8-K

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (date of earliest event reported): November 10, 2003

Adobe Systems Incorporated

(Exact name of Registrant as specified in its charter)

Delaware	0-15175	77-0019522
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

345 Park Avenue

San Jose, California 95110-2704

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (408) 536-6000

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 1 – Registrant’s Business and Operation

Item 1.01 Entry into a Material Definitive Agreement.

On November 10, 2003, at a meeting of the Executive Compensation Committee of the Board of Directors of the Company (the “Committee”), the Committee approved the terms of the 2004 Annual Executive Incentive Plan (the “2004 Plan”) which is applicable to members of the Company’s executive team.

The 2004 Plan required the Company to achieve a 90% revenue to plan and 90% operating profit to plan minimum threshold for the executive team be eligible for an annual bonus.  The bonus is computed as a percentage of base salary, which is established by the Committee. In fiscal 2004, the target level of bonus equaled or exceeded 50% of salary for each of the executive officers. The percentage target of each bonus contains corporate targets specifically tied to corporate revenue and operating profit levels, and for certain officers, the bonus is tied to business unit revenue. In addition, individual goals are set for certain executive officers. The Committee may alter the incentive payout based on such factors as achievement of publicly announced targets, product milestones, strategic goals, cross-functional teamwork and collaboration, and unforeseen changes in the economy and/or geopolitical climate.

A copy of the 2004 Plan is attached as Exhibit 10.1 to this Current Report on Form 8-K.

On July 30, 2004, at a meeting of the Committee, the Committee approved the terms of the 2005Annual Executive Incentive Plan (the “2005 Plan”) which is applicable to members of the Company’s executive team.

The 2005 Plan requires the Company to achieve a 90% revenue to plan and 90% operating profit to plan minimum threshold for the executive team be eligible for an annual bonus.  The bonus is computed as a percentage of base salary, which is established by the Committee. In fiscal 2005, the target level of bonus equals or exceeds 50% of salary for each of the executive officers. The percentage target of each bonus contains corporate targets specifically tied to corporate revenue and operating profit levels, individual goal achievement and for certain officers, the bonus is tied to business unit revenue. For 2005 the bonus target is weighted 70% on revenue achievement and 30% on individual goal achievement. For the SVP WW Sales, the bonus is based 100% on revenue achievement. The Committee may alter the incentive payout based on such factors as achievement of publicly announced targets, product milestones, strategic goals, cross-functional teamwork and collaboration, and unforeseen changes in the economy and/or geopolitical climate.

A copy of the 2005 Plan is attached as Exhibit 10.2 to this Current Report on Form 8-K.

Section 9 – Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits.

(c)Exhibits

10.1 Adobe Systems Incorporated 2004 Annual Executive Incentive Plan

10.2 Adobe Systems Incorporated 2005 Annual Executive Incentive Plan

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ADOBE SYSTEMS INCORPORATED
Date: January 13, 2005	By:	/s/ MURRAY J. DEMO
		Murray J. Demo Senior Vice President and Chief Financial Officer

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EX-10.1

Exhibit 10.1

ADOBE ANNUAL EXECUTIVE INCENTIVE PLAN

(FY 2004)

OBJECTIVES:

1)Drive revenue growth and accountability

2)Drive execution of operating plan

3)Motivate and inspire employees to contribute at peak performance

ELIGIBILITY:       Members of the Executive Team who are employed by Adobe (full time or part time) during the full eligibility period (fiscal year) are eligible for the Executive Incentive Plan.  If hired prior to the fourth quarter, employee is eligible for a prorated annual bonus.

INCENTIVE TARGET:Incentive target stated as a percentage of annual base salary.

PAYMENT SCHEDULE:    Annual incentive bonus target paid on annual basis approx 45-60 days from the end of the fiscal year.

