[gjdqq14b5fty000001.jpg]Exhibit 10.4

 

Tandem Diabetes Care, Inc.

2018 Sr. Management Cash Bonus Plan

 

The Tandem Diabetes Care, Inc. 2018 Sr. Management Cash Bonus Plan (the “Bonus
Plan”) has been designed to align plan participants with the business goals and
strategies of Tandem Diabetes Care, Inc. (“Tandem” or the “Company”) and to
further the objectives of the Company’s executive compensation program. This
Bonus Plan is an important part of the Company’s commitment to recognizing key
employees who contribute to the achievement of important Company performance
goals. Specifically, the objectives of the Bonus Plan are as follows:

 

•

Attract, retain and reward highly skilled individuals, including executive
officers, with the background and experience required for the Company’s future
growth and success by providing meaningful cash incentive payments to plan
participants who are in a position to contribute significantly to Company
success.

 

•

Align the interests of plan participants with those of the Company’s
stockholders by tying a meaningful portion of their total compensation
opportunity to the achievement of specific Company performance objectives, such
as an annual revenue target.

 

•

Together with base salary, long-term equity incentives and other components of
compensation, create an appropriate balance of cash versus non-cash, and
guaranteed versus at risk compensation opportunities.

Performance Period

The Bonus Plan is primarily intended to reward plan participants for their
individual contributions to the Company’s achievement with respect to Company
performance objectives for the 2018 fiscal year.  However, the Company’s Board
of Directors or the Compensation Committee of the Board of Directors (the
“Compensation Committee”) also has the discretion to consider individual or
Company performance after December 31, 2018 and until the date of any actual
bonus determination under the Bonus Plan in measuring performance and
determining the amount of an award, if any, under the Bonus Plan.

Eligibility

Employees of the Company eligible for an award under this Bonus Plan will be
limited to individuals serving as a Vice President or more senior management
role within the Company, as determined by the Board of Directors or the
Compensation Committee. If, following January 1, 2018, an individual is promoted
or hired and becomes an eligible participant under the Bonus Plan at any time
during the 2018 calendar year, then the individual will be eligible to
participate under the Bonus Plan on a pro-rata basis, calculated in the
reasonable discretion of the Compensation Committee, unless otherwise
specifically provided by the Board of Directors or the Compensation Committee.  

Bonus Opportunity

A target cash incentive amount (a “Target Bonus Amount”) for each eligible plan
participant will be set as a percentage of the participant’s base salary.  Cash
incentives may be earned under the Bonus Plan based on the achievement of both
financial performance objectives and product development objectives.  The
financial performance objectives are comprised of two parts and will
collectively represent 80% of the overall Target Bonus Amount and the product
development objectives will collectively represent 20% of the overall Target
Bonus Amount.

1.

 

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Financial Performance Objectives

The portion of the cash bonuses that relate to the Company financial objectives
may be earned based on the Company’s actual revenue for fiscal year 2018 as
compared to a pre-established 2018 revenue target (the “Revenue Target”),
provided the Company also achieves at least a minimum operating margin
percentage (the “Minimum Operating Percentage Target”).  Subject to the
foregoing, the Company financial objective portion of the cash bonuses may be
earned under the Bonus Plan as follows:  

 

•

A minimum percentage growth rate over the Company’s actual 2017 revenue, which
places the Company’s revenue for 2018 at 75% of the Revenue Target (the “Minimum
Revenue Target”), must be achieved for any bonus to be earned under the
financial performance objectives portion of the 2018 Cash Bonus Plan.  

 

•

If the Company’s actual revenues are between this Minimum Revenue Target and the
Revenue Target, the goal achievement for the financial performance objectives
will be calculated proportionately in a straight-line from 0% to 100%.  If the
Company’s actual revenues exceed the Revenue Target, the goal achievement for
the financial performance objectives will be calculated proportionately as a
percentage of the Revenue Target.

