rights by way of anticipation or otherwise to assign
or otherwise dispose of any interest under this Plan nor shall such rights be
assigned or transferred by operation of law. SECTION 11. ADMINISTRATION 11.1 Administration. This Plan shall be administered by the Committee.
The Committee may from time to time establish rules for the administration of
this Plan that are not inconsistent with the provisions of this Plan. 11.2 Finality of Determination. The Committee has sole discretion in
interpreting the provisions of the Plan. The determination of the Committee as
to any disputed questions arising under this Plan, including questions of
construction and interpretation, shall be final, binding, and conclusive upon
all persons. 11.3 Expenses. The cost of payments from this Plan and the expenses of
administering the Plan shall be borne by the Corporation. 11.4 Action by the Corporation. Any action required or permitted to be
taken under this Plan by the Corporation shall be by resolution of the Board,
by the duly authorized Committee of the Board, or by a person or persons
authorized by resolution of the Board or the Committee. 8




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SECTION 12. AMENDMENT AND TERMINATION (a) Amendment and Termination. The Corporation expects the Plan to be
permanent but, since future conditions affecting the Corporation cannot be
anticipated or foreseen, the Corporation necessarily must and does hereby
reserve the right to amend, modify, or terminate the Plan at any time by action
of the Board. Notwithstanding the foregoing, upon the occurrence of a Change
in Control (as hereinafter defined) the Plan may not be terminated or amended
in such a manner as to decrease any benefits or rights accrued as of the date
of the Change of Control without the approval of the majority of the
Participants. Each of Change in Control, Person and Beneficial Owner shall have the
meaning set forth in Section 16.1. SECTION 13. APPLICABLE LAW 13.1 Applicable Law. This Plan shall be governed and construed in
accordance with the laws of the State of California. SECTION 14. WITHHOLDING OF TAXES 14.1 Tax Withholding. The Corporation shall have the right to deduct from
all contributions made to, or payments made from, the Plan any federal, state,
or local taxes required by law to be withheld with respect to such
contributions or payments. SECTION 15. NOTICE 15.1 Notice. Any notice required or permitted to be given under the Plan
shall be sufficient if in writing and hand-delivered, or sent by a registered
or certified mail, and if given to the Corporation, delivered to the principal
office of the Corporation. Such notice shall be deemed given as of the date of
delivery or, if delivery is made by mail, as of the date shown on the postmark
or the receipt for registration or certification. SECTION 16. CHANGE IN CONTROL 16.1 Change in Control. For purposes of this Plan, a Change in Control
shall be deemed to have occurred on the first to occur of any one of the events
set forth in the following paragraphs: (a) any Person is or becomes the Beneficial Owner, directly or indirectly,
of securities of the Corporation (not including in the securities Beneficially
Owned by such Person any securities acquired directly from the Corporation or
its Affiliates) representing 50% or more of either the then outstanding shares
of Common Stock or the combined voting power of the Corporations then
outstanding voting 9




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securities, excluding any Person who becomes such a Beneficial Owner in
connection with a transaction described in clause (i) of paragraph (c) below;
or (b) a change in the composition of the Board occurring within a two-year
period, as a result of which fewer than a majority of the directors are
Incumbent Directors. Incumbent Directors shall mean directors who either (A)
are directors of the Company as of November 1, 2003 or (B) are elected, or
nominated for election, to the Board with the affirmative votes of at least two
thirds of those directors whose election or nomination was not in connection
with any transaction described in this section 16.1, or in connection with an
actual or threatened proxy contest relating to the election of directors to the
Company. (c) there is consummated a merger or consolidation of the Corporation or
any direct or indirect subsidiary of the Corporation with any other
corporation, other than (i) a merger or consolidation which would result in the
voting securities of the Corporation outstanding immediately prior to such
merger or consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity or any parent thereof) at least 50% of the combined voting power of the
voting securities of the Corporation or such surviving entity or any parent
thereof outstanding immediately after such merger or consolidation, or (ii) a
merger or consolidation effected to implement a recapitalization of the
Corporation (or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Corporation (not
including in the securities Beneficially Owned by such Person any securities
acquired directly from the Corporation or its Affiliates) representing 50% or
more of either the then outstanding shares of Common Stock or the combined
voting power of the Corporations then outstanding voting securities; or (d) the stockholders of the Corporation approve a plan of complete
liquidation or dissolution of the Corporation or there is consummated an
agreement for the sale or disposition by the Corporation of all or
substantially all of the Corporations assets (in one transaction or a series
of related transactions within any period of 24 consecutive months), other than
a sale or disposition by the Corporation of all or substantially all of the
Corporations assets to an entity, at least 50% of the combined voting power of
the voting securities of which are owned by stockholders of the Corporation in
substantially the same proportions as their ownership of the Corporation
immediately prior to such sale. Notwithstanding the foregoing, no Change in Control shall be deemed to have
occurred if there is consummated any transaction or series of integrated
transactions immediately following which the record holders of the Common Stock
immediately prior to such transaction or series of transactions continue to
have substantially the same proportionate ownership in an entity which owns all
or substantially all of the assets of the Corporation immediately following
such transaction or series of transactions. 10




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For purposes of the definition of Change in Control, Affiliate shall have the
meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange
Act; Beneficial Owner shall have the meaning set forth in Rule 13d-3 under
the Exchange Act; Exchange Act shall mean the Securities Exchange Act of
1934, as amended; and Person shall have the meaning given in Section 3(a)(9)
of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof,
except that such term shall not include (i) the Corporation or any of its
subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Corporation or any of its Affiliates, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, (iv) a corporation owned, directly or indirectly, by the
shareholders of the Corporation in substantially the same proportions as their
ownership of stock of the Corporation or (v) any individual, entity or group
which is permitted to, and actually does, report its Beneficial Ownership on
Schedule 13G (or any successor schedule); provided that if any such individual,
entity or group subsequently becomes required to or does report its Beneficial
Ownership on Schedule 13D (or any successor schedule), such individual, entity
or group shall be deemed to be a Person for purposes hereof on the first date
on which such individual, entity or group becomes required to or does so report
Beneficial Ownership of all of the voting securities of the Corporation
Beneficially Owned by it on such date. 16.2 Effect of Change in Control. Upon a Change in Control, the
Corporation must contribute to the Trust as provided in the Trust. 16.3 Successors.Any successor in interest to the Corporation, including
a purchaser of a substantial portion of its assets, must assume the obligations
of this Plan. 11