Exhibit 10.1


 


Cascade Microtech, Inc.


2005 Executive Compensation Plan


for the Six-Month Period Ending
December 31, 2005


Participants


 


	
  Eric
  Strid

  	
   

  	
  Chief
  Executive Officer and President

  
	
  Steven
  Sipowicz

  	
   

  	
  Chief
  Financial Officer, Vice President of Finance, Treasurer and Corporate
  Secretary

  
	
  John
  Pence

  	
   

  	
  Vice
  President and General Manager, Engineering Products Division

  
	
  Bruce
  McFadden

  	
   

  	
  Vice
  President and General Manager, Production Probe Division

  



 


Performance Criteria


 


Bonuses for these
participants are calculated on a percentage of their base salary based on
attainment of planned levels of net income, operating income and divisional
revenue.  Determinations as to whether the performance targets have been
met are made quarterly with respect to 20% of the bonus, and semi-annually with
respect 80% of the bonus.


 


This table lists the portion
of the total bonus payout that is based on the different performance measures,
for each executive:


 


	
   

  	
   

  	
  Semi-annual 80%

  	
   

  	
  Quarterly

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Engineering

  	
   

  	
  Production

  	
   

  	
  20%

  	
   

  
	
   

  	
   

  	
  Net

  income

  	
   

  	
  Operating

  income

  	
   

  	
  products

  revenue

  	
   

  	
  probes

  revenue

  	
   

  	
  Quarterly

  Objectives

  	
   

  
	
  Chief
  Executive Officer

  	
   

  	
  20

  	
  %

  	
  40

  	
  %

  	
  10

  	
  %

  	
  10

  	
  %

  	
  20

  	
  %

  
	
  Chief
  Financial Officer

  	
   

  	
  30

  	
  %

  	
  30

  	
  %

  	
  10

  	
  %

  	
  10

  	
  %

  	
  20

  	
  %

  
	
  VP
  Engineering Products

  	
   

  	
  —

  	
   

  	
  60

  	
  %

  	
  20

  	
  %

  	
  —

  	
   

  	
  20

  	
  %

  
	
  VP
  Production Probe

  	
   

  	
  —

  	
   

  	
  60

  	
  %

  	
  —

  	
   

  	
  20

  	
  %

  	
  20

  	
  %

  



 


In the cases of net income,
operating income, and product line revenues, the period of the performance
measures will be for the second half of 2005 (third and fourth quarters).


 


The payout for the net
income portion will be:


•                  100%
payout for achievement of 100% of the planned net income (“target”)


•                  Linear
from 0% to 100% for net income between 75% and 100% of target


•                  Zero
for net income below 75% of target


•                  Linearly
proportional to net income at or above 100% of target


 


The payout for the operating
income portion will be:


•                  100%
payout for achievement of 100% of the planned consolidated operating income (“target”)


•                  Linear
from 50% payout for operating income at 75% of target to 100% payout at 100% of
target and higher


•                  Zero
for operating income below 75% of target


 


The payout for the product
line revenue portion will be:


•                  100%
payout for achievement of 100% of the planned respective consolidated product
line revenue (“target”)


•                  Linear
from 0% payout for product line revenues at 75% of target to 200% payout at
125% of target


•                  200%
payout for product line revenues above 125% of target


•                  Zero
for product line revenues below 75% of target


 


The payout for quarterly
objectives will be proportional to the fraction of quarterly objectives
completed. The CEO is the final arbiter of such completion status. A set of
quarterly objectives is formulated by a consensus of the management team for
each executive at the beginning of each quarter.