Document:

2007 Sales Compensation Plan

 Exhibit 10.3 
 Ikanos Communications, Inc. 
 2007 Sales Compensation Plan 
 For Vice President Worldwide Sales 
 Version 1.0 
  

	1.	Purpose 

  

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

  

	 	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 and annual revenue targets 

  

	 	1.2.2.	Exceeding quarterly and annual margin targets for VP of WW Sales 

  

	 	1.2.3.	Winning OEM designs and launching new products 

  

	 	1.2.4.	Teamwork to specific company goals 

  

	2.	Overview 

 The Ikanos 2007 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 for VP of WW Sales 

  

	 	2.2.2.	Annual Commission based on exceeding Annual Target Revenue and Target Margin Goals for VP of WW Sales 

  

	 	2.2.3.	Incentive Goals for achieving specific goals 

  

	 	2.3.	Equity Awards 

  

	 	2.4.	Benefits 

  

	 	2.5.	Car Allowance 

  

	3.	Definitions 

  

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

  

	 	3.2.	Salary – Compensation usually referred to as “Base Salary” paid on a regular basis. 

  

	 	3.3.	Commission – Compensation that varies as a function of performance against assigned tasks or goals. 

  

	 	3.4.	Incentives – to reward and motivate employees to complete design goals or MBO’s in a specific quarter. 

  

	 	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 Design In/Win – 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 Quota – Fiscal 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 – Gross margin that has been reported by the company following any necessary review or audit by the Company’s independent CPA’s.

  

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

  

	 	3.18.	Design Win Stages – stages to take a design from introduction to production. Exhibit A 

  

	 	3.19.	Quarterly Performance Objectives (QPO) – listing of design goals for a specific quarter Exhibit B 

  

	4.	Eligibility 

  

	 	4.1.	The VP of WW Sales while employed by the Company. 

  

	5.	Timeframes 

  

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

  

	 	5.2.	Incentive Goals must be approved prior to the dates below between the CEO. 

  

	 	5.3.	In the event that a scored Incentive Goal is not submitted by the VP of WW Sales before the deadline then the Incentive Goal shall not be paid for that specific quarter.

 In the event of a delay in disbursement of payment not related to the VP of WW Sales or his staff, the VP of WW Sales will be eligible for a
recoverable draw for the amount of 50% of your performance pay for that quarter. 

 Table 1. Deadlines 
  

									
	 Deadlines 2007 
	  	 Q1
	  	 Q2
	  	 Q3
	  	 Q4

					
	Sales – Incentive Goals	  	Feb 28th	  	April 6th	  	July 6th	  	Oct 6th
					
	 Sales – Last day to ship
 Products
	  	Apr 1st	  	Jul 1st	  	Sept 30th	  	Dec 30th
					
	 Incentive Goals
 Achievement
submitted
 to CEO
	  	Apr 6th	  	Jul 6th	  	Oct 5th	  	Jan 4th 2008
					
	 Finance – audited non-
 GAAP revenue
 submitted to Sales
	  	April 22nd	  	July 22nd	  	Oct 21st	  	Jan 28th 2008
					
	 Sales – detailed
 worksheet
of
 commission calculation
 submitted
to Finance
	  	April 25th	  	July 25th	  	Oct 24th	  	Jan 31st 2008
					
	 Finance - Complete
 review of
commission
 worksheet and signed
 off
by CFO & VP of HR
	  	May 1st	  	Aug 31st	  	Oct 31st	  	Feb 6th 2008
					
	HR – PANs Completed	  	May 2nd	  	Aug 3rd	  	Nov 1st	  	Feb 7th 2008
					
	 CEO review two days
 following
receipt of
 PANs
	  	May 3rd	  	Aug 6th	  	Nov 2nd	  	Feb 8th 2008
					
	 Payroll – Payments
 Disbursed
	  	 US Employees:
 May 11th
  
 International:
 1st Payroll in May
	  	 US Employees:
 Aug 17th
  
 International:
 1st Payroll in Aug
	  	 US Employees:
 Nov 9th
  
 International:
 1st Payroll in Nov
	  	 US Employees:
 Feb 15th 2008
  
 International:
 1st Payroll in Feb

  

	6.	Salary 

  

	 	6.1.	The Company will pay participants 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 sets your Target Quarterly Revenue and your Target Annual Revenue 

  

	 	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 Year-to-Date (“YTD”) Revenue/Target YTD Revenue*Target
YTD Revenue Commission) less all previously paid Quarterly Revenue Commissions for 2007. 
  

	 	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 attached Compensation Plan Summary sets your Target Quarterly Margin and your 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 YTD Margin/Target YTD Margin*Target YTD Margin Commission) less all previously paid Quarterly Margin Commissions
for 2007. 
  

