Document:

exhibit_10-03.htm

    

    
      
        
           

        

        
           

          
            

          

        

        
          Table of
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Exhibit
10.03

     

    SILICON
IMAGE, INC.

    EMPLOYEE
BONUS PLAN FOR FISCAL YEAR 2009

     

    
      	
              1.

            	
              Purpose

            

    

     

    The
purpose of this Bonus Plan (this “Plan”) is to provide financial
incentives for certain executive1
and non-executive2 employees (“Executives” and “Non-Executives”, respectively)
of Silicon Image, Inc. (the “Company”) to meet and exceed
the Company’s annual financial performance goals.

     

    
      	
              2.

            	
              Eligibility

            

    

     

    Executives
and Non-Executives of the Company selected by the Committee (the “Participants” and each a
“Participant”) shall be
eligible to participate in this Plan; provided however, that the
following employees are not entitled to participate in this
Plan:  Executives and Non-Executives who are entitled to participate
in any Company Business Development- or Sales-incentive plan; employees who
commence employment with the Company on or after May 15, 2009 will not be
eligible to participate in this Plan with respect to the first Bonus Pool
Funding Date, as hereinafter defined; and employees who commence employment with
the Company on or after November 15, 2009 will not be eligible to participate in
this Bonus Plan with respect to the second Bonus Pool Funding Date, as
hereinafter defined.   Participation in this Plan is at the sole
discretion of the Compensation Committee of the Company’s Board of Directors
(the “Committee”).

     

    
      	
              3.

            	
              Administration

            

    

     

    a.      This
Plan shall be administered by the Committee which may delegate specific
administrative tasks to others as appropriate for administration of this
Plan.

     

    b.      Subject
to the provisions of this Plan, the Committee shall have exclusive authority to
designate the Participants eligible to participate in this Plan, each
Participant’s target bonus under this Plan (“Bonus”), the actual amount
(if any) of each Bonus paid under this Plan
(which amounts may be less than, equal to or greater than a Participant’s target
Bonus), the date when any performance goals are measured, and the date when
Bonuses (if any) will be paid.

     

    c.      The
Committee shall have all discretion and authority necessary or appropriate to
administer this Plan, including, but not limited to, the power to interpret this
Plan, to prescribe, amend and rescind rules and regulations relating to it, and
to make all other determinations necessary or advisable in the administration of
this Plan, and such determination shall be final and binding upon all persons
having an interest in this Plan.

     

    d.      A
majority of the Committee shall constitute a quorum, and the acts of a majority
of the members present at a meeting at which a quorum is present or any action
taken without a meeting by a writing executed by all of the members of the
Committee shall constitute the act of the Committee.

     

    e.      The
Committee may employ attorneys, consultants, accountants, or other
persons.  The Committee and the Company and its officers and directors
shall be entitled to rely upon the advice, opinion, or valuations of any such
persons.  No member of the Committee shall be personally liable for
any action, determination, or interpretation taken or made with respect to this
Plan, unless such action is determined
by final adjudication to be criminal misconduct, willful misconduct or
demonstrates bad faith by the member.  In such event, the member shall
be liable for future expenses, including legal fees, including fines and
penalties, resulting from the final adjudication.

     

    

      

    

      
      1 “Executive” means an employee
of the Company at the level of Vice President or above employed by the Company
or any affiliated Company as determined by the Committee.

    

      
      2 “Non-Executive” means an
employee of the Company, other than an Executive, employed by the Company or any
affiliated Company as determined by the Committee.

    

    

    
      
        
           

        

        
          1

          
            

          

        

        
           

        

      

    

    

     

    
      	
              4.

            	
              Bonus
      Pool Establishment and Allocation

            

    

     

    4.1 Subject to the terms and
conditions of this Plan, the Company will fund a cash Bonus pool of
approximately $3,200,000 on June 30, 2009 (a “Bonus Pool Funding Date”)
if:

     

    
      	
              ·  

            	
              Actual
      revenue3 for the semiannual period ending June
      30, 2009 (“Actual
      Revenue”) equals or exceeds 100% of the planned revenue (“Plan Revenue”)
      established in the 2009 Annual Operating Plan approved by the Board of
      Directors (“Annual
      Operating Plan”) for such period;
and

            

    

     

    
      	
              ·  

            	
              Operating
      income determined in accordance with generally accepted accounting
      principles less stock-based compensation expense, amortization of
      intangible assets and such other extraordinary items as may be determined
      by the Committee (“Non-GAAP Operating
      Income”) for the semiannual period ending June 30, 2009 equals or
      exceeds 100% of the planned Non-GAAP Operating Income established in the
      Annual Operating Plan (the “Plan Non-GAAP Operating
      Income”) for such semiannual period.  The determination
      as to whether Non-GAAP Operating Income equals or exceeds Plan Non-GAAP
      Operating Income shall be made after taking into account the compensation
      expense associated with the establishment of the cash Bonus
      pool.

