Exhibit 10.12

 

IGM BIOSCIENCES, INC.

OUTSIDE DIRECTOR COMPENSATION POLICY

(as Amended and Restated Effective February 5, 2020)

IGM Biosciences, Inc. (the “Company”) believes that providing cash and equity
compensation to members of the Company’s Board of Directors (the “Board,” and
members of the Board, the “Directors”) represents an effective tool to attract,
retain and reward Directors who are not employees of the Company (the “Outside
Directors”). This Outside Director Compensation Policy (the “Policy”) is
intended to formalize the Company’s policy regarding cash compensation and
grants of equity to its Outside Directors. Unless otherwise defined herein,
capitalized terms used in this Policy will have the meaning given such terms in
the Company’s Amended and Restated 2018 Omnibus Incentive Plan (the “Plan”).
Each Outside Director will be solely responsible for any tax obligations
incurred by such Outside Director as a result of compensation such Outside
Director receives under this Policy.

This Policy was originally adopted and approved August 7, 2019 and was effective
as of the effective date of the registration statement in connection with the
initial public offering of the Company’s securities (the “Effective
Date”).  This Policy, as amended and restated, was adopted and made effective on
February 5, 2020.

1.

Cash Compensation

Annual Cash Retainer

Each Outside Director will be paid an annual cash retainer of $20,000. There are
no per-meeting attendance fees for attending Board meetings. This cash
compensation will be paid quarterly in arrears on a prorated basis.

Committee Annual Cash Retainer

Each Outside Director who serves as the Board chair or the chair or a member of
a committee of the Board will be eligible to earn additional annual fees (paid
quarterly in arrears on a prorated basis) as follows:

 

Board Chair:

Audit Committee Chair:

$20,000

Audit Committee Chair:

$10,000

Audit Committee Member:

$5,000

Compensation Committee Chair:

$10,000

Compensation Committee Member:

$5,000

Corporate Governance and Nominating Committee Chair:

$10,000

Corporate Governance and Nominating Committee Member:

$5,000

Research and Clinical Development Committee Chair:

$10,000

Research and Clinical Development Committee Member:

$5,000

 

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For clarity, each Outside Director who serves as a committee chair will only
receive the additional annual fee as the committee chair and not the additional
annual fee as a committee member.

Payment

Except as specified in Section 2, each annual cash retainer under this Policy
will be paid quarterly in arrears on a prorated basis to each Outside Director
who has served in the relevant capacity at any point during the immediately
preceding fiscal quarter, and such payment shall be made no later than 30 days
following the end of such immediately preceding fiscal quarter.  For purposes of
clarification, an Outside Director who has served as an Outside Director, as a
member of an applicable committee (or chair thereof) during only a portion of
the relevant Company fiscal quarter will receive a pro-rated payment of the
quarterly payment of the applicable annual cash retainer(s), calculated based on
the number of days during such fiscal quarter such Outside Director has served
in the relevant capacities.  For purposes of clarification, an Outside Director
who has served as an Outside Director, as a member of an applicable committee
(or chair thereof), as applicable, from the Effective Date through the end of
the fiscal quarter containing the Effective Date (the “Initial Period”) will
receive a prorated payment of the quarterly payment of the applicable annual
cash retainer(s), calculated based on the number of days during the Initial
Period that such Outside Director has served in the relevant capacities.

2.

Elections to Receive Restricted Stock Units in Lieu of Cash Compensation

Following the Effective Date, subject to complying with the Retainer Award
Election Mechanics below, each Outside Director may elect to convert 0%, 50% or
100% of his or her cash compensation with respect to services performed in a
future calendar quarter and otherwise scheduled to be paid following the
completion of those services under Section 1 of this Policy (the “Retainer Cash
Payments”) into a number of Restricted Stock Units (“Retainer Award”) having a
Grant Value equal to the aggregate amount of the elected percentage of the
Retainer Cash Payments payable to such Outside Director under this Policy for
the applicable quarter (as determined on the applicable date of grant of such
Retainer Award), provided that the number of Shares covered by such Retainer
Award shall be rounded to the nearest whole Share (such election, a “Retainer
Award Election”).  Quarterly Retainer Awards will be automatic and
nondiscretionary and will be granted on the first trading day of each quarter
with respect to Retainer Cash Payments that would have been paid in the most
recently-completed fiscal quarter.  All Restricted Stock Units underlying such
quarterly Retainer Awards will be fully vested upon grant and will be settled in
Shares as soon as administratively practicable following each date of
grant.  For purposes of this Policy, “Grant Value” is calculated based on the
volume weighted average price of one Share over the Company’s fourth quarter of
the year immediately preceding the year of the date of grant. For purposes of
clarity, the amount of Retainer Cash Payments considered with respect to each
quarterly Retainer Award will reflect any changes in committee assignments and
any appointment or removal as the chair of committee based on the applicable
fees earned during the prior quarter pursuant to Section 1 of this Policy.