	 	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.	Incentive Goals 

  

	 	9.1.	Incentive Goals. To qualify for Incentive Goals, the incentive must be listed and signed off by the CEO within timelines established herein. 

  

	 	9.2.	Claiming Incentive Goals. VP of WW Sales completes their achievement form and provides the supporting documents as specified in Exhibit A within the timelines established
herein. 

  

	 	9.3.	Calculation of Incentive Achievement. Incentives Achievement shall be calculated as a percentage times the Incentive as listed in the plan summary. 

 

	10.	First quarter of employment guarantee 

  

	 	10.1.	From your employment start date with the Company or any of its subsidiaries to end of the company’s fiscal quarter since your employment, 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). 

	11.	Other Duties 

  

	 	11.1.	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.

  

	12.	Employee Benefits 

  

	 	12.1.	You will be eligible to participate in the company employee benefits programs—See HR. 

  

	13.	Termination of Employment 

  

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

 

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

  

	 	13.1.2.	No payment for Annual Revenue Commission or Overachievement of OEM Design In/Win. 

  

	 	13.1.3.	Incentive Goals Claim Forms and the evidence of the acheivement must be submitted before your last day of employment occurring between the first day of the quarter and the date your
termination. The dollar amount shall be calculated as specified in Section 8. 

  

	14.	Changes to the Compensation Plan 

  

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

  

	15.	With-Holding 

  

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

  

	19.	General Provisions 

  

	 	19.1	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 

  

							
	  
	 		 	  
	 	
	Mike Gulett, Chairman of Compensation Committee	 		 	Date	 	
				
	  
	 		 	  
	 	
	Cory Sindelar, CFO	 		 	Date	 	
				
	  
	 		 	  
	 	
	Pam Gosal, VP of HR	 		 	Date	 	
				
	  
	 		 	  
	 	
	Dan Atler, President and CEO	 		 	Date	 	

 Exhibit A 
  

					
	 Design In / Design Win
	  	 Definition
	  	 Supporting Document

			
	 3—Design Started
	  	Samples; Customer resource allocated	  	Customer schematics received
			
	 4—In Qualification at customer
	  	Pro-types back, bring-up	  	Paid Samples shipped
			
	 5—In Qualification at Telco
	  	BMT started	  	Either a public event or email from Telco Management or GM BU and documented in a email, or Customer Manager report.
			
	 6—Telco Selection
	  	BMT passed; selected by Telco	  	Either a public event or email from Telco Management or GM BU and documented in a email, or Customer Manager report.
			
	 7—Production
	  	Production level PO	  	PO’s totaling $100k in chips.

 Exhibit B 
  

															
	 Quarterly Performance Objectives (QPO)
	  	Name:	 	 		  		
							
	 Category
	  	 	  	 Bus Unit
	  	 Goal Description
	  	Weight	 	 	 Comments
	  	Score	 
	
	 	 
	 Design Activities (Criteria please see tab "Design
In")
	  

		  	1	  		  		  	0.0	%	 		  	0.0	%
		  	2	  		  		  	0.0	%	 		  	0.0	%
		  	3	  		  		  	0.0	%	 		  	0.0	%
		  	4	  		  		  	0.0	%	 		  	0.0	%
		  	5	  		  		  	0.0	%	 		  	0.0	%
		  	6	  		  		  	0.0	%	 		  	0.0	%
		  	7	  		  		  	0.0	%	 		  	0.0	%
							
		  		  		  		  	 	 	 		  	 	 
		  		  		  	Total (100%):	  	100.0	%	 		  	0.0	%Summary of Registrant's 2007 Executive Bonus Program

 Exhibit 10.4 
 SUMMARY OF 
 2007 EXECUTIVE BONUS PROGRAM 
 The registrant maintains the Executive Bonus Program to provide the Company’s executive officers (excluding the Vice President of Worldwide Sales) the opportunity to receive a cash award based on the achievement
of performance objectives in the prior fiscal year. The Compensation Committee (the “Committee”), in consultation with the Chief Executive Officer, establishes a threshold based on the registrant’s financial performance for the
year and general individual performance goals for each officer, and the Chief Executive Officer further develops specific objectives and milestones for each officer. Awards are calculated on an executive’s annual salary as of the end of
the fiscal year. The amount of each executive’s payout is dependent on the achievement of the performance goals. The Committee has the authority to adjust the amount of awards payable under the Executive Bonus Program. Payments
are made following the end of the year, after the Committee has determined the degree of attainment of that year’s performance goals. 
 The Committee
approved performance goals and target awards in March 2007 for the 2007 fiscal year. In addition to the individual goals, objectives and milestones for each executive officer, the Committee adopted the threshold requirement that the registrant
meet or exceed the revenue and gross margin dollar targets set in the registrant’s Annual Operating Plan for fiscal year 2007. The Committee set target bonuses at 40% of salary.

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