            

    

     

    4.2 Subject to Section 4.4
below and the other terms and conditions of this Plan, the Company will fund a
cash Bonus pool of approximately $3,200,000 on December 31, 2009 (a “Bonus Pool Funding Date”)
if:

     

    
      	
              ·  

            	
              Actual
      Revenue for the semiannual period ending December 31, 2009 equals or
      exceeds 100% of the Plan Revenue established in the Annual Operating Plan
      for such period; and

            

    

     

    
      	
              ·  

            	
              (A)
      Non-GAAP Operating Income for the semiannual period ending December 31,
      2009 divided by (B) Actual Revenue for such semiannual period (“Non-GAAP Operating Margin
      Percentage”) equals or exceeds 100% of the planned Non-GAAP
      Operating Margin Percentage established in the Annual Operating Plan (the
      “Plan Non-GAAP Operating
      Margin Percentage”) for such semiannual period.  The
      determination as to whether Non-GAAP Operating Margin Percentage equals or
      exceeds Plan Non-GAAP Operating Margin Percentage shall be made after
      taking into account the compensation expense associated with the
      establishment of the cash Bonus
pool.

            

    

     

    4.3 If the Company does not
fund a bonus pool on the June 30, 2009 Bonus Pool Funding Date due to not having
achieved the required financial performance criteria as described in Section 4.1
above, subject to Section 4.4 below and the other terms and conditions of this
Plan, the Company will fund a cash Bonus pool of approximately $6,400,000 on the
December 31, 2009 Bonus Pool Funding Date instead of the $3,200,000 referenced
in Section 4.2 above if:

     

    
           
A Bonus pool is not funded on the June 30, 2009 Bonus Pool Funding Date under
Section 4.1 above due to the Company’s failure to achieve 100% of Plan Revenue
or 100% of Plan Non-GAAP Operating Income or both for the semiannual period
ending on June 30, 2009;

       

      
        	
                ·  

              	
                Actual
      Revenue for the fiscal year ended December 31, 2009 equals or exceeds 100%
      of the Plan Revenue for such period established in the Annual Operating
      Plan; and

              

      

       

      
        	
                ·  

              	
                Non-GAAP
      Operating Margin Percentage for the fiscal year ended December 31, 2009
      equals or exceeds 100% of the Plan Non-GAAP Operating Margin Percentage
      for such period established in the Annual Operating Plan after taking into
      account the compensation expense associated with the establishment of the
      cash Bonus pool.

              

      

       

      

    

      
      3
Represents the Company’s total product, development, licensing and royalty
revenues for fiscal year 2009 as reported in the Company’s financial
statements.

      4
Represents the Company’s total earnings before interest, tax, depreciation, and
amortization, and, excludes stock compensation expense as accounted for under
SFAS No. 123R.

    

    

    
      
        
           

        

        
          2

          
            

          

        

        
           

        

      

    

    

    4.4 In the event that the
Company’s financial performance for 2009 with respect to Actual Revenue and
Non-GAAP Operating Margin Percentage exceeds 100% of the Plan Revenue and Plan
Non-GAAP Operating Margin Percentage established in the Annual Operating Plan
for the full fiscal year, subject to the terms and conditions of this Plan, the
Company will fund on the December 31, 2009 Bonus Pool Funding Date a cash Bonus
pool in the amount of approximately $8,500,000 less any Bonus amount funded on
the June 30, 2009 Bonus Pool Funding Date under Section 4.1 above (in lieu of
any cash bonus pools referenced above to be funded on the December 31, 2009
Bonus Pool Funding Date)  if:

     

    
      	
              ·  

            	
              Actual
      Revenue for the fiscal year ended December 31, 2009 equals or exceeds 109%
      of the Plan Revenue established in the Annual Operating Plan for such
      period; and

            

    

     

    
      	
              ·  

            	
              Non-GAAP
      Operating Margin Percentage for the fiscal year ended December 31, 2009
      equals or exceeds 125% of the Plan Non-GAAP Operating Margin Percentage
      established in the Annual Operating Plan for such period after taking into
      account the compensation expense associated with the establishment of the
      cash Bonus pool.

