Exhibit 10.2


 


[***] Certain information
on this page has been omitted and filed separately with the Securities and
Exchange Commission.  Confidential
treatment has been requested with respect to the omitted portions.


Ikanos Communications,
Inc.

2006 Sales Compensation Plan

For Vice President Worldwide Sales


Version 2.7


1.                            Purpose


1.1.                              Attraction,
retention and motivation.  The goal
of this plan is to attract, retain, and motivate the best salespeople in the
industry through clearly specified sales goals and a pay-for-performance
philosophy.


1.1.1.                     Attraction.  Earn higher than the industry norm through
the no-cap quarterly revenue-based and margin-based commission and the no-cap
annual revenue-based and margin-based commission with multiplier.


1.1.2.                     Retention.  Participants are rewarded with an Annual
Commission paid after year end results are final.


1.1.3.                     Motivation.  OEM Design Win Incentives and Strategic Telco
Win Incentives


1.2.                              Communicate
the company goals.  Another goal of
the Plan is to communicate what the company wants you to focus on:


1.2.1.                     Exceeding
quarterly revenue targets


1.2.2.                     Exceeding
quarterly margin targets


1.2.3.                     Winning
strategic Telco tenders


1.2.4.                     Winning OEM
designs and launching new products


1.2.5.                     Teamwork to
meet above goals


1.3.                              Pay
for performance.  The company
believes in pay for performance and rewards sales performance with a no-cap
revenue-based commission plan.


2.                            Overview


The Ikanos 2006
Sales Compensation Plan is composed of:


2.1.                              Salary


2.2.                              Performance
Pay


2.2.1.                     Commission
based on meeting Quarterly Target Revenue and Target Margin Goals


2.2.2.                     Annual
Commission based on exceeding Annual Target Revenue and Target Margin Goals


2.2.3.                     Incentives to
win OEM designs and launch new products


2.2.4.                     Incentives to
win strategic Telco tenders


2.3.                              Stock
Options


2.4.                              Benefits


2.5.                              Car
Allowance


 









 



 


3.                            Definitions


3.1.                              Performance
Pay—Variable compensation calculated based on performance to goals and
typically paid on a quarterly and annual basis.


3.2.                              FAE—Field
Applications Engineers


3.3.                              Salary—Compensation
usually referred to as “Base Salary” paid on a regular basis.


3.4.                              Commission—Compensation
that varies as a function of performance against assigned tasks or goals.


3.5.                              Benefits—A
form of compensation allocated to or for the purchase of employee benefits such
as company health care plan/s.  In some
cases, the employee may pay some portion of the cost of these benefits


3.6.                              Target
Customers—OEM’s, Distributors or Contract Manufacturers that purchase products
or services from Ikanos.


3.7.                              Target
OEM Design Wins—Ikanos chipsets that have fulfilled a system vendor’s
specifications and have been designed into a specific end product.


3.8.                              Target
Commission—Variable compensation amount limited to a specific time period.


3.9.                              Quarterly
Target Revenue Goal—Quarterly revenue target toward which the effort of an
employee is directed.


3.10.                        Annual
Target Revenue Goal—Fiscal year revenue target toward which the effort of an
employee is directed.


3.11.                        Quarterly
Target Margin Quota—Quarterly margin target toward which the effort of an
employee is directed.


3.12.                        Annual
Target Margin QuotaFiscal year margin target toward which the effort of an
employee is directed


3.13.                        Actual
Revenue—Net revenue that has been reported by the company following any
necessary review or audit by the Company’s independent CPA’s.


3.14.                        Actual
Margin—Calculated as Net Revenue less cost of revenue as reported on un-audited
non-GAAP statement of operations.


3.15.                        Teamwork—Work
and activities of a group of employees who individually contribute to the
productivity of the whole.


3.16.                        Sales
Teams—A group of employees associated together in work or activities.


3.17.                        Shared
Quota—a quota that is shared amongst two or more sales people.


3.18.                        OEM—Original
Equipment Manufacturer that typically sells and supports equipment to Telco’s.


4.                            Eligibility


4.1.                              Sales
managers, sales directors, sales operations managers and sales vice presidents
are eligible for commissions and incentives under this Plan while employed by
the Company.


