EXHIBIT 10.1
Compensatory Arrangements for Executive Officers
     The Compensation Committee (the “Committee”) of the Board of Directors of
OSI Pharmaceuticals, Inc. (“OSI” or the “Company”) approved the 2008 salaries
and 2007 cash bonuses for OSI’s principal executive officer, principal
accounting officer and other named executive officers (as that term is defined
in Item 402 of Regulation S-K) (“NEOs”) as set forth in OSI’s proxy statement
dated May 2, 2008 (the “2008 Proxy”). The following table sets forth the annual
base salary level of such officers for 2008 and the 2007 cash bonuses for each
such officer:

                  Name and Position   2008 Base   2007 Bonus  
Colin Goddard, Ph.D.
  $ 640,000     $ 900,000  
Chief Executive Officer
               
 
               
Michael G. Atieh
  $ 435,000     $ 260,000  
Executive Vice President, Chief Financial Officer and Treasurer
               
 
               
Gabriel Leung
  $ 438,300     $ 235,000  
Executive Vice President and President, (OSI) Oncology
               
 
               
Anker Lundemose, M.D., Ph.D., D.Sc.
  £ 224,400     £ 121,000  
Executive Vice President and President, (OSI) Prosidion
               
 
               
Robert L. Simon
  $ 393,300     $ 221,500  
Executive Vice President, Pharmaceutical Development and Manufacturing
               

Cash Bonuses
     The 2007 bonus awards were computed in accordance with the Committee’s
policy awarding annual bonuses for executive officers, as disclosed in the
Compensation Discussion and Analysis section of the 2008 Proxy, and are
consistent with past practices. OSI has established a discretionary annual cash
bonus program for all of its employees, including its executive officers. The
bonus targets, which are a percentage of base salary, for all of its executive
officers are based upon their respective grade levels. The amount of bonus
actually paid to its employees, including the executive officers (other than
OSI’s CEO) is a function of the corporate and individual performance measures.
The CEO’s bonus is based entirely on corporate performance measures. Consistent
with its compensation objectives, a larger portion of the bonuses for OSI’s
executive officers is tied to corporate performance as compared to individual
performance. While achievement against the applicable key objectives and goals
of our business plan is given substantial weight in scoring the individual
performance of our NEOs, consideration is also given to an evaluation of the
NEO’s individual performance based on the following subjective criteria:
(i) leadership, (ii) management, (iii) judgment and decision making skills,
(iv) results orientation and (v) communication.

 

--------------------------------------------------------------------------------

 

     The actual amount of the bonuses paid to its executive officers, including
the CEO, varies depending upon the Company’s performance (which is 80% of the
total bonus) and, for executive officers other than the CEO, such executive
officers’ individual performance (which is 20% of the total bonus). In 2007, the
Committee set the corporate component at 150% for the CEO and 120% for all other
executive officers. The individual component of the annual cash bonus is based
on the executive officer’s individual performance rating, determined in the
manner discussed above. For 2007, the individual performance component of the
annual cash bonus was set between approximately 80% and 130% for executive
officers who received one of the top three performance ratings.
     The bonus targets for the NEOs are either set in accordance with their
employment agreements or are based upon their respective grade levels. The 2008
bonus targets (which represents a percentage of base salary) for the NEOs are as
follows:

          Name   Target
Colin Goddard, Ph.D.
    100 %
Michael G. Atieh
    50 %
Gabriel Leung
    50 %
Anker Lundemose, M.D., Ph.D., D.Sc.
    50 %
Robert L. Simon
    50 %

Equity Awards
     OSI grants equity awards to our executive officers, including our NEOs,
under our Amended and Restated Stock Incentive Plan. Our practice is to grant
equity awards at the end of the year following our annual performance review;
there is no relationship between the timing of our equity grants and the release
of non-public material information. Equity grants to the NEOS are designed to
provide a level of equity compensation that is at the approximate 50th
percentile of that awarded by OSI’s peer group of companies. For 2007,
individual equity grants for our NEOs were made within a range of plus or minus
20% of the targeted award level based on each NEOs’ individual performance
rating. Following our review of market practices, we determined to make equity
awards for 2007 as a mix of stock options and restricted stock units with 50% in
the form of stock options and 50% in the form of restricted stock units. The
value of the 2007 option and restricted stock unit awards granted to the CEO
represented values at approximately the 60th percentile of the market data
reviewed in 2007.
Perquisites
     We provide very few perquisites to our executive officers. Certain of our
named executive officers receive reimbursement of relocation and temporary
housing expenses, car allowances, 401K plan match and retirement plan
contributions, legal services related to preparation of an employment agreement,
home security systems, tax services and telephone expenses.