            

    

     

    Semiannual
bonus pools of approximately $3,200,000, or approximately $6,400,000 in the
aggregate, represent 75% of the aggregate amount of the target bonuses of those
employees who are expected to be Participants in the Bonus Plan, while an
aggregate cash Bonus pool of approximately $8,500,000 represents 100% of the
aggregate amount of the target bonuses of those employees who are expected to be
Participants in the Bonus Plan.  Therefore, if the Registrant achieves
100% of the Plan Revenue and Plan Non-GAAP Operating Margin Percentage
established in the Annual Operating Plan, Participants in the Bonus Plan will
receive 75% of their target bonuses; and, if the Registrant achieves 109% of the
Plan Revenue and 125% of the Plan Non-GAAP Operating Margin Percentage
established in the Annual Operating Plan, Participants in the Bonus Plan will
receive 100% of their target bonuses.

     

           
The actual amount of a cash bonus pool on a Bonus Pool Funding Date shall be a
function of (i) the Registrant’s financial performance with respect to actual
revenue, Non-GAAP Operating Income and Non-GAAP Operating Margin Percentage, as
the case may be, compared to the Annual Operating Plan and (ii) the actual
Participants participating in the Bonus Plan as of each Bonus Pool Funding Date
and such Participants’ target Bonuses.   In the event that the
Registrant’s performance with respect to revenue and Non-GAAP Operating Margin
Percentage falls in between the targets established in the Annual Operating Plan
and the targets established by the Bonus Plan for the payment of 100% of target
bonuses, the actual bonus amounts will be calculated pro rata on a straight line
basis.  For upside payments, growth must be deemed to be “organic”
rather than “acquired”, except as contemplated by the Annual Operating
Plan.

     

     

    The
amounts of Bonuses, if any, allocable to individual Participants will be
determined by the Committee in its sole discretion and may be less than, equal
to or greater than target Bonus levels.

     

    

    
      
        
           

        

        
          3

          
            

          

        

        
           

        

      

    

    

     

    5.      Payment

     

    Bonuses
under this Plan, if any, will be distributed as soon as reasonably practicable
following determination of the amounts of the Bonus pool and the amounts
applicable to Participants provided, however, that distribution of the Bonus
pool funded on the December 31, 2009 Bonus Pool Funding Date, if any, shall in
no event occur after March 15, 2010.  Participants must be employed by
the Company as employees at the time of computation and distribution in order to
be eligible to receive payment of Bonuses, if any, unless otherwise determined
by the Compensation Committee.  Employees who commence employment with
the Company on or after May 15, 2009 will not be eligible to participate in this
Plan with respect to the first Bonus Pool Funding Date; and employees who
commence employment with the Company on or after November 15, 2009 will not be
eligible to participate in this Bonus Plan with respect to the second Bonus Pool
Funding Date.   Participants who begin their employment with the
Company after January 1, 2009 but prior to May 15, 2009 with respect to the
first Bonus Pool Funding Date, and Participants who begin their employment with
the Company after July 1, 2009 but prior to November 15, 2009 with respect to
the second Bonus Pool Funding Date, shall be eligible to receive payment of a
pro-rated Bonus (based on the full days of such Participant’s employment during
the applicable semi-annual period).  In addition, Participants must
complete all mandatory training(s) within the time noted in the notice to
employees to be eligible to receive payment of a Bonus.  The Committee
may impose additional eligibility requirements on payment of any Bonuses in its
sole discretion.  It is the objective of the Committee that the entire
calculated pool be distributed to eligible Participants.

     

    
      	
              6.

            	
              General
      Provisions

            

    

     

    a.      No
Prior Funding

     

    No
amounts payable under this Plan shall be funded, set aside or otherwise
segregated prior to payment.  The obligation to pay Bonuses shall at
all times be an unfunded and unsecured obligation of the Company, and the
Company shall not be required to incur indebtedness to fund any Bonus pool
unless otherwise directed to do so by the Committee.  Participants
shall have the status of general creditors.  This Plan is not
qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended,
and is not subject to any provisions of the Employee Retirement Income Security
Act of 1974.