4.2.                              FAE’s
are eligible for incentives under this Plan while employed by the Company.


5.                            Deadlines


5.1.                              The
following Table 1 determines the deadlines involved in the calculation and
payment of your commissions and incentives.


 



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5.2.                              Adjustments
to your Plan Summary for Shared Quotas, OEM Design Win Targets, and Strategic
Telco Wins may be approved prior to the beginning of each quarter on the dates
below by the CEO.


5.3.                              In
the event that OEM Design Win Claim Forms or Strategic Telco Win Claim Forms
are not submitted by the Plan participant before the deadline then the OEM
Design Win and/or the Strategic Telco Win shall not be paid for the current
quarter.


5.4.                              Provided
that the Plan participants submit their Claim Forms, in the event of a delay in
disbursement of payment, you will be eligible for a recoverable draw for the
amount of 50% of your performance pay for that quarter.


Table
1.  Deadlines


	
  Deadlines 2006

  	
   

  	
  Q1

  	
   

  	
  Q2

  	
   

  	
  Q3

  	
   

  	
  Q4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sales—Adjustments
  to your Plan Summary for the following quarter

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sales—Last
  day to ship Products

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sales—OEM
  Design Win and Strategic Telco Win Claim Forms submitted from Sales to
  Finance

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Finance—Complete
  Review of Claims when submitted

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  HR,
  Finance—PANs Completed

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  HR—CEO
  signed off

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Payroll—Payments Disbursed

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  



 


6.                            Salary


6.1.                              The
Company will pay you a regular fixed salary paid in 26 (US employees) or 12
(international office employees) pay periods based on your Plan Summary.


7.                            Commission
on Revenue


7.1.                              Target
Revenue.  The attached Compensation
Plan Summary as published to the Compensation Committee sets your Target
Quarterly Revenue and your Target Annual Revenue at the time the 2006 Sales
Plan is approved.  In the event that the
Compensation Plan Summary revenue is increased your Plan Summary revenue target
shall not be increased.  In the event
that the Compensation Plan Summary revenue is decreased, you may be eligible
for a change to your Plan Summary if approved by the 


 



 3
 






 



CEO.  The Plan
Summary lists your Target Quarterly Revenue and Target Annual Revenue. A copy
of the Compensation Plan Summary is attached.


7.2.                              Target
Commission.  Your Plan Summary lists
the dollar amounts of your Target Quarterly Commission and your Target Annual
Commission.


7.3.                              Calculation
of Quarterly Revenue Commission. 
Quarterly Revenue Commission shall be calculated as follows unless
otherwise limited in your Plan Summary:


Quarterly Revenue
Commission = (Actual Quarterly Revenue/Target Quarterly Revenue)*Target
Quarterly Revenue Commission


7.4.                              Calculation
of Annual Revenue Commission.  If
your Actual Annual Revenue is over 100% of your Target Annual Revenue, then you
are eligible for the Annual Revenue Commission. 
Annual Revenue Commission shall be calculated as follows:


Annual Revenue Commission
= 2 * ((Actual Annual Revenue/Target Annual Revenue)-1) * Target Annual Revenue
Commission


7.5.                              No
Cap on Commissions.  Quarterly and
Annual Commission on Revenue shall not be capped.


8.                            Commission
on Margin


8.1.                              Target
Margin.  The Compensation Plan
Summary as published to the Ikanos Board of Directors sets your Target
Quarterly Margin and your Target Annual Margin at the time the 2006 Sales Plan
is approved.  In the event that the
Compensation Plan Summary revenue is increased your Plan Summary revenue target
shall not be increased.  In the event
that the Compensation Plan Summary revenue is decreased, you may be eligible
for a change to your Plan Summary if approved by the CEO.  The Plan Summary lists your Target Quarterly
Margin and Target Annual Margin


8.2.                              Target
Margin Commission.  Your Plan Summary
lists the dollar amounts of your Target Quarterly Margin Commission and your
Target Annual Margin Commission.


