Exhibit 10.1

 

DEPOMED, INC. AMENDED AND RESTATED ANNUAL BONUS PLAN

(as adopted by the Board of Directors on February 12, 2016)

 

Depomed, Inc. (“Depomed” or the “Company) has established an Annual Bonus Plan
(the “Bonus Plan”) that is designed to align employee performance with annual
corporate goals and to reward the achievement of corporate and personal goals
during the plan year, which shall coincide with the applicable calendar year.

 

The Bonus Plan is administered at the absolute discretion of the Company,
including its management and Board of Directors, which may, at its discretion,
choose not to fund the Bonus Plan or to fund it at any level it chooses;
provided, however, that in connection with the occurrence of a Change in Control
(as defined in the Company’s Amended and Restated 2014 Omnibus Incentive Plan,
as amended from time to time), the Board of Directors shall provide for the
funding of the Bonus Plan as described below.

 

Background

 

Depomed has a history of rewarding its high-performing employees for their
efforts and accomplishments.  We have formalized the structure of employees’
activities to be consistent with Depomed’s corporate goals and have defined a
specific process for calculating bonuses consistent with the Company’s
performance and the employees’ performance and individual contributions.  The
Company maintains absolute discretion in administering and deciding whether to
fund the Bonus Plan so that it remains flexible in meeting the changing needs of
the organization (except in the context of a Change in Control, as described
below).

 

All levels of Depomed employees other than the CEO establish personal goals
consistent with Depomed’s corporate goals and their department goals.  By
following defined goals, employees will align their activity with the corporate
goals and major department deliverables.  Progress toward achievement of
personal goals is to be reviewed together by employees and their supervisors,
with oversight from department heads, on an ongoing basis throughout the
calendar year.  The review period for accomplishing personal goals ends on
December 31.

 

Eligibility

 

All regular Depomed employees who are not field-based sales personnel and work
at least 25 hours per week will be eligible to participate in the Bonus Plan. 
Bonuses for employees regularly scheduled to work less than 40 hours weekly will
be prorated based on the number of hours they are regularly scheduled to work. 
New employees who join the company by the first business day in October of a
calendar year will be eligible to participate in the current year’s plan on a
prorated basis based on the number of full calendar months worked.  If an
employee’s Bonus Target (as defined below) changes during the plan year due to a
promotion or otherwise, the final Bonus Target level will be calculated based on
the months the employee worked at each Bonus Target and the base compensation
received while at each level.  Employees who are on approved leaves of absence
of more than 6 weeks (or such other period determined by the Company in its
discretion) in any calendar year may have their annual bonus award prorated in
accordance with applicable law to reflect the time they were on leave.

 

Field-based sales personnel participate in separate incentive compensation plans
and are not subject to this Bonus Plan.  Depomed shall have sole discretion to
make any eligibility determinations.

 

Bonus Target

 

A “Bonus Target” has been identified for different levels of personnel and is
based on a percentage of annual base pay, including overtime compensation paid
to non-exempt employees during the plan year.  The Company seeks to set Bonus
Targets based on external compensation benchmarks for similar positions within
our industry and on internal equity considerations.  The Compensation Committee
of the Board of Directors sets the Bonus Targets for the CEO and all other
executive officers who report directly to the CEO and are at the Senior Vice
President level or above.  Management sets Bonus Targets for all other positions
and reviews the various Bonus Target levels periodically with the Compensation
Committee.  The Bonus Target is comprised of two elements:  (i) the employee’s
achievement of personal goals; and (ii) Depomed’s achievement of corporate
goals.

 

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Corporate Goals Bonus Calculation

 

The portion of the Bonus Target attributed to the corporate goals will be
subject to a “Corporate Goals Bonus Calculation,” which will reflect the
Company’s overall success and fiscal and other considerations the Board of
Directors deems relevant.  In a year where all the corporate goals are fully met
and the Company’s finances are on target, the Corporate Goals Bonus Calculation
would usually be 100%.  Conversely, in a year where the corporate goals are not
fully met, finances are not on target or as other considerations warrant,
Corporate Goals Bonus Calculation multiplier of 75%, 50% or 0%, for example,
might be applied to the Bonus Target.  If the Company has exceeded corporate
goals and finances are above target, the Corporate Goals Bonus Calculation may
be more than 100%.  After the end of each calendar year, the Company’s
performance will be evaluated by the CEO, CFO, and Vice President of Human
Resources, who will recommend a Corporate Goals Bonus Calculation to the
Compensation Committee of the Board of Directors.  The Compensation Committee
then makes a recommendation to the full Board of Directors, which has final
authority and discretion on determining the Corporate Multiplier.