     

    b.      No
Obligation to Employ

     

    Eligibility
for participation in this Plan is not evidence of, nor does it constitute, a
contract of employment between the Company and any
individual.  Nothing in this Plan will confer or be deemed to confer
on any individual any right to continue in the employ of the Company or limit in
any way the right of the Company to terminate an individual’s employment at any
time, with or without cause.  This Plan is not intended to and does
not create any legal rights for any employee.

     

    c.      Amendment
or Termination of Plan

     

    This Plan
may be amended or terminated by the Board or the Committee at any time prior to
funding or payment of Bonuses hereunder.

     

    d.      Headings

     

    The
headings of the sections hereof are inserted for convenience only and shall not
be deemed to constitute a part hereof nor to affect the meaning
thereof.

     

    e.      Withholding
of Taxes

     

    To the
extent that the Company is required to withhold federal, state, local or foreign
taxes in connection with any benefit realized by a Participant under this Plan,
and the amounts available to the Company
for such withholding are insufficient, it will be a condition to the realization
of such benefit that the Participant make arrangements satisfactory to the
Company for payment of the balance of such taxes required or requested to be
withheld.

     

    f.      Choice
of Law

     

    All
questions concerning the construction, validity and interpretation of this Plan
will be governed by the law of the State of California.  Any Bonus
will not be effective unless such Bonus is made in compliance with all
applicable laws, rules and regulations.

     

    

    
      
        
           

        

        
          4exhibit_10-04.htm

    

      
        
           

        

        
          
          

          
            

          

        

        
          Table of
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      EXHIBIT
10.04

      SILICON
IMAGE, INC.

      SUPPLEMENTAL
BONUS PLAN FOR FISCAL YEAR 2009

       

       

      
        	
                1.

              	
                Purpose

              

      

       

      The
purpose of this Supplemental Bonus Plan For Fiscal Year 2009 (the “Supplemental Bonus Plan”) is
to provide financial incentives for certain executive1 and non-executive2 employees (“Executives” and “Non-Executives”, respectively)
of Silicon Image, Inc. (the “Company”) to promote the
achievement of the Company’s financial performance goals for the fiscal year
ending December 31, 2009 and the achievement by the Executives and
Non-Executives in each of the Company’s functional areas of certain key
performance indicators (“KPIs”), for each functional
area identified by the Company’s senior management as instrumental to achieving
the Company’s performance goals for FY 2009.

       

      This
Supplemental Bonus Plan supplements the Company’s Employee Bonus Plan for Fiscal
Year 2009 (the “FY 2009 Bonus
Plan”) to provide for smaller bonuses and becomes effective only in the
event that the Company’s financial performance meets certain targets yet falls
short of the level required for bonuses under the FY 2009 Bonus
Plan.  Any payments made under this Supplemental Bonus Plan shall
offset any payments made under the FY 2009 Bonus Plan.

       

      For
example, if full Bonus is paid under this Supplemental Bonus Plan, which is
equal to 25% of a Participant’s 100% Bonus under the FY 2009 Bonus Plan, the
remaining target percentage under the FY 2009 Bonus Plan shall be 75% (subject
to the terms and conditions of the FY 2009 Bonus Plan).

       

      

       

      
        	
                2.

              	
                Bonus
      Pool Establishment and Allocation

              

      

       

       a.                 Subject
to the terms and conditions of this Supplemental Bonus Plan, the Company will
fund a cash Bonus pool of approximately $1,625,000 (representing 25% of the
aggregate amount of the target bonuses of those employees who are expected to be
participants in the FY 2009 Bonus Plan) on December 31, 2009 (the “Bonus Pool Funding Date”)
if:

       

      
        	
                ·  

              	
                Actual
      revenue3 for the annual period ending December
      31, 2009 (“Actual
      Revenue”) equals or exceeds 100% of the Supplemental Bonus Plan
      revenue (“Plan
      Revenue”) target approved by the Compensation Committee (the “Committee”)
      of the Board of Directors of the Company;
and

              

      

       

      
        	
                ·  

              	
                Operating
      income determined in accordance with generally accepted accounting
      principles less stock-based compensation expense, amortization of
      intangible assets and such other extraordinary items as may be determined
      by the Committee (“Non-GAAP Operating
      Income”) for the annual period ending December 31, 2009 is positive
      for the 2009 fiscal year.  The determination as to whether
      Non-GAAP Operating Income equals or exceeds Supplemental Bonus Plan
      Non-GAAP Operating Income shall be made after taking into account the
      compensation expense associated with the establishment of the cash Bonus
      pool..

