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EXHIBIT 10T
COGNEX CORPORATION
SUMMARY OF ANNUAL BONUS PROGRAM
SUMMARY OF ANNUAL BONUS PROGRAM
Cognex Corporation (the Company) provides selected employees, including the Companys named
executive officers, with an opportunity to earn cash bonuses pursuant to an annual bonus program
(the Bonus Program). Each participant in the Bonus Program is assigned a target annual cash
bonus. Participants may earn their bonuses based on the achievement of certain financial goals
set forth in the Companys annual budget related to the Companys operating income (excluding
stock-based compensation expense) as a percentage of revenue, or operating margin. The
Compensation/Stock Option Committee of the Companys Board of Directors establishes a minimum
level of operating margin, which must be achieved for any cash bonus to be paid to a participant.
Once the minimum threshold has been achieved, each participants eligible bonus is calculated as
follows:
| if the operating margin is above the minimum threshold but below the operating margin target in the annual budget, each employee is eligible to receive a pro-rata portion of his or her target bonus; | ||
| if the operating margin is equal to the operating margin set forth in the annual budget, each employee is eligible to receive 100% of his or her target bonus; and | ||
| if the operating margin is above the operating margin set forth in the annual budget, all exempt employees are eligible to receive an additional amount depending upon his or her grade level and up to a maximum level approved by the Compensation/Stock Option Committee. |
The Compensation/Stock Option Committee approves the target bonus for each employee at director
level and above, which includes the Companys named executive officers, and the amount by which
each individual can participate in any increase due to performance in excess of the budget target.
Once the operating margin criterion is met, the amount each employee at director level and above,
which includes the Companys named executive officers, receives depends upon the achievement of
individual performance goals, which are established annually.
Under the Bonus Program, Robert J. Shillman, the Companys Chief Executive Officer, has the
opportunity to earn 0-300% of his target bonus amount based on the achievement of the specified
performance goals and the other executive officers have the opportunity to earn 0-200% of their
target bonus amounts based on the achievement of the specified performance goals. For fiscal year
2010, Robert J. Willett will have the opportunity to earn 0-250% of his target bonus amount
based on the achievement of the specified performance goals.
The annual bonuses for the Companys named executive officers are listed in the Summary
Compensation Table set forth in the Companys proxy statement for its annual meeting of
shareholders.