8.3.                              Calculation
of Quarterly Margin Commission. 
Quarterly Margin Commission shall be calculated as follows:


Quarterly Margin
Commission = (Actual Quarterly Margin/Target Quarterly Margin) * Target
Quarterly Margin Commission


8.4.                              Calculation
of Annual Margin Commission.  If your
Actual Annual Margin is over 100% of your Target Annual Margin, then you are
eligible for the Annual Margin Commission. 
Annual Margin Commission shall be calculated as follows:


Annual Margin Commission
= 2 * ((Actual Annual Margin/Target Annual Margin)-1) * Target Annual Margin
Commission


8.5.                              No
Cap on Commissions.  Quarterly and
Annual Commission on Revenue shall not be capped.


9.                            OEM Design
Win Incentives


9.1.                              Target
OEM Design Wins.  Your Plan Summary
lists your Target OEM Customers and Products that are eligible for OEM Design
Win Incentives.  The list includes
opportunities to win new OEM customers and to launch new products with existing
OEM customers.  You may request to have
new Design Win opportunities added to your list of targets by submitting an
amended Plan Summary to your immediate supervisor.  If you have not obtained the appropriate
signatures on the amended Plan Summary by the end of the fiscal quarter for the
following quarter, your new Design Win opportunities will not be included in
your compensation for the following quarter.


9.2.                              Target
OEM Design Win Incentive Amount. 
Your Plan Summary lists the dollar amount of your OEM Design Win
Incentive.


 



 4
 






 



9.3.                              Qualifying
OEM Design Wins.  To qualify for an
OEM Design Win Incentive, the OEM customer and product must be listed on your
Plan Summary before the beginning of each quarter.  Each OEM Design Win shall be assigned a
weighting factor measured in points and listed in your Plan Summary.  Points shall be assigned in reference to
revenue and margin opportunity or by strategic significance.


9.4.                              Claiming
OEM Design Win Incentive.  Payments
for OEM Design Wins result from timely filed claim forms that meet sales
director win requirements submitted to and approved by the finance department.


9.5.                              Late
Claim Forms.  If you fail to submit
your Claim Form on the dates specified in Table 1 above, then your claim will
not be included in that quarter’s compensation. 
You may submit a new claim form in the following fiscal quarter under
this Plan.  If you fail to submit your
claim form in the fourth fiscal quarter of this year, then your claim will not
be included in this year’s compensation calculations.


9.6.                              Calculation
of OEM Design Win Incentive.  OEM
Design Win Incentives shall be calculated as dollars per point times the Target
OEM Design Win points.  The dollars per
point and points per Target OEM Customer are listed in your Plan Summary.


9.7.                              OEM
Design Win Not Achieved in the Quarter Specified.  In the event that an OEM Design Win is not
achieved in the quarter specified in your plan summary, the OEM Design Win
rolls into the following quarter, including Q4 2005 to Q1 2006.


10.                         Strategic
Telco Win Incentive


10.1.                        Target
Strategic Telco Customers.  Your Plan
Summary lists your Target Strategic Telco Customers eligible for Strategic
Telco Win Incentives.  You may request to
have new Strategic Telco Win opportunities to be added to your list of targets
by submitting an amended Plan Summary to your immediate supervisor.  If you have not obtained the appropriate
signatures on the amended Plan Summary by the end of the fiscal quarter for the
following quarter, your new Strategic Telco Win opportunities will not be
included in your compensation for the following quarter.


10.2.                        Strategic
Telco Win Incentive Amount.  Your
Plan Summary also states the dollar amount of your Strategic Telco Win
Incentive.


10.3.                        Qualifying
Strategic Telco Wins.  To qualify for
this Incentive, the Telco customer must be listed on your Plan Summary before
the beginning of each quarter. You may request to have new Target Strategic Telco
Win opportunities to be added to your list of targets for the following quarter
by submitting an amended Plan Summary to your immediate supervisor.  If you have not obtained the required
signatures on the amended Plan Summary by the dates set in the Table 1 above in
the appropriate quarter, your requested new Target Strategic Telco Wins will
NOT be included in your compensation for the following quarter.


