Exhibit 10.3

GI DYNAMICS, INC.

NON-EMPLOYEE DIRECTOR COMPENSATION POLICY

The Compensation Committee of the Board of Directors of GI Dynamics, Inc. (the
“Company”) has approved the following Non-Employee Director Compensation Policy
(this “Policy”) which establishes compensation to be paid to non-employee
directors of the Company, effective as of August 1, 2011 (the “Effective Time”)
and revised as of May 22, 2014, to provide an inducement to obtain and retain
the services of qualified persons to serve as members of the Company’s Board of
Directors.

Applicable Persons

This Policy shall apply to each director of the Company who is not an employee
of, or consultant to, the Company or any Affiliate (each, an “Outside
Director”). “Affiliate” shall mean a corporation which is a direct or indirect
parent or subsidiary of the Company, as determined pursuant to Section 424 of
the Internal Revenue Code of 1986, as amended.

Stock Option Grants

All stock option amounts set forth herein shall be subject to automatic
adjustment in the event of any stock split or other recapitalization affecting
the Company’s common stock.

Initial Stock Option Grants for Existing Directors

Upon the adoption by the Board of Directors of the Company’s 2011 Employee,
Director and Consultant Equity Incentive Plan (the “Stock Plan”), each Outside
Director shall be granted a non-qualified stock option (the “Existing Director
Initial Option Grant”) to purchase 130,000 shares of the Company’s common stock
under the Stock Plan. Each such option shall vest over five years from the date
of the grant in (i) one installment of 20% of the shares on the first
anniversary of the date of the grant and (ii) forty-eight substantially equal
monthly installments thereafter, each subject to the Outside Director’s
continued service on the Board of Directors.

Initial Stock Option Grant For Newly Appointed or Elected Directors

Each Outside Director whose service on the Board of Directors commences
following the date of adoption of the Stock Plan and prior to the annual meeting
of stockholders in 2012 shall, subject to shareholder approval being obtained
under the ASX Listing Rules, be granted a non-qualified stock option to purchase
130,000 shares of the Company’s common stock under the Stock Plan on the date of
his or her initial appointment or election to the Board of Directors. Each such
option shall vest over five years from the date of the grant in (i) one
installment of 20% of the shares on the first anniversary of the date of the
grant and (ii) forty-eight substantially equal monthly installments thereafter,
each subject to the Outside Director’s continued service on the Board of
Directors.

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Each Outside Director whose service on the Board of Directors commences at or
following the annual meeting of stockholders in 2012 and prior to the annual
meeting of stockholders in 2013 shall, subject to shareholder approval being
obtained under the ASX Listing Rules, be granted a non-qualified stock option to
purchase 105,000 shares of the Company’s common stock under the Stock Plan on
the date of his or her initial appointment or election to the Board of
Directors. Each such option shall vest over four years from the date of the
grant in (i) one installment of 25% of the shares on the first anniversary of
the date of the grant and (ii) thirty-six substantially equal monthly
installments thereafter, each subject to the Outside Director’s continued
service on the Board of Directors.

Each Outside Director whose service on the Board of Directors commences at or
following the annual meeting of stockholders in 2013 shall, subject to
shareholder approval being obtained under the ASX Listing Rules, be granted a
non-qualified stock option to purchase 80,000 shares of the Company’s common
stock under the Stock Plan on the date of his or her initial appointment or
election to the Board of Directors. Each such option shall vest over three years
from the date of the grant in (i) one installment of 33% of the shares on the
first anniversary of the date of the grant and (ii) twenty-four substantially
equal monthly installments thereafter, each subject to the Outside Director’s
continued service on the Board of Directors.

Annual Equity Incentive Grants

Commencing in 2014, each Outside Director shall, subject to any required
shareholder approval being obtained under the ASX Listing Rules, be granted
(i) a non-qualified stock option (the “Annual Option Grant”) to purchase 10,000
shares of the Company’s common stock under the Stock Plan, and (ii) a restricted
stock unit (the “Annual RSU Grant”) with respect to 10,000 shares of the
Company’s common stock under the Stock Plan, each year on or about the annual
meeting of the Board of Directors following the Company’s annual meeting of
stockholders. Each Annual Option Grant and Annual RSU Grant shall vest in full
on the first anniversary of the date of the grant , each subject to the Outside
Director’s continued service on the Board of Directors.

Terms for All Option Grants

Unless otherwise specified by the Board of Directors or the Compensation
Committee at the time of grant, all options granted under this Policy shall
(i) have an exercise price equal to the fair market value of the Company’s
common stock as determined pursuant to the Stock Plan on the date of grant
(which for the Existing Director Initial Option Grants shall be equal to the
price per common equivalent share at which Chess Depositary Interests (“CDIs”)
are offered to the public in the contemplated initial public offering of the
Company’s CDIs unless otherwise determined by the Compensation Committee prior
to the consummation of such offering); and (iii) contain such other terms and
conditions as the Board of Directors or the Compensation Committee shall
determine prior to the grant of the option. Such options shall become
exercisable in full immediately prior to a change of control of the Company. A
change of control shall be defined as: (i) any “person” or “group” (as such
terms are used in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended, (other than a person or group which is one of our shareholders as of
June 16, 2011) is or becomes the beneficial owner, directly or indirectly,

 

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through a purchase, merger or other acquisition transaction or series of
transactions, of our capital stock entitling such person or group to control 50%
or more of the total voting power of our capital stock entitled to vote
generally in the election of directors, where any voting capital stock of which
such person or group is the beneficial owner that are not then outstanding are
deemed outstanding for purposes of calculating such percentage; except in
connection with our issuance of capital stock in a bona-fide financing
transaction the proceeds of which are to be utilized by us for general corporate
purposes or (ii) any sale or transfer of all or substantially all of our assets
to another person.

Cash Fees

Annual Cash Payments

The following annual cash fees shall be paid to the Outside Directors serving on
the Board of Directors and the Audit Committee, Compensation Committee and
Nominating and Governance Committee, as applicable. For clarity, an Outside
Director is paid for each role that such Outside Director is appointed to
although a Chair of a Committee cannot also me considered as a member for
compensation purposes.

 

Board of Directors or Committee of Board of Directors

   Annual Retainer
Amount for Chair      Annual Retainer
Amount for Member  

Board of Directors

   $ 75,000       $ 50,000   

Audit Committee

   $ 15,000       $ 3,000   

Compensation Committee

   $ 10,000       $ 2,000   

Nominating and Governance Committee

   $ 5,000       $ 1,000   

Payment Terms for All Cash Fees

Cash payments payable to Outside Directors shall be paid quarterly in arrears as
of the last day of each fiscal quarter commencing as of the Effective Date.

Following an Outside Director’s first election or appointment to the Board of
Directors, such Outside Director shall receive his or her cash compensation pro
rated beginning on the date he or she was initially appointed or elected. If an
Outside Director dies, resigns or is removed during any quarter, he or she shall
be entitled to a cash payment on a pro rated basis through his or her last day
of service.

Expenses

Upon presentation of documentation of such expenses reasonably satisfactory to
the Company, each Outside Director shall be reimbursed for his or her reasonable
out-of-pocket business expenses incurred in connection with attending meetings
of the Board of Directors and Committees thereof or in connection with other
business related to the Board of Directors.

 

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Amendments

The Compensation Committee or the Board of Directors shall review this Policy
from time to time to assess whether any amendments in the type and amount of
compensation provided herein should be adjusted in order to fulfill the
objectives of this Policy.

 

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