Exhibit 10.2

THRESHOLD PHARMACEUTICALS, INC.

NON-EMPLOYEE DIRECTOR COMPENSATION POLICY

ADOPTED BY THE BOARD OF DIRECTORS: MARCH 20, 2014

Each member of the board of directors (the “Board”) of Threshold
Pharmaceuticals, Inc. (the “Company”) who is not an employee of the Company or
any parent or subsidiary of the Company (each, a “Non-Employee Director”) will
be eligible to receive cash and equity compensation as set forth in this
Threshold Pharmaceuticals, Inc. Non-Employee Director Compensation Policy (this
“Policy”). The cash and equity compensation described in this Policy will be
paid or granted, as applicable, automatically and without further action of the
Board to each Non-Employee Director who is 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
will become effective on the date of the annual meeting of the Company’s
stockholders held in 2014, provided that the Threshold Pharmaceuticals, Inc.
2014 Equity Incentive Plan (the “2014 Plan”) is approved by the Company’s
stockholders at such annual meeting, and will remain in effect until it is
revised or rescinded by further action of the Board. Capitalized terms not
explicitly defined in this Policy but defined in the 2014 Plan will have the
same definitions as in the 2014 Plan.

1. CASH COMPENSATION.

(a) Annual Fees. Each Non-Employee Director will be eligible to receive the
following annual fees for service as (i) a member of the Board and (ii) a member
or chairperson of a committee of the Board (“Committee”) set forth below, as
applicable, to be paid in the form of annual retainers:

 

Board or Committee

  

Type of Fee

   Amount (Per Year)  

Board

   Retainer Fee    $ 30,000   

Audit Committee

   Chair Retainer Fee    $ 20,000       Non-Chair Retainer Fee    $ 11,000   

Compensation Committee

   Chair Retainer Fee    $ 14,000       Non-Chair Retainer Fee    $ 11,000   

Nominating and

   Chair Retainer Fee    $ 14,000   

Governance Committee

   Non-Chair Retainer Fee    $ 11,000   

(b) Expenses. Each Non-Employee Director will be entitled to reimbursement from
the Company for all reasonable out-of-pocket expenses incurred by the
Non-Employee Director in connection with his or her attendance at Board and
Committee meetings.

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To the extent that any taxable reimbursements are provided to a Non-Employee
Director, they will be provided in accordance with Section 409A of the Internal
Revenue Code of 1986, as amended, and the Treasury Regulations and other
guidance thereunder and any state law of similar effect, including, but not
limited to, the following provisions: (i) the amount of any such expenses
eligible for reimbursement during the Non-Employee Director’s taxable year may
not affect the expenses eligible for reimbursement in any other taxable year;
(ii) the reimbursement of an eligible expense must be made no later than the
last day of the Non-Employee Director’s taxable year that immediately follows
the taxable year in which the expense was incurred; and (iii) the right to any
reimbursement may not be subject to liquidation or exchange for another benefit.

2. EQUITY COMPENSATION. The options described in this Policy will be granted
under the 2014 Plan and will be subject to the terms and conditions of (i) this
Policy, (ii) the 2014 Plan and (iii) the forms of option grant notices and
option agreements approved by the Board for the grant of options to Non-Employee
Directors.

(a) Initial Grants. Each individual who is elected or appointed for the first
time to be a Non-Employee Director automatically will be granted, on the date of
such initial election or appointment, a nonstatutory stock option to purchase
35,000 shares of Common Stock (an “Initial Option Grant”).

(b) Annual Grants. On the date of each annual meeting of the Company’s
stockholders, each individual who is then a Non-Employee Director and will be
continuing as a Non-Employee Director following the date of such annual meeting
automatically will be granted a nonstatutory stock option to purchase 20,000
shares of Common Stock (an “Annual Option Grant”), provided that such individual
has served as a Non-Employee Director for at least six (6) months prior to the
date of such annual meeting.

(c) Terms of Options.

(i) Exercise Price. The exercise price of each Initial Option Grant and Annual
Option Grant will be equal to 100% of the Fair Market Value of the Common Stock
subject to the option on the date the option is granted.

(ii) Vesting. Subject to Section 3 below, each Initial Option Grant and Annual
Option Grant will vest and become exercisable as follows:

(A) Each Initial Option Grant will vest and become exercisable as to 2.7777% of
the shares of Common Stock subject to the option on each monthly anniversary of
the date of grant, rounded down to the nearest whole share, subject to the
Non-Employee Director’s Continuous Service through such dates.

(B) Each Annual Option Grant will vest and become exercisable as to 8.3333% of
the shares of Common Stock subject to the option on each monthly anniversary of
the date of grant for the first 11 months following the date of grant, rounded
down to the nearest whole share, and as to the remaining shares of Common Stock
subject to the option on the date of the annual meeting of the Company’s
stockholders for the year following the year of grant for such option, subject
to the Non-Employee Director’s Continuous Service through such dates.

 

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3. CERTAIN TRANSACTIONS AND EVENTS.

(a) Fundamental Transaction. The provisions of this Section 3(a) (and not
Section 9(c) of the 2014 Plan) will apply to all outstanding Initial Option
Grants and Annual Option Grants in the event of a Fundamental Transaction. In
the event of a Fundamental Transaction while a Participant remains a
Non-Employee Director, the shares of Common Stock at the time subject to each
outstanding Initial Option Grant and Annual Option Grant held by such
Participant, but not otherwise vested, will automatically vest in full so that
each such Initial Option Grant and Annual Option Grant will, immediately prior
to the effective date of the Fundamental Transaction, become exercisable for all
the shares of Common Stock subject to such Initial Option Grant and Annual
Option Grant as fully vested shares and may be exercised for any or all of those
vested shares. Immediately following the consummation of the Fundamental
Transaction, each Initial Option Grant and Annual Option Grant will terminate
and cease to be outstanding, except to the extent assumed by the successor
corporation (or Affiliate thereof).

Each Initial Option Grant and Annual Option Grant which is assumed in connection
with a Fundamental Transaction will be appropriately adjusted, immediately after
such Fundamental Transaction, to apply to the number and class of securities
which would have been issuable to the Participant in consummation of such
Fundamental Transaction had the Initial Option Grant or Annual Option Grant been
exercised immediately prior to such Fundamental Transaction. Appropriate
adjustments will also be made to the exercise price payable per share under each
outstanding Initial Option Grant and Annual Option Grant, provided that the
aggregate exercise price payable for such securities will remain the same. To
the extent the actual holders of the Common Stock receive cash consideration for
their Common Stock in consummation of the Fundamental Transaction, the successor
corporation may, in connection with the assumption of the outstanding Initial
Option Grants and Annual Option Grants, substitute one or more shares of its own
common stock with a fair market value equivalent to the cash consideration paid
per share of Common Stock in such Fundamental Transaction.

(b) Change in Control. In the event of a Change in Control while a Participant
remains a Non-Employee Director, the shares of Common Stock at the time subject
to each outstanding Initial Option Grant and Annual Option Grant held by such
Participant, but not otherwise vested, will automatically vest in full so that
each such Initial Option Grant and Annual Option Grant will, immediately prior
to the effective date of the Change in Control, become exercisable for all the
shares of Common Stock subject to such Initial Option Grant and Annual Option
Grant as fully vested shares and may be exercised for any or all of those vested
shares. Each such Initial Option Grant and Annual Option Grant will remain
exercisable for such fully vested shares until the expiration or sooner
termination of the option term in connection with a Change in Control.

 

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