10.4.                        Claiming
Payments.  Claiming Strategic Telco
Payments for Strategic Telco Wins result from timely filed claim forms that
meet sales director win requirements submitted to an approved by the finance
department.


11.                         Payment Process


11.1.                        Operations
Sales Manager will provide to finance analyst and assistant controller a
summary commission worksheet signed by the VP of WW sales.  This summary sheet will list, by eligible
sales personnel, the actual revenue by customer, quota, percentage achieved,
quarterly revenue commission payment, total design win points, OEM design win
incentive payment, and strategic telco incentive payment.


11.2.                        Finance
analyst and assistant controller will sign off on the summary commission
worksheet, after validating summaries from detail reports.  After signing off, finance 


 



 5
 






 



analyst and assistant controller will obtain CFO and
CEO signatures on the summary commission worksheet.


11.3.                        After the
summary commission worksheet has been signed, HR will complete requisite
personnel action notices (PANs) and attach originals of signed summary
worksheet.  VP of HR will sign off on
PANs and PANs and summaries will be submitted to Finance for payment.


12.                         Stock
Options


12.1.                        All FAE’s,
sales managers, sales directors, sales operations managers, and sales vice
presidents eligible under this Plan qualify for Stock Options at the date of
hire and also are eligible for consideration for additional stock options based
on their performance during the annual option grant process.


13.                         Spot Bonus


13.1.                        All FAE’s,
sales managers, sales directors and sales vice presidents are eligible for spot
bonuses in accordance with the Company’s bonus policy and practices.


14.                         First
quarter of employment guarantee


14.1.                        From your
employment start date with the Company or any of its subsidiaries to end of
your first full fiscal quarter, your Performance Pay as defined in your Plan
Summary shall be paid at 100% (pro-rated for the numbers of calendar days you
were employed in that quarter).


15.                         Other Duties


15.1.                        From time
to time you may be assigned to perform other duties.  These might include, but are not limited to,
such tasks as collecting market research data, arranging press tours,
participating in technical standards meetings, language translation, and
setting up trade show booths.  Such
duties are a normal part of your job for which the company pays you a
salary.  Other duties may be assigned by
your supervisor.


16.                         Employee
Benefits


16.1.                        You will
be eligible to participate in the company employee benefits programs - See HR.


17.                         Termination
of Employment


17.1.                        If your
employment is terminated (voluntary or involuntary), you will be eligible for a
pro-rated % of your target performance pay calculated as follows:


17.1.1.               (Days worked in the
quarter / Days in the quarter) * your Earned Quarterly Revenue Commission.  (Days are calendar days)


17.1.2.               No payment for
Annual Revenue Commission.


17.1.3.               OEM Design Win
Incentive Claim Forms and the evidence of the win must be submitted before your
last day of employment for OEM design wins occurring between the first day of
the quarter and the date your termination. 
The dollar amount shall be calculated as specified in Section 8.5.


17.1.4.               Strategic Win
Incentive Claim Forms and the evidence of the win must be submitted before your
last day of employment for OEM design wins occurring between the first day of
the quarter and the date your termination. 
The dollar amount shall be calculated as specified in Section 9.5.


 



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18.                               Changes
to the Compensation Plan


18.1.                        The company may change, quotas,
commissions, or any other part of this plan at any time.


19.                         With-Holding


19.1.                        Commissions paid to employees
will be subject to all of the standard with-holding requirements of the country
from which they are paid.


20.                               General
Provisions


20.1                           This
plan does not constitute an employment agreement and does not replace Ikanos’ “at-will”
employment policy.  This plan supersedes
all prior plans.


21.                               Approvals


 




	
   

  	
   

  	
   

  
	
  Chris Smith, Vice President of Human Resources

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Rajesh Vashist, President and CEO

  	
   

  	
  Date

  






 



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