Symmetricom (SYMM)

Fiscal 2009 Awards

For Fiscal 2009, the Committee set the target award opportunities for the executive officers, including the Named Executive Officers, at 75% of base salary for the CEO and 50% of base salary for the other executive officers. Under the Fiscal 2009 ICP, actual award payments could range from zero to 175% of base salary, based on the actual level of the Company’s performance against the performance objective described below.

The Committee selected (pre-tax) operating income as the corporate performance objective to be used to determine funding of the Fiscal 2009 ICP, as well as the calculation of individual award payments. This performance metric was selected, and the related target performance level set, based on an evaluation of the Company’s Fiscal 2009 operating plan as approved by the Board of Directors. The Committee set the payout range for this metric from zero to 175%. The following table shows the threshold, target, and maximum levels of performance required to fund award payments at the 50%, 100%, and 175% levels.

As illustrated by the preceding table, to the extent that the Company’s actual (pre-tax) operating income for Fiscal 2009 did not meet or exceed the threshold performance level, then the ICP would not be funded and no award payments would be made. The Committee set the target level for the corporate performance objective at a level that it believed would require successful execution of the Company’s Fiscal 2009 operating plan and the achievement of revenue levels and expense control more challenging than had been set in prior fiscal years.

In addition, the Committee approved individual performance objectives for each of the executive officers based on the recommendations submitted by the CEO. In the case of the CEO’s annual cash incentive award, the Committee established his individual performance objectives based on financial performance of the Company’s Fiscal 2009 operating plan. These performance objectives included, for example, meet and/or exceed bookings plan at three key customers and meet or exceed operating income plan for their respective business area in the case of the other Named Executive Officers.

Finally, the Committee weighted the corporate performance objective at 80% of the target award opportunity and the individual performance objectives at 20% of the opportunity for the Named Executive Officers.

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For Fiscal 2009, the Company achieved a (pre-tax) operating income level to fund the Fiscal 2009 ICP. The CEO’s annual cash incentive award was based 100% on Company financial performance. Other Named Executive Officers payments were based 80% on Company financial performance and 20% on individual performance. Achievement of individual performance targets ranged from 93% to 100% and these scores were incorporated in each individual’s bonus calculation. Consequently, the executive officers, including the CEO and the other Named Executive Officers, received annual cash incentive award payments for Fiscal 2009 as follows (in thousands):

Fiscal 2008 Awards

        For Fiscal 2008, the Committee set the target award opportunities for the executive officers, including the Named Executive Officers, at 75% of base salary for the CEO and 50% of base salary for the other executive officers. Under the Fiscal 2008 ICP, actual award payments could range from zero to 127.5% of base salary, based on the actual level of the Company's performance against the performance objective described below.

        The Committee selected (pre-tax) operating income as the corporate performance objective to be used to determine funding of the Fiscal 2008 ICP, as well as the calculation of individual award payments. This performance metric was selected, and the related target performance level set, based on an evaluation of the Company's Fiscal 2008 operating plan as approved by the Board of Directors. The Committee set the payout range for this metric from zero to 200%. The following table shows the threshold, target, and maximum levels of performance required to fund award payments at the 50%, 100%, and 200% levels.

        As illustrated by the preceding table, to the extent that the Company's actual (pre-tax) operating income for Fiscal 2008 did not meet or exceed the threshold performance level, then the ICP would not be funded and no award payments would be made. The Committee set the target level for the corporate performance objective at a level that it believed would require successful execution of the Company's Fiscal 2008 operating plan and the achievement of revenue levels and expense control more challenging than had been set in prior fiscal years.

        In addition, the Committee approved individual performance objectives for each of the executive officers based on the recommendations submitted by the CEO. In the case of the CEO's annual cash incentive award, the Committee established his individual performance objectives based on its assessment of the Company's Fiscal 2008 operating plan, as well as the Company's long-term strategic plan. These performance objectives included, for example, meet and/or exceed bookings plan at three key customers in the case of the CEO and, meet or exceed operating income plan for their respective business area in the case of the other Named Executive Officers.

        Finally, the Committee weighted the corporate performance objective at 70% of the target award opportunity and the individual performance objectives at 30% of the opportunity.

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        For Fiscal 2008, the Company did not meet the threshold (pre-tax) operating income level required to fund the Fiscal 2008 ICP. Consequently, none of the executive officers, including the CEO and the other Named Executive Officers, received annual cash incentive award payments for Fiscal 2008.

