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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -7.2pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">UNITED
STATES</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -7.2pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECURITIES
AND EXCHANGE COMMISSION</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -7.2pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Washington,
D.C.&#160;&#160;20549</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -7.2pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">FORM
8-K</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -7.2pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CURRENT
REPORT</font></div>
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to Section 13 or 15(d)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -7.2pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">of the
Securities Exchange Act of 1934</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -7.2pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date of
Report (Date of earliest event reported): <font style="DISPLAY: inline; FONT-WEIGHT: bold">October 6, 2008</font></font></div>
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              <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
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            <tr>
              <td valign="top" width="22%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td valign="top" width="51%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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              <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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      IMAGE, INC.</font></div>
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              <td valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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              <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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              <td valign="top" width="37%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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              <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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              <td colspan="2" valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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              <td colspan="6" valign="top" width="78%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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      616-4000</font></div>
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            <tr>
              <td colspan="6" valign="top" width="78%">
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              <td colspan="6" valign="top" width="78%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <tr>
              <td colspan="6" valign="top" width="78%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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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:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</font></div>
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pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</font></div>
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communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))</font></div>
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communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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</font></div>
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      </div><br>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ITEM
5.02. DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN
OFFICERS.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;2009
Bonus Plan</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
December 22, 2008, the Compensation Committee (the &#8220;<font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-STYLE: italic">Committee</font>&#8221;)
of the Board of Directors (the &#8220;<font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-STYLE: italic">Board</font>&#8221;) of
Silicon Image, Inc. (the &#8220;<font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-STYLE: italic">Registrant</font>&#8221;)
approved the Silicon Image, Inc. Employee Bonus Plan for Fiscal Year 2009 (the
&#8220;<font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-STYLE: italic">Bonus
Plan</font>&#8221;).</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Bonus
Plan provides incentives to certain executive and non-executive employees and is
designed to promote achievement of the Registrant&#8217;s financial performance goals
for the year ending December&#160;31, 2009.&#160;&#160;The terms of the Bonus
Plan grant the Committee exclusive authority to designate which employees may
participate in the Bonus Plan (&#8220;<font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-STYLE: italic">Participants</font>&#8221;),
excluding employees who are eligible to participate in any incentive plan
available to sales or business development personnel.&#160;&#160;In addition,
Participants must complete all mandatory training(s) within the requisite time
periods in order to be eligible to receive payment of a bonus.</font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under the
terms of the Bonus Plan, the Registrant will fund a cash bonus pool of
approximately $3,200,000 on June 30, 2009 (a &#8220;<font style="DISPLAY: inline; FONT-WEIGHT: bold">Bonus Pool Funding Date</font>&#8221;)
if:</font></div>
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            <tr valign="top">
              <td style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
              </td>
              <td style="WIDTH: 18pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
              </td>
              <td>
                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Actual
      revenue for the semiannual period ending June 30, 2009 equals or exceeds
      100% of the planned revenue (&#8220;<font style="DISPLAY: inline; FONT-WEIGHT: bold">Plan Revenue</font>&#8221;)
      established in the 2009 Annual Operating Plan approved by the Board of