Retainer Award Election Mechanics

Each Retainer Award Election must be submitted in the form and manner specified
by the Board or Compensation Committee.  An individual who fails to make a
timely Retainer Award Election shall not receive a Retainer Award for the next
calendar year, and instead shall receive the applicable Retainer Cash Payments
for such calendar year.  Once a Retainer Award Election is validly submitted and
becomes effective, it will remain in effect with respect to all subsequent
Retainer Cash Payments related to future calendar years unless the applicable
Outside Director revokes such election as provided in (ii) below.  

Retainer Award Elections must comply with the following timing requirements:

i.Annual Election.  Each Outside Director may make a Retainer Award Election
with respect to Annual Retainer Cash Payments payable to such Outside Director
in the following calendar year (the “Annual Election”).  The Annual Election
must be submitted to the Company’s Chief Financial Officer within the Company’s
fourth quarter open trading window (the “Fourth Quarter Trading Window”) of the
calendar year immediately preceding the calendar year to which the Retainer Cash
Payments relate (the last day of such trading window, the “Annual Election
Deadline”), and, except as provided in (ii) below, the Annual Election shall
become irrevocable effective as of the Annual Election Deadline, provided that
if such calendar year does not contain a Fourth Quarter Trading Window, Outside
Directors will not be eligible to make an Annual Election in such calendar year.

 

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ii.Revocation/Revision.  An Outside Director may revoke or revise his or her
existing Retainer Award Election during a Fourth Quarter Trading Window by such
calendar year’s Annual Election Deadline with respect to Retainer Cash Payments
related to future calendar years.  If a calendar year does not contain a Fourth
Quarter Trading Window, Outside Directors will not be eligible to revoke or
revise a Retainer Award Election in such calendar year.  

3.

Equity Compensation

Outside Directors will be eligible to receive all types of Awards (except
Incentive Stock Options) under the Plan (or the applicable equity plan in place
at the time of grant), including discretionary Awards not covered under this
Policy. All grants of Awards to Outside Directors pursuant to Section 3 of this
Policy will be automatic and nondiscretionary, except as otherwise provided
herein, and will be made in accordance with the following provisions:

(a)No Discretion. No person will have any discretion to select which Outside
Directors will be granted any Awards under this Policy or to determine the
number of Shares to be covered by such Awards.

(b)Initial Options. Each individual who first becomes an Outside Director
following the Effective Date will be granted a nonstatutory stock option (an
“Initial Option”) to purchase 12,100 Shares. The Initial Option will be
automatically granted on the first trading date on or after the date on which
such individual first becomes an Outside Director, whether through election by
the stockholders of the Company or appointment by the Board to fill a vacancy.
If an individual was a member of the Board and also an employee, becoming an
Outside Director due to termination of employment will not entitle the Outside
Director to an Initial Option.  Each Initial Option will vest as to 1/3rd of the
Shares subject to the Initial Option on the one-year anniversary of the date the
applicable Outside Director’s service as an Outside Director commenced and as to
1/36th of the Shares subject to the Initial Option each month thereafter, in
each case subject to the Outside Director continuing to be a Service Provider
through the applicable vesting date. Each Initial Option will become fully
vested and exercisable immediately prior to a Change in Control, subject to the
Outside Director continuing to be a Service Provider at the time of the Change
in Control.

(c)Annual Options. Following the Effective Date, each Outside Director will be
automatically granted a nonstatutory stock option on the same date as annual
equity award grants are made to the Company’s executive officers (an “Annual
Option”) to purchase 10,000 Shares. Each Annual Option will vest as to 1/12th of
the Shares subject to the Annual Option each month that is completed after the
date of the first annual meeting of the Company’s stockholders following the
date of grant (each, an “Annual Meeting”) after the date the Annual Option is
granted, provided that the Annual Option will vest in full on the earlier of (i)
the 12-month anniversary of the first Annual Meeting following the date of
grant, or (ii) the date of the second regularly scheduled Annual Meeting after
the date of grant, in each case subject to the Outside Director continuing to be
a Service Provider through the applicable vesting date.