Awards

The 2006 Plan provides for the grant of incentive stock options, nonqualified stock options, restricted stock, stock appreciation rights, performance shares, performance stock units, dividend equivalents, stock payments, deferred stock, restricted stock units, other stock-based awards, and performance-based awards. No determination has been made as to the types or amounts of awards that will be granted to specific individuals pursuant to the 2006 Plan. See the Summary Compensation Table and Option Grants in Last Fiscal Year, below, for information on prior awards to named executive officers.

Stock options, including incentive stock options, as defined under Section 422 of the Code, and nonqualified stock options may be granted pursuant to the 2006 Plan. The option exercise price of all stock options granted pursuant to the 2006 Plan will not be less than 100% of the fair market value of our common stock on the date of grant. Stock options may be exercised as determined by the Committee, but in no event after the fifth anniversary date of grant, provided that a vested nonqualified stock option may be exercised up to 12 months after the optionee’s death. The aggregate fair market value of the shares with respect to which options intended to be incentive stock options are exercisable for the first time by an employee in any calendar year may not exceed $100,000, or such other amount as the Code provides.

Upon the exercise of a stock option, the purchase price must be paid in full in either cash or its equivalent, by tendering previously acquired shares of common stock with a fair market value at the time of exercise equal to the exercise price (provided such shares have been held for such period of time as may be required by the Committee in order to avoid adverse accounting consequences and have a fair market value on the date of delivery equal to the aggregate exercise price of the option or exercised portion

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thereof) or other property acceptable to the Committee (including through the delivery of a notice that the participant has placed a market sell order with a broker with respect to shares then issuable upon exercise of the option, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the option exercise price, provided that payment of such proceeds is then made to the Company upon settlement of such sale). However, no participant will be permitted to pay the exercise price of an option, or continue any extension of credit with respect to the exercise price of an option with a loan from us or arranged by us in any method which would violate Section 13(k) of the Exchange Act.

Restricted stock may be granted pursuant to the 2006 Plan. A restricted stock award is the grant of shares of common stock at a price determined by the Committee (including zero), that is nontransferable and may be subject to substantial risk of forfeiture until specific conditions determined by the Committee are met. During the period of restriction, participants holding shares of restricted stock may have full voting and dividend rights with respect to such shares. The restrictions will lapse in accordance with a schedule or other conditions determined by the Committee.

A stock appreciation right (a “SAR”) is the right to receive payment of an amount equal to the excess of the fair market value of a share of common stock on the date of exercise of the SAR over the fair market value of a share of common stock on the date of grant of the SAR. SARs are payable in cash, in shares of Common Stock or in a combination of both, as determined by the Committee.

The other types of awards that may be granted under the 2006 Plan include performance shares, performance stock units, dividend equivalents, stock payments, deferred stock, restricted stock units, and performance bonus awards.

The Committee may grant awards to employees who are or may be “covered employees,” as defined in Section 162(m) of the Code, that are intended to be performance-based awards within the meaning of Section 162(m) of the Code in order to preserve the deductibility of these awards for federal income tax. Participants are only entitled to receive payment for a performance-based award for any given performance period to the extent that pre-established performance goals set by the Committee for the period are satisfied. These pre-established performance goals must be based on one or more of the following performance criteria: net earnings (either before or after interest, taxes, depreciation and amortization), economic value-added (as determined by the Committee), sales or revenue, net income (either before or after tax), operating earnings, cash flow (including, but not limited to, operating cash flow, and free cash flow), cash flow return on capital, return on net assets, return on stockholders’ equity, return on assets, return on capital, stockholder returns, return on sales, gross or net profit margin, productivity, expense, margins, operating efficiency, customer satisfaction, working capital, earnings per share, price per share, and market share. These performance criteria may be measured in absolute terms or as compared to any incremental increase or as compared to results of a peer group. With regard to a particular performance period, the Committee shall have the discretion to select the length of the performance period, the type of performance-based awards to be granted, and the goals that will be used to measure the performance for the period. In determining the actual size of an individual performance-based award for a performance period, the Committee may reduce or eliminate (but not increase) the award. Generally, a participant will have to be employed on the date the performance-based award is paid to be eligible for a performance-based award for any period.