      Directors (&#8220;<font style="DISPLAY: inline; FONT-WEIGHT: bold">Annual
      Operating Plan</font>&#8221;) for such period;
and</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
            <tr valign="top">
              <td style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
              </td>
              <td style="WIDTH: 18pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
              </td>
              <td>
                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Operating
      income determined in accordance with generally accepted accounting
      principles less stock-based compensation expense, amortization of
      intangible assets and such other extraordinary items as may be determined
      by the Committee (&#8220;<font style="DISPLAY: inline; FONT-WEIGHT: bold">Non-GAAP Operating
      Income</font>&#8221;) for the semiannual period ending June 30, 2009 equals or
      exceeds 100% of the planned Non-GAAP Operating Income established in the
      Annual Operating Plan (the &#8220;<font style="DISPLAY: inline; FONT-WEIGHT: bold">Plan Non-GAAP Operating
      Income</font>&#8221;) for such semiannual
period.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Additionally,
the Registrant will fund a cash bonus pool of approximately $3,200,000 on
December 31, 2009 (a &#8220;<font style="DISPLAY: inline; FONT-WEIGHT: bold">Bonus
Pool Funding Date</font>&#8221;) if:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
            <tr valign="top">
              <td style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
              </td>
              <td style="WIDTH: 18pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
              </td>
              <td>
                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Actual
      revenue for the semiannual period ending December 31, 2009 equals or
      exceeds 100% of the Plan Revenue established in the Annual Operating Plan
      for such period; and</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
            <tr valign="top">
              <td style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
              </td>
              <td style="WIDTH: 18pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
              </td>
              <td>
                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(A)
      Non-GAAP Operating Income for the semiannual period ending December 31,
      2009 divided by (B) the actual revenue for such semiannual period (&#8220;<font style="DISPLAY: inline; FONT-WEIGHT: bold">Non-GAAP Operating Margin
      Percentage</font>&#8221;) equals or exceeds 100% of the planned Non-GAAP
      Operating Margin Percentage established in the Annual Operating Plan (the
      &#8220;<font style="DISPLAY: inline; FONT-WEIGHT: bold">Plan Non-GAAP Operating
      Margin Percentage</font>&#8221;) for such semiannual
  period.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Alternatively,
if the Registrant does not fund a bonus pool on the June 30, 2009 Bonus Pool
Funding Date due to not having achieved the required financial performance
criteria as described above, the Registrant will fund a cash bonus pool of
approximately $6,400,000 on the December 31, 2009 Bonus Pool Funding Date
instead of the $3,200,000 referenced above if:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
            <tr valign="top">
              <td style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
              </td>
              <td style="WIDTH: 18pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
              </td>
              <td>
                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
      bonus pool is not funded on the June 30, 2009 Bonus Pool Funding Date due
      to the Registrant&#8217;s failure to achieve 100% of Plan Revenue or 100% of
      Plan Non-GAAP Operating Income or both for the semiannual period ending on
      June 30, 2009;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">&#160;
</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
        </div>
      </div><br>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
            <tr valign="top">
              <td style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
              </td>
              <td style="WIDTH: 18pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
              </td>
              <td>
                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Actual
      revenue for the fiscal year ended December 31, 2009 equals or exceeds 100%
      of the Plan Revenue established in the Annual Operating Plan for such
      period; and</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
            <tr valign="top">
              <td style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
              </td>
              <td style="WIDTH: 18pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
              </td>
              <td>
                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Non-GAAP
      Operating Margin Percentage for the fiscal year ended December 31, 2009
      equals or exceeds 100% of the Plan Non-GAAP Operating Margin Percentage
      established in the Annual Operating Plan for such
  period.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Moreover,
in the event that the Registrant&#8217;s financial performance for 2009 with respect
to revenue and Non-GAAP Operating Margin Percentage exceeds 100% of the Plan
Revenue and Plan Non-GAAP Operating Margin Percentage established in the Annual
Operating Plan for the full fiscal year, then the Registrant will fund on the
December 31, 2009 Bonus Pool Funding Date a cash bonus pool in the amount of
approximately $8,500,000 less any cash bonus pool funded on the June 30, 2009
Bonus Pool Funding Date (in lieu of any cash bonus pools referenced above to be
funded on the December 31, 2009 Bonus Pool Funding Date) if:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
            <tr valign="top">
              <td style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
              </td>
              <td style="WIDTH: 18pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
              </td>
              <td>