 

•

No more than 90% payout can be earned under the financial objectives portion of
the Bonus Plan unless the Company’s actual quarterly Earnings before Interest,
Taxes, Depreciation and Amortization (and further excluding non-cash stock based
compensation expense and any payment of the 2018 Cash Bonus payable to the
Company’s Chief Executive Officer) (“EBITDA”) for fiscal year 2018 is positive
(the “EBITDA Goal”).  

Potential Incremental Bonus

If the Company’s actual revenues are above 105% of the Revenue Target, and
provided that the Company also achieves both the EBITDA Goal and a secondary
minimum operating margin percentage target that reflects more favorable
performance as compared to the Minimum Operating Percentage Target, then the
2018 Cash Bonus Plan has two levels of potential incremental overall goal
achievement:

 

•

If the Company’s actual revenues are above 105% of the Revenue Target and up to
115% of the Revenue Target, the percentage of overall goal achievement with
respect to the Company financial objectives under the Bonus Plan will first be
calculated as described above, and then for each percent of revenue achievement
above 105% of the Revenue Target and up to 115% of the Revenue Target, an
additional 1.0% will be added to the overall goal achievement under the 2018
Cash Bonus Plan, and the cash bonus will be calculated based on this modified
level of goal achievement; or

 

•

If the Company’s actual revenues are above 115% of the Revenue Target of the
Revenue Target, the percentage of overall goal achievement with respect to the
Company financial objectives under the Bonus Plan will first be calculated as
described above, and then for each percent of revenue achievement above 105% of
the Revenue Target, an additional 2.0% will be added to the overall goal
achievement under the 2018 Cash Bonus Plan, and the cash bonus will be
calculated based on this modified level of goal achievement.

2.

 

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Company Product Development Milestones

The portion of the cash bonuses that relates to the Company product development
milestones generally require the Company to submit regulatory filings or obtain
regulatory clearance and commercially launch certain products under
development.  Subject to the Committee’s final discretion, an individual product
development milestone must be achieved within a required time period for the
applicable portion of the 2018 Cash Bonus Plan to be achieved. Overall goal
achievement of the Company’s product development milestones will be based on the
portion of the product development milestones that the Company actually achieves
during fiscal year 2018.

Award Determination

Bonus payments under the Bonus Plan, if any, will be made at the discretion of
the Board or the Committee. The financial performance components and product
development components of the Bonus Plan may be earned independent of one
another. If the Company does not achieve any portion of any of the financial
performance components or the product development components of the Bonus Plan,
no payouts will be made unless the Board or the Committee, in their sole
discretion, determines that there are other factors that merit consideration in
the determination of bonus awards, which may be determined on an individual
basis.  All determinations and decisions made by the Compensation Committee and
the Board of Directors pursuant to the provisions of the Bonus Plan shall be
final, conclusive and binding on all persons, and shall be given the maximum
deference permitted by law.

 

Payout and Administration

Payment of bonuses will be made as soon as practical after the end of the plan
year, but not later than March 15, 2019. Participants must be actively employed
at the time of payout to be eligible for any bonus payment. Only the Board of
Directors may approve a payment under this Bonus Plan to the Company’s Chief
Executive Officer. The Board of Directors or the Compensation Committee may
approve payments to any other eligible plan participant. The Board of Directors
or the Compensation Committee can modify the Bonus Plan, including timing and
form of payments, at any time in their sole discretion. Amounts payable under
the Bonus Plan are intended to comply with the “short-term deferral” rule set
forth in Section 1.409A-1(b)(4) of the Treasury Regulations and thus be exempt
from the provisions of Section 409A of the Internal Revenue Code of 1986, as
amended.  The Board of Directors and the Compensation Committee intend to
administer the Bonus Plan in a manner consistent with this rule.  Any amounts
paid hereunder shall be subject to recoupment in accordance with The Dodd-Frank
Wall Street Reform and Consumer Protection Act and any implementing regulations
thereunder, any clawback policy adopted by the Company or as is otherwise
required by applicable law.

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