EXECUTIVE TEAM BUSINESS UNIT HEADS (Creative Pro, DI/DV,  Intelligent Documents) – Bonus Components

Corporate result threshold (achievement of 90% revenue to plan & 90% operating profit to plan) must be achieved before business unit revenue results are paid out

Business Unit Revenue Target is based on budget revenue numbers for the specific business units

•100% of bonus is comprised of business unit revenue

•Minimum payment requires threshold achievement of at least 81% business unit revenue to plan

•Upside potential to 200%

Bonus Formulas for Business Unit:

Target $ x Business Unit Revenue Achievement % = $Bonus

SVP WW SALES AND FIELD OPS – Bonus Components

Corporate result threshold (achievement of 90% revenue to plan & 90% operating profit to plan) must be achieved before business unit revenue results are paid out

Business Unit Revenue Target is based on budget revenue numbers for the specific business units

•100% of bonus is comprised of company revenue (with different weightings per BU)

•CEO may adjust the percentage weightings within the plan, to redirect behavior based on changes in the economy, immediate needs of the company, changes in long-term strategies and individual career growth and development throughout the fiscal year.

•Minimum payment requires threshold achievement of at least 81% business unit revenue to plan

•Upside potential to 200%

REMAINING MEMBERS OF EXECUTIVE TEAM- Bonus Components

Corporate Target is driven by the corporate operating profit and revenue plan.

•Minimum payment (50%) requires a threshold achievement of 90% revenue to plan & 90% operating profit to plan

•Upside potential on the corporate result achievement to a maximum of 150% of the annual bonus target

•Corporate result threshold must be achieved before any bonus is paid

Individual Target (weighted 100%) isbased on achievement of goals tied to managing the business

Bonus Formula

Target $ x Corp Results% x Individual Results% = $ Bonus

Participation in the Plan is at the discretion of Company management.  The Company reserves the right to make changes to the Plan at any time.  The compensation committee of the Board of Directors may alter the incentive payout based on achievement of publicly announced targets, product milestones, strategic goals, cross functional teamwork and collaboration, and unforeseen changes in the economy and/or geopolitical climate.

EX-10.2

Exhibit 10.2

ADOBE EXECUTIVE ANNUAL INCENTIVE PLAN

(FY 2005)

OBJECTIVES:

1)Drive revenue growth and accountability

2)Drive execution of operating plan and strategic objectives

3)Motivate and inspire employees to contribute at peak performance

ELIGIBILITY:Members of the Executive Team who are employed by Adobe (full time or part time) during the full eligibility period (fiscal year) are eligible for the Executive Incentive Plan.  If hired prior to the fourth quarter, employee is eligible for a prorated annual bonus. If hired in the fourth quarter, Executive is not eligible for bonus.

INCENTIVE TARGET:Incentive target stated as a percentage of annual base salary.

PAYMENT SCHEDULE:Annual incentive bonus target paid on annual basis approx 45-60 days from the end of the fiscal year.

EXECUTIVE TEAM – Bonus Components

The Corporate result threshold must be achieved before bonus is paid.  Subsequently, executive team members are measured on achievement against revenue and individual targets.

Corporate Target is driven by the corporate operating profit and revenue plan.

•Minimum payment (50%) requires a threshold achievement of 90% revenue to plan & 90% operating profit to plan

•Upside payment potential to 200%

Individual Target is based on achievement of goals tied to the corporate operating plan and strategic objectives.

•30% of bonus is weighted on individual results and tied to  Corporate results

Revenue Target is based on budget revenue numbers for the Company or specific Business Unit.

•70% of bonus is comprised of revenue

•Minimum payment (50% ) requires threshold achievement of at least 90% of revenue to plan

•Upside payment potential to 200%

Bonus Formula if Company meets threshold:

Target x Company Results % x Individual Results% x Weight 30%

+

Target x Revenue Results % x Weight 70%

=

Bonus

SVP WW SALES AND FIELD OPS – Bonus Components

Corporate result threshold (achievement of 90% revenue to plan & 90% operating profit to plan) must be achieved before bonus is paid.

Business Unit Revenue Target is based on budget revenue numbers for the specific business units

•100% of bonus is comprised of company revenue (with different weightings per Business Unit)

•CEO may adjust the percentage weightings within the plan, to redirect behavior based on changes in the economy, immediate needs of the company, changes in long-term strategies and individual career growth and development throughout the fiscal year.

•Minimum payment (50%) requires threshold achievement of at least 90% business unit revenue to plan

•Upside payment potential to 200%

Participation in the Plan is at the discretion of Company management.  The Company reserves the right to make changes to the Plan at any time.  The compensation committee of the Board of Directors may alter the incentive payout based on achievement of publicly announced targets, product milestones, strategic goals, cross functional teamwork and collaboration, and unforeseen changes in the economy and/or geopolitical climate.