                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Actual
      revenue for the fiscal year ended December 31, 2009 equals or exceeds 109%
      of the Plan Revenue established in the Annual Operating Plan for such
      period; and</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
            <tr valign="top">
              <td style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
              </td>
              <td style="WIDTH: 18pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
              </td>
              <td>
                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Non-GAAP
      Operating Margin Percentage for the fiscal year ended December 31, 2009
      equals or exceeds 125% of the Plan Non-GAAP Operating Margin Percentage
      established in the Annual Operating Plan for such
  period.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Semiannual
bonus pools of approximately $3,200,000, or approximately $6,400,000 in the
aggregate, represent 75% of the aggregate amount of the target bonuses of those
employees who are expected to be Participants in the Bonus Plan, while an
aggregate cash Bonus pool of approximately $8,500,000 represents 100% of the
aggregate amount of the target bonuses of those employees who are expected to be
Participants in the Bonus Plan.&#160;&#160;Therefore, if the Registrant achieves
100% of the Plan Revenue and Plan Non-GAAP Operating Margin Percentage
established in the Annual Operating Plan, Participants in the Bonus Plan will
receive 75% of their target bonuses; and, if the Registrant achieves 109% of the
Plan Revenue and 125% of the Plan Non-GAAP Operating Margin Percentage
established in the Annual Operating Plan, Participants in the Bonus Plan will
receive 100% of their target bonuses.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
actual amount of a cash bonus pool on a Bonus Pool Funding Date shall be a
function of (i) the Registrant&#8217;s financial performance with respect to actual
revenue, Non-GAAP Operating Income and Non-GAAP Operating Margin Percentage, as
the case may be, compared to the Annual Operating Plan and (ii) the actual
Participants participating in the Bonus Plan as of each Bonus Pool Funding Date
and such Participants&#8217; target Bonuses.&#160;&#160;&#160;In the event that the
Registrant&#8217;s performance with respect to revenue and Non-GAAP Operating Margin
Percentage falls in between the targets established in the Annual Operating Plan
and the targets established by the Bonus Plan for the payment of 100% of target
bonuses, the actual bonus amounts will be calculated pro rata on a straight line
basis.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Committee has exclusive authority to determine the amount of each Participant&#8217;s
target bonus and the actual amount payable to each Participant, and may amend or
terminate the Bonus Plan at any time.&#160;&#160;The amounts of bonuses, if any,
allocable to individual executive employees will be determined by the Committee
in its sole discretion. The amounts of bonuses, if any, allocable to individual
non-executive employees will be determined by the Registrant&#8217;s management and
submitted to the Committee for approval. The amounts of individual bonuses may
be less than, equal to or greater than target bonus levels for the individual&#8217;s
employee level.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Compensation Committee has also approved target bonus levels (the &#8220;<font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-STYLE: italic">Target Bonus
Levels</font>&#8221;) for executive participants under the Bonus Plan, subject to the
terms and conditions of the Bonus Plan. The Target Bonus Levels are by employee
position or title and indicate a percentage that would apply to the respective
employee&#8217;s base salary (as of December&#160;31, 2009) for bonus calculation
purposes under the Bonus Plan. A summary of the Target Bonus Levels for
executive participants in the Bonus Plan follows.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">&#160;
</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;Target
Bonus Levels for Executives under the Bonus Plan</font></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="bottom" width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="bottom" width="31%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="50%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">Position/Title</font></font></div>
              </td>
              <td align="left" colspan="2" valign="bottom" width="32%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">Target Bonus Level</font></font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="50%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Chief
      Executive Officer</font></div>
              </td>
              <td align="left" colspan="2" valign="top" width="32%">
                <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">100%
      of base salary</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="50%">
                <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Chief
      Financial Officer, Chief Operating Officer,</font></div>
              </td>
              <td align="left" colspan="2" valign="top" width="32%">
                <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">50%
      of base salary</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="50%">
                <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Chief
      Technology Officer, Chief Legal Officer</font></div>
              </td>
              <td align="left" colspan="2" valign="top" width="32%">
                <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">45%
      of base salary</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="50%">
                <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Vice
      President</font></div>
              </td>
              <td align="left" colspan="2" valign="top" width="32%">
                <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">40%
      of base salary</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Target Bonus Levels and bonus amounts payable are subject to the terms and
conditions of the Bonus Plan.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Transitional
