their target cash bonuses. The incentive bonus is not funded if our incentive Adjusted EBITDA for the year is below a threshold of 92% of the incentive Adjusted EBITDA target, 40% of the target
cash bonus is funded if our Adjusted EBITDA for the year is 92% of the incentive Adjusted EBITDA target, 80% of the target cash bonus is funded if our incentive Adjusted EBITDA for the year is 96% of the incentive Adjusted EBITDA target, 100% of the
target cash bonus is funded if our incentive Adjusted EBITDA for the year is 100% of the incentive Adjusted EBITDA target and 152% of the target cash bonus is funded if our incentive Adjusted EBITDA for the year is 108% of the incentive Adjusted
EBITDA target. As such, for the first 4%, each 1% increase or decrease in incentive Adjusted EBITDA relative to the target incentive Adjusted EBITDA results in a 5% increase or 4% decrease in the funded bonus. At 5%, each 1% increase or decrease in
incentive Adjusted EBITDA relative to the target incentive Adjusted EBITDA results in a 8% increase or decrease in the funded bonus.
Profit Sharing. We also provide annual cash incentives to all of our employees, including our Named Executive Officers, through a
profit sharing program. The profit-sharing program is tied directly to our annual Adjusted EBITDA growth goal. Payout of this incentive is based on base earnings. The Chief Executive Officer, with the compensation committee, determines the Adjusted
EBITDA growth goals for the year and sets the corresponding payout. If we exceed our Adjusted EBITDA goal, then we pay out more than 100% of the pre-determined profit sharing pool, and if we fall short of our Adjusted EBITDA goal, we pay out less
than 100% of the pre-determined profit sharing pool. Profit-sharing incentives are paid in February based on the previous years Adjusted EBITDA results. For 2009, based on our 2009 performance, we did not pay any profit-sharing cash incentives
to our employees, including Named Executive Officers, since we fell below our performance target.
Upon completion of the 2006 Acquisition, officers and executive officers, including Named Executive Officers, were granted equity awards.
Equity awards were granted pursuant to the First Amended and Restated Sensata Technologies Holding B.V. 2006 Management Option Plan as a primary incentive to achieve growth goals and retain executive talent. Also, in connection with the 2006
Acquisition, all employees who previously held Texas Instruments restricted stock were granted restricted stock pursuant to the First Amended and Restated Sensata Technologies Holding B.V. 2006 Securities Purchase Plan. Equity compensation is
granted as a long-term, non-cash incentive and as a means to align the long-term interests of executives.
Options. Pursuant to the First Amended and Restated Sensata Technologies Holding B.V. 2006 Management Option Plan, or the 2006
Option Plan, we may elect to award non-qualified options, subject to review by the Chief Executive Officer and compensation committee. All awards are in the form of options exercisable for ordinary shares and a fixed amount of ordinary shares
has been reserved for issuance under this plan. All awards of options under the plan are subject to time-based vesting and will vest over a period of five years, 40% vesting in years one and two, 60% vesting year three, 80% vesting year four and
100% vesting year five. Certain options are, in addition to time vesting, subject to performance vesting upon the completion of a liquidity event, which is defined to be a sale or an initial public offering that results in specified returns of two
times the Sponsors investment. Options granted under this plan are generally not transferable by the optionee. Except as otherwise provided in specific option award agreements, options that are fully vested expire 60 days after termination of
the optionees employment for any reason other than termination for cause (in which case the options expire on the optionees termination date) or due to death or disability (in which case the options expire on the date that is as much as
six months after the optionees termination date). In addition, except as otherwise provided in specific award agreements, any securities issued to an optionee upon an exercise of an option granted under the 2006 Option Plan are subject to
repurchase upon termination of the optionees employment. The repurchase right terminates on the first to occur of a change in control or an initial public offering (as such terms are defined in the 2006 Option Plan) and
will terminate upon completion of this offering. Any optionee who exercises an option awarded under the 2006 Option Plan automatically becomes subject to the Management Securityholders Addendum to the plan that provides additional terms and
conditions upon which the optionee may hold the securities. The term of all options granted under this plan may not exceed ten years. During the three months ended September 30, 2009, we amended the 2006 Option Plan to increase the ordinary