Exhibit 10.1

NOVAN, INC.
NON-EMPLOYEE DIRECTOR COMPENSATION POLICY
October 1, 2020
Non-employee members of the board of directors (the “Board”) of Novan, Inc.
(the “Company”) shall be eligible to receive cash and equity compensation as set
forth in this Non-Employee Director Compensation Policy (this “Policy”). The
cash and equity compensation described in this Policy shall be paid or be made,
as applicable, automatically and without further action of the Board, to each
member of the Board who is not an employee of the Company or any parent or
subsidiary of the Company (each, a “Non-Employee Director”), who may be eligible
to receive such cash or equity compensation, unless such Non-Employee Director
declines the receipt of such cash or equity compensation by written notice to
the Company. This Policy shall become effective on the date hereof
(the “Effective Date”) and shall remain in effect until it is revised or
rescinded by further action of the Board. This Policy may be amended, modified
or terminated by the Board at any time in its sole discretion. The terms and
conditions of this Policy shall supersede any prior cash and/or equity
compensation arrangements for service as a member of the Board between the
Company and any of its Non-Employee Directors and between any subsidiary of the
Company and any of its non-employee directors. No Non-Employee Director shall
have any rights hereunder, except with respect to equity awards granted pursuant
to the Policy.
1.
Cash Compensation.

(a)    Annual Retainers. Each Non-Employee Director shall receive an annual
retainer of $40,000 for service on the Board.

(b)    Additional Annual Retainers. In addition, a Non-Employee Director shall
receive the following annual retainers:

(i) Chairman of the Board. A Non-Employee Director serving as Chairman of the
Board shall receive an additional annual retainer of $32,500 for such service.

(ii) Lead Independent Director. A Non-Employee Director serving as Lead
Independent Director shall receive an additional annual retainer of $22,500 for
such service.

(iii) Audit Committee. A Non-Employee Director serving as Chairperson of the
Audit Committee shall receive an additional annual retainer of $17,500 for such
service. A Non-Employee Director serving as a member of the Audit Committee
(other than the Chairperson) shall receive an additional annual retainer of
$8,750 for such service.

(iv) Compensation Committee. A Non-Employee Director serving as Chairperson of
the Compensation Committee shall receive an additional annual retainer of
$17,500 for such service. A Non-Employee Director serving as a member of the

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Compensation Committee (other than the Chairperson) shall receive an additional
annual retainer of $7,500 for such service.

(v) Nominating and Corporate Governance Committee. A Non-Employee Director
serving as Chairperson of the Nominating and Corporate Governance Committee
shall receive an additional annual retainer of $10,000 for such service. A
Non-Employee Director serving as a member of the Nominating and Corporate
Governance Committee (other than the Chairperson) shall receive an additional
annual retainer of $5,000 for such service.

(vi) Science and Technology Committee. A Non-Employee Director serving as
Chairperson of the Science and Technology Committee shall receive an additional
annual retainer of $20,000 for such service. A Non-Employee Director serving as
a member of the Science and Technology Committee (other than the Chairperson)
shall receive an additional annual retainer of $6,000 for each service.

(vii) Special Committee. In the event the Board creates a special committee, or
designates the members of a standing committee to function with respect to a
special purpose as members of a special committee, additional cash compensation
in the form of a retainer or a per meeting fee, whether such meeting is attended
in person or by telephone, shall be paid at the rate established by the Board at
the time the Board establishes such committee or designates members of a
standing committee to function with respect to a special purpose as members of a
special committee. Only the members of the special committee (or members of a
standing committee to function with respect to a special purpose as members of a
special committee) are eligible for the payments described in this section with
respect to meetings of such special committee.

(c)    Payment of Retainers. The annual retainers described in Sections 1(a) and
1(b) shall be earned on a quarterly basis based on a calendar quarter and shall
be paid by the Company in arrears not later than the fifteenth day following the
end of each calendar quarter. In the event a Non-Employee Director does not
serve as a Non-Employee Director, or in the applicable positions described in
Section 1(b), for an entire calendar quarter, such Non-Employee Director shall
receive a prorated portion of the retainer(s) otherwise payable to such
Non-Employee Director for such calendar quarter pursuant to Section 1(b), with
such prorated portion determined by multiplying such otherwise payable
retainer(s) by a fraction, the numerator of which is the number of days during
which the Non-Employee Director serves as a Non-Employee Director or in the
applicable positions described in Section 1(b) during the applicable calendar
quarter and the denominator of which is the number of days in the applicable
calendar quarter.