Agreement with Hyun Jong Shin</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
October 6, 2008, the Registrant entered into a Transitional Employment and
Severance Agreement (the &#8220;<font style="DISPLAY: inline; FONT-STYLE: italic">Transitional Agreement</font>&#8221;) with
Hyun Jong (John) Shin, the Registrant&#8217;s Vice President, Strategic Technology
Initiatives and former Vice President, Engineering and a named executive officer
in the Registrant&#8217;s proxy statement for its 2008 Annual Meeting of
Stockholders.&#160;&#160;The Registrant and Mr.&#160;Shin have agreed that he
will continue in his current capacity during a transitional period from
September 3, 2008 through July 31, 2009, unless earlier terminated for cause or
extended by mutual agreement (the &#8220;<font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-STYLE: italic">Transitional
Period</font>&#8221;).&#160;&#160;Under the terms of the Transitional Agreement,
Mr.&#160;Shin will continue to receive payment of his current base salary, will
continue to vest in his existing equity awards, and will continue to participate
in applicable employee benefit plans, until the conclusion of the Transitional
Period. Upon the conclusion of the Transitional Period (or upon Mr. Shin&#8217;s
earlier termination of his employment), and subject to Mr.&#160;Shin&#8217;s delivery
to the Registrant of a signed general release of claims in favor of the
Registrant, Mr. Shin will be entitled to a severance payment equal to his base
salary for the remainder of the Transitional Period plus seven-twelfths of 40%
of his current yearly base salary. In addition, if Mr. Shin terminates his
employment prior to the conclusion of the Transitional Period, the Registrant
will pay his COBRA insurance premiums during the remainder of the Transitional
Period, should Mr.&#160;Shin timely elect to continue group health coverage
under COBRA.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Separation Agreement contains certain other provisions, including agreements by
Mr. Shin to continue to comply with the terms of his Employee Inventions and
Confidentiality Agreement and to return all of the Registrant&#8217;s property and
confidential and proprietary information in his possession to Registrant at the
conclusion of the Transitional Period and not to solicit any of the Registrant&#8217;s
employees for a period of eighteen months and not to interfere in any customer
or client relationship.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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          <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
        </div>
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          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">&#160;
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          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
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</font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SIGNATURE</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date:&#160;&#160;December
29,
2008&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold">SILICON IMAGE,
INC.</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 252pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By:&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">/s/ Edward
Lopez</font>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 252pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;
Edward Lopez</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 252pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;
Chief Legal Officer</font></div><br>
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form8_k.htm
UNITED
STATES
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):
October 6, 2008
SILICON
      IMAGE, INC.
(Exact
      name of Registrant as Specified in its Charter)
Delaware
(State
      or Other Jurisdiction of Incorporation)
000-26887
77-0396307
(Commission
File
      Number)
(IRS
      Employer Identification No.)
1060 East Arques Ave., Sunnyvale,
      CA
94085
(Address of Principal
      Executive Offices)
(Zip
      Code)
(408)
      616-4000
(Registrant's
      Telephone Number, Including Area Code)
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:
o
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
ITEM
5.02. DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN
OFFICERS.
1.           2009
Bonus Plan
On
December 22, 2008, the Compensation Committee (the "
Committee
")
of the Board of Directors (the "
Board
") of
Silicon Image, Inc. (the "
Registrant
")
approved the Silicon Image, Inc. Employee Bonus Plan for Fiscal Year 2009 (the
"
Bonus
Plan
").
The Bonus
Plan provides incentives to certain executive and non-executive employees and is
designed to promote achievement of the Registrant's financial performance goals
for the year ending December 31, 2009.  The terms of the Bonus
Plan grant the Committee exclusive authority to designate which employees may
participate in the Bonus Plan ("
Participants
"),
excluding employees who are eligible to participate in any incentive plan
available to sales or business development personnel.  In addition,
Participants must complete all mandatory training(s) within the requisite time
periods in order to be eligible to receive payment of a bonus.
Under the
terms of the Bonus Plan, the Registrant will fund a cash bonus pool of
approximately $3,200,000 on June 30, 2009 (a "
Bonus Pool Funding Date
")
if:
·
Actual
      revenue for the semiannual period ending June 30, 2009 equals or exceeds
      100% of the planned revenue ("
Plan Revenue
")
      established in the 2009 Annual Operating Plan approved by the Board of
      Directors ("
Annual
      Operating Plan
") for such period;
and
·
Operating
      income determined in accordance with generally accepted accounting
      principles less stock-based compensation expense, amortization of
      intangible assets and such other extraordinary items as may be determined
      by the Committee ("
Non-GAAP Operating
      Income
") for the semiannual period ending June 30, 2009 equals or
      exceeds 100% of the planned Non-GAAP Operating Income established in the
      Annual Operating Plan (the "
Plan Non-GAAP Operating
      Income
") for such semiannual
period.