              

      

       

      

        

      

        
        1 “Executive” means an employee
of the Company at the level of Vice President or above employed by the Company
or any affiliated Company as determined by the Committee.

      

        
        2 “Non-Executive” means an
employee of the Company, other than an Executive, employed by the Company or any
affiliated Company as determined by the Committee.

      

        
        3
Represents the Company’s total product, development, licensing and royalty
revenues for fiscal year 2009 as reported in the Company’s financial
statements.

      

      
        
          
             

          

           

        

        
          1

          
            

          

        

        
           

        

      

      
        	
                ·  

              	
                Notwithstanding
      the foregoing financial targets set forth in (a) above, the actual amount
      of the cash Bonus pool on the Bonus Pool Funding Date shall be a function
      of (i) the Company’s financial performance with respect to actual revenue
      and Non-GAAP Operating Income, (ii) the actual Participants participating
      in this Supplemental Bonus Plan as of the Bonus Pool Funding Date and such
      Participants’ target Bonuses and (iii) the achievement by Participants of
      their KPIs.

              

      

       

      
        	b.
       	
                 

              	
                The
      Committee has exclusive authority to determine the amount of each
      Participant’s target bonus and the actual amount payable to each
      Participant, and may amend or terminate the Bonus Plan at any time, as
      allowed by law.  The amounts of bonuses, if any, allocable to
      individual executive employees will be determined by the Committee in its
      sole discretion. The amounts of bonuses, if any, allocable to individual
      non-executive employees will be determined by the Registrant’s management
      and submitted to the Committee for approval. The amounts of individual
      bonuses may be less than, equal to or greater than target bonus levels for
      the individual’s employee level.

              

      

       

      
        	
                 
      c.

              	
                       
      

              	
                In
      the event the Company achieves the revenue and Non-GAAP Operating Income
      metrics set forth herein, then Participants shall be eligible to receive
      up to twenty-five percent (25%) of their target bonus as established under
      the FY 2009 Bonus Plan; provided, however, that the actual Bonus under
      this Supplemental Bonus Plan payable to a Participant will be a function
      of the performance of the Participant’s functional area against its
      KPIs.  For example, if a Participant’s functional area achieves
      one hundred percent (100%) of its KPIs, then such Participant shall be
      eligible to receive 25% of such Participant’s target bonus under the FY
      2009 Bonus Plan; and if such Participant’s functional area achieves 80% of
      its KPIs, then such Participant shall be eligible to receive 20% (80%
      achievement of KPIs x 25% of target bonus) of such Participant’s target
      bonus under the FY 2009 Bonus Plan.

              

      

       

      
        	
                 
      d.

              	
                .

              	
                If
      the Company fails to achieve the revenue and Non-GAAP Operating Income
      metrics described herein, then no bonuses under this Supplemental Bonus
      Plan shall be paid.

              

      

       

       

      3.           Payment

       

      Bonuses
under this Supplemental Bonus Plan, if any, will be distributed as soon as
reasonably practicable following determination of the amounts of the Bonus pool
and the amounts applicable to Participants provided, however, that distribution
of the Bonus pool funded on December 31, 2009, if any, shall in no event occur
after March 15, 2010.  Participants must be employed by the Company as
employees at the time of computation and distribution in order to be eligible to
receive payment of Bonuses, if any, unless otherwise determined by the
Committee.  In addition, Participants must complete all mandatory
training(s) within the time noted in the notice to employees to be eligible to
receive payment of a Bonus.  The Committee may impose additional
eligibility requirements on payment of any Bonuses in its sole
discretion.  It is the objective of the Committee that the entire
calculated pool be distributed to eligible Participants.

       

      4.           Full
Force and Effect of FY 2009 Bonus Plan

       

      Except as
provided above, all other terms and conditions of the FY 2009 Bonus Plan shall
remain in full force and effect during the term of this Supplemental Bonus
Plan.  In the event of a conflict between the terms and conditions of
this Supplemental Bonus Plan and the FY 2009 Bonus Plan, this Supplemental Bonus
Plan shall supersede the FY 2009 Bonus Plan to the extent of such
conflict.

      

      
        
          
                                                                                   

          

           

        

        
          2

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