2.Equity Compensation. Non-Employee Directors shall be granted the equity awards
described below. The awards described below shall be granted under and shall be
subject to the terms and provisions of the Company’s 2016 Incentive Award Plan
or any other applicable Company equity incentive plan then-maintained by the
Company (the “Equity Plan”) and shall be granted subject to the execution and
delivery of award agreements, including attached exhibits, in substantially the
forms previously approved by the Board. All applicable terms of the Equity Plan
apply to this Policy

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as if fully set forth herein, and all equity grants hereunder are subject in all
respects to the terms of the Equity Plan.

(a)    Annual Awards. A Non-Employee Director who (i) serves on the Board as of
the date of any annual meeting of the Company’s stockholders (an “Annual
Meeting”) after the Effective Date and (ii) will continue to serve as a
Non-Employee Director immediately following such Annual Meeting shall be
automatically granted, on the date of such Annual Meeting, an option to purchase
the number of shares of the Company’s common stock (at a per-share exercise
price equal to the closing price per share of the Company’s common stock on the
date of such annual meeting (or on the last preceding trading day if the date of
the annual meeting is not a trading day)) equal to the lesser of 20,000 shares
or the number of shares that have an aggregate fair value on the date of grant
of $100,000 (as determined in accordance with ASC 718) (with the number of
shares of Common Stock underlying each such award subject to adjustment as
provided in the Equity Plan). The awards described in this Section 2(a) shall be
referred to as the “Annual Awards.” Notwithstanding the foregoing, the Board in
its sole discretion may determine that the Annual Awards for any year be granted
in the form of restricted stock units with equivalent value on the date of grant
(with the number of shares of Common Stock underlying each such award not to
exceed 20,000 shares and subject to adjustment as provided in the Equity Plan).
For the avoidance of doubt, a Non-Employee Director elected for the first time
to the Board at an Annual Meeting shall only receive an Annual Award in
connection with such election, and shall not receive any Initial Award (as
defined below) on the date of such Annual Meeting as well.

(b)    Initial Awards. Except as otherwise determined by the Board, each
Non-Employee Director who is initially elected or appointed to the Board on any
date other than the date of an Annual Meeting shall be automatically granted, on
the date of such Non-Employee Director’s initial election or appointment (such
Non-Employee Director’s “Start Date”), an option to purchase shares of the
Company’s common stock (at a per-share exercise price equal to the closing price
per share of the Company’s common stock on the date of such election or
appointment (or on the last preceding trading day if such date is not a trading
day)) equal to the lesser of 20,000 shares or the number of shares that have an
aggregate fair value on such Non-Employee Director’s Start Date equal to the
product of (i) $100,000 (as determined in accordance with ASC 718), and (ii) a
fraction, the numerator of which is (x) 365 minus (y) the number of days in the
period beginning on the date of the Annual Meeting immediately preceding such
Non-Employee Director’s Start Date and ending on such Non-Employee Director’s
Start Date and the denominator of which is 365 (with the number of shares of
Common Stock underlying each such award subject to adjustment as provided in the
Equity Plan). The awards described in this Section 2(b) shall be referred to
as “Initial Awards.” Notwithstanding the foregoing, the Board in its sole
discretion may determine that the Initial Award for any Non-Employee Director be
granted in the form of restricted stock units with equivalent value on the date
of grant (with the number of shares of Common Stock underlying each such award
not to exceed 20,000 shares and subject to adjustment as provided in the Equity
Plan). For the avoidance of doubt, no Non-Employee Director shall be granted
more than one Initial Award.

(c)    Termination of Service of Employee Directors. Members of the Board who
are employees of the Company or any parent or subsidiary of the Company who
subsequently terminate their service with the Company and any parent or
subsidiary of the Company and remain on the

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Board will not receive an Initial Award pursuant to Section 2(b) above, but to
the extent that they are otherwise eligible, will be eligible to receive, after
termination from service with the Company and any parent or subsidiary of the
Company, Annual Awards as described in Section 2(a) above.

(d)    Vesting of Awards Granted to Non-Employee Directors. Each Annual Award
and Initial Award shall vest and become exercisable in four equal quarterly
installments, such that each such award shall be fully vested and exercisable on
the first anniversary of the date of grant, subject to the Non-Employee
Director’s continued service on the Board as a Non-Employee Director through
each applicable vesting date. No portion of an Annual Award or Initial Award
that is unvested or unexercisable at the time of a Non-Employee Director’s
termination of service on the Board as a Non-Employee Director shall become
vested and exercisable thereafter. All of a Non-Employee Director’s Annual
Awards and Initial Awards shall vest in full immediately prior to the occurrence
of a Change in Control (as defined in the Equity Plan), to the extent
outstanding at such time.
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