Additionally,
the Registrant will fund a cash bonus pool of approximately $3,200,000 on
December 31, 2009 (a "
Bonus
Pool Funding Date
") if:
·
Actual
      revenue for the semiannual period ending December 31, 2009 equals or
      exceeds 100% of the Plan Revenue established in the Annual Operating Plan
      for such period; and
·
(A)
      Non-GAAP Operating Income for the semiannual period ending December 31,
      2009 divided by (B) the actual revenue for such semiannual period ("
Non-GAAP Operating Margin
      Percentage
") equals or exceeds 100% of the planned Non-GAAP
      Operating Margin Percentage established in the Annual Operating Plan (the
      "
Plan Non-GAAP Operating
      Margin Percentage
") for such semiannual
  period.
Alternatively,
if the Registrant does not fund a bonus pool on the June 30, 2009 Bonus Pool
Funding Date due to not having achieved the required financial performance
criteria as described above, the Registrant will fund a cash bonus pool of
approximately $6,400,000 on the December 31, 2009 Bonus Pool Funding Date
instead of the $3,200,000 referenced above if:
·
A
      bonus pool is not funded on the June 30, 2009 Bonus Pool Funding Date due
      to the Registrant's failure to achieve 100% of Plan Revenue or 100% of
      Plan Non-GAAP Operating Income or both for the semiannual period ending on
      June 30, 2009;
·
Actual
      revenue for the fiscal year ended December 31, 2009 equals or exceeds 100%
      of the Plan Revenue established in the Annual Operating Plan for such
      period; and
·
Non-GAAP
      Operating Margin Percentage for the fiscal year ended December 31, 2009
      equals or exceeds 100% of the Plan Non-GAAP Operating Margin Percentage
      established in the Annual Operating Plan for such
  period.
Moreover,
in the event that the Registrant's financial performance for 2009 with respect
to revenue and Non-GAAP Operating Margin Percentage exceeds 100% of the Plan
Revenue and Plan Non-GAAP Operating Margin Percentage established in the Annual
Operating Plan for the full fiscal year, then the Registrant will fund on the
December 31, 2009 Bonus Pool Funding Date a cash bonus pool in the amount of
approximately $8,500,000 less any cash bonus pool funded on the June 30, 2009
Bonus Pool Funding Date (in lieu of any cash bonus pools referenced above to be
funded on the December 31, 2009 Bonus Pool Funding Date) if:
·
Actual
      revenue for the fiscal year ended December 31, 2009 equals or exceeds 109%
      of the Plan Revenue established in the Annual Operating Plan for such
      period; and
·
Non-GAAP
      Operating Margin Percentage for the fiscal year ended December 31, 2009
      equals or exceeds 125% of the Plan Non-GAAP Operating Margin Percentage
      established in the Annual Operating Plan for such
  period.
Semiannual
bonus pools of approximately $3,200,000, or approximately $6,400,000 in the
aggregate, represent 75% of the aggregate amount of the target bonuses of those
employees who are expected to be Participants in the Bonus Plan, while an
aggregate cash Bonus pool of approximately $8,500,000 represents 100% of the
aggregate amount of the target bonuses of those employees who are expected to be
Participants in the Bonus Plan.  Therefore, if the Registrant achieves
100% of the Plan Revenue and Plan Non-GAAP Operating Margin Percentage
established in the Annual Operating Plan, Participants in the Bonus Plan will
receive 75% of their target bonuses; and, if the Registrant achieves 109% of the
Plan Revenue and 125% of the Plan Non-GAAP Operating Margin Percentage
established in the Annual Operating Plan, Participants in the Bonus Plan will
receive 100% of their target bonuses.