(d)Additional Terms of Initial Options and Annual Options.  The terms and
conditions of each Initial Option and Annual Option will be as follows:

i.The term of each Initial Option and Annual Option will be ten years, subject
to earlier termination as provided in the Plan.

ii.Each Initial Option and Annual Option will have an exercise price per Share
equal to 100% of the Fair Market Value per Share on the grant date.

4.

Change In Control

In the event of a Change in Control, each Outside Director will fully vest in
his or her outstanding Company equity awards immediately prior to a Change in
Control, including any Initial Option or Annual Option, provided that the
Outside Director continues to be an Outside Director through the date of the
Change in Control.

 

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5.

Annual Compensation Limit

No Outside Director may be paid, issued or granted, in any fiscal year, any cash
compensation and Awards with an aggregate value greater than $1,000,000 for an
Outside Director’s first year of service or $750,000 in any subsequent year. The
value of any Award will be based on the grant date fair value determined in
accordance with U.S. generally accepted accounting principles). Any cash
compensation paid or Awards granted to an individual for his or her services as
an Employee, or for his or her services as a Consultant (other than as an
Outside Director), will not count for purposes of the limitation under this
Section 5.

6.

Travel Expenses

Each Outside Director’s reasonable, customary and documented out-of-pocket
travel expenses to Board and committee meetings will be reimbursed by the
Company.

7.

Additional Provisions

All provisions of the Plan not inconsistent with this Policy will apply to
Awards granted to Outside Directors thereunder.

8.

Adjustments

In the event that any dividend or other distribution (whether in the form of
cash, Shares, other securities or other property), recapitalization, stock
split, reverse stock split, reorganization, merger, consolidation, split-up,
spin-off, combination, repurchase, or exchange of Shares or other securities of
the Company, or other change in the corporate structure of the Company affecting
the Shares occurs, the Administrator, in order to prevent diminution or
enlargement of the benefits or potential benefits intended to be made available
under this Policy, will adjust the number of Shares issuable pursuant to Awards
granted under this Policy.

9.

Section 409A

In no event will cash compensation or expense reimbursement payments under this
Policy be paid after the later of (i) 15th day of the 3rd month following the
end of the Company’s fiscal year in which the compensation is earned or expenses
are incurred, as applicable, or (ii) 15th day of the 3rd month following the end
of the calendar year in which the compensation is earned or expenses are
incurred, as applicable, in compliance with the “short-term deferral” exception
under Section 409A of the Internal Revenue Code of 1986, as amended, and the
final regulations and guidance thereunder, as may be amended from time to time
(together, “Section 409A”). It is the intent of this Policy that this Policy and
all payments hereunder be exempt from or otherwise comply with the requirements
of Section 409A so that none of the compensation to be provided hereunder will
be subject to the additional tax imposed under Section 409A, and any ambiguities
or ambiguous terms herein will be interpreted to be so exempt or comply. In no
event will the Company or any of its Parent or Subsidiaries have any liability
or obligation to reimburse, indemnify, or hold harmless an Outside Director for
any taxes imposed or other costs incurred as a result of Section 409A.

 

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10.

Stockholder Approval

The initial adoption of the Policy will be subject to approval by the Company’s
stockholders prior to the Effective Date. Unless otherwise required by
applicable law, following such approval, the Policy shall not be subject to
approval by the Company’s stockholders, including, for the avoidance of doubt,
as a result of or in connection with an action taken with respect to this Policy
as contemplated in Section 11 hereof.

11.

Revisions

The Board may amend, alter, suspend or terminate this Policy at any time and for
any reason. No amendment, alteration, suspension or termination of this Policy
will materially impair the rights of an Outside Director with respect to
compensation that already has been paid or awarded, unless otherwise mutually
agreed in writing between the Outside Director and the Company. Termination of
this Policy will not affect the Board’s or the Compensation Committee’s ability
to exercise the powers granted to it under the Plan with respect to Awards
granted under the Plan pursuant to this Policy prior to the date of such
termination.