The
actual amount of a cash bonus pool on a Bonus Pool Funding Date shall be a
function of (i) the Registrant's financial performance with respect to actual
revenue, Non-GAAP Operating Income and Non-GAAP Operating Margin Percentage, as
the case may be, compared to the Annual Operating Plan and (ii) the actual
Participants participating in the Bonus Plan as of each Bonus Pool Funding Date
and such Participants' target Bonuses.   In the event that the
Registrant's performance with respect to revenue and Non-GAAP Operating Margin
Percentage falls in between the targets established in the Annual Operating Plan
and the targets established by the Bonus Plan for the payment of 100% of target
bonuses, the actual bonus amounts will be calculated pro rata on a straight line
basis.
The
Committee has exclusive authority to determine the amount of each Participant's
target bonus and the actual amount payable to each Participant, and may amend or
terminate the Bonus Plan at any time.  The amounts of bonuses, if any,
allocable to individual executive employees will be determined by the Committee
in its sole discretion. The amounts of bonuses, if any, allocable to individual
non-executive employees will be determined by the Registrant's management and
submitted to the Committee for approval. The amounts of individual bonuses may
be less than, equal to or greater than target bonus levels for the individual's
employee level.
The
Compensation Committee has also approved target bonus levels (the "
Target Bonus
Levels
") for executive participants under the Bonus Plan, subject to the
terms and conditions of the Bonus Plan. The Target Bonus Levels are by employee
position or title and indicate a percentage that would apply to the respective
employee's base salary (as of December 31, 2009) for bonus calculation
purposes under the Bonus Plan. A summary of the Target Bonus Levels for
executive participants in the Bonus Plan follows.
Target
Bonus Levels for Executives under the Bonus Plan
Position/Title
Target Bonus Level
Chief
      Executive Officer
100%
      of base salary
Chief
      Financial Officer, Chief Operating Officer,
50%
      of base salary
Chief
      Technology Officer, Chief Legal Officer
45%
      of base salary
Vice
      President
40%
      of base salary
The
Target Bonus Levels and bonus amounts payable are subject to the terms and
conditions of the Bonus Plan.
2.           Transitional
Agreement with Hyun Jong Shin
On
October 6, 2008, the Registrant entered into a Transitional Employment and
Severance Agreement (the "
Transitional Agreement
") with
Hyun Jong (John) Shin, the Registrant's Vice President, Strategic Technology
Initiatives and former Vice President, Engineering and a named executive officer
in the Registrant's proxy statement for its 2008 Annual Meeting of
Stockholders.  The Registrant and Mr. Shin have agreed that he
will continue in his current capacity during a transitional period from
September 3, 2008 through July 31, 2009, unless earlier terminated for cause or
extended by mutual agreement (the "
Transitional
Period
").  Under the terms of the Transitional Agreement,
Mr. Shin will continue to receive payment of his current base salary, will
continue to vest in his existing equity awards, and will continue to participate
in applicable employee benefit plans, until the conclusion of the Transitional
Period. Upon the conclusion of the Transitional Period (or upon Mr. Shin's
earlier termination of his employment), and subject to Mr. Shin's delivery
to the Registrant of a signed general release of claims in favor of the
Registrant, Mr. Shin will be entitled to a severance payment equal to his base
salary for the remainder of the Transitional Period plus seven-twelfths of 40%
of his current yearly base salary. In addition, if Mr. Shin terminates his
employment prior to the conclusion of the Transitional Period, the Registrant
will pay his COBRA insurance premiums during the remainder of the Transitional
Period, should Mr. Shin timely elect to continue group health coverage
under COBRA.
The
Separation Agreement contains certain other provisions, including agreements by
Mr. Shin to continue to comply with the terms of his Employee Inventions and
Confidentiality Agreement and to return all of the Registrant's property and
confidential and proprietary information in his possession to Registrant at the
conclusion of the Transitional Period and not to solicit any of the Registrant's
employees for a period of eighteen months and not to interfere in any customer
or client relationship.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date:  December
29,
2008
SILICON IMAGE,
INC.
By:
/s/ Edward
Lopez
Edward Lopez
Chief Legal Officer