 

Exhibit A reflects the current Bonus Targets for various positions within the
Company.  Management will update Exhibit A from time to time as appropriate.

 

Personal Goals

 

For all levels of Depomed employees other than the CEO, personal goals
consistent with Depomed’s corporate goals and applicable department goals are
established by management in consultation with employees. Employees may have up
to six personal goals. Each personal goal will be assigned a weight reflecting
the significance and impact of the goal and the contribution towards corporate
and department goals.  The minimum weight assigned to each goal is 10%, and the
combined weight of the goals must equal 100%.  Personal goals will be approved
by the next level manager.  Any exceptions to the personal goals minimum
described above must be approved by an employee’s supervisor, department head
and the Vice President of Human Resources.

 

Personal Goals Bonus Calculation

 

The portion of the Bonus Target attributed to the personal goals will be subject
to a “Personal Goals Bonus Calculation,” which will reflect each employee’s
personal success as assessed by management.  At the end of each calendar year
employees’ goals and achievements will be assessed by management.  Based on
management’s assessment of the level of achievement, employees may receive no
credit, partial credit or full credit for achieving any single personal goal (or
for achieving all of personal goals collectively) up to a maximum of 1.25 times
target.  Management determines the final award for the achievement of personal
goals.

 

Performance Assessment and Payment of Bonuses

 

Following the plan year, personal goals and corporate goals will be assessed and
performance reviews will be prepared and delivered to employees.  Employees
receiving an overall performance rating of below “Meets Expectations” will
receive no more than 50% of their target bonus payout. Employees who receive an
overall performance rating of “Unsatisfactory Performance” will not be eligible
to receive any bonus payout.  Bonuses will be calculated and payment of bonuses
will be made to eligible employees no later than March 15 (unless otherwise
determined by the Company).

 

The CEO’s direct reports will recommend the bonus award for achievement of
personal goals for employees in their departments subject to approval or
modification by the CEO.  Management maintains absolute discretion in
determining the scope and impact of accomplishments as well as the final bonus
payout for all employees.  Employees’ final bonus payouts generally are based on
the Corporate Goals Bonus Calculation and aggregate personal goal calculation
but may be modified as deemed appropriate by management or the Compensation
Committee, as applicable.

 

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Employees must be employed by Depomed on the day payment is made to earn and be
eligible for a bonus payment, since the payments are intended to incent
successful employees to remain with Depomed.  For avoidance of doubt, in the
event of a Change in Control that occurs following the end of the plan year, an
eligible employee shall only be required to remain employed by Depomed on the
closing date of the Change in Control in the event that payment cannot be made
on or before such closing date.

 

Employees who have received formal disciplinary action during or after a plan
year may have their bonus payout reduced or eliminated for that plan year, at
the sole discretion of management.

 

Change in Control

 

In the event of a Change in Control (which shall have the meaning given such
term in the Amended and Restated Depomed, Inc. 2014 Omnibus Incentive Plan) that
occurs prior to the end of a plan year, each eligible employee who is employed
by Depomed on the closing date of the Change in Control will receive a pro-rated
bonus payout on such closing date based on (1) such employee’s Bonus Target and
individual weighting of corporate and personal goals as well as (2) the  number
of days in the plan year that have elapsed, through and including the closing
date.  The amount of the payout shall be based on the following principles,
which shall control in the event that there is any inconsistency with any other
provision of the Bonus Plan: (1) the Personal Goals Bonus Calculation shall be
deemed to be achieved at 100% and (2) the Corporate Goals Bonus Calculation
shall be deemed to be achieved at100% of target.  For avoidance of doubt, in the
event that a Change in Control occurs following the completion of the plan year,
each eligible employee who is employed by Depomed on the closing date of the
Change in Control will receive the full bonus for such completed plan year based
on actual performance for both the Personal Goals Bonus Calculation and the
Corporate Goals Bonus Calculation as determined in accordance with the Bonus
Plan. 

 

Depomed retains the right to alter or eliminate the Bonus Plan and to alter its
terms and conditions at any time and for any reason, before, during or after the
plan year; provided, however, that Depomed may not alter or eliminate the Bonus
Plan in connection with a Change in Control in the event that such alteration or
termination would adversely affect a participant’s rights hereunder without such
participant’s written consent.  All decisions made by the Company, including
management and the Board of Directors, will be in their absolute discretion, and
are final and not subject to dispute of appeal.

 

No participant shall have any vested right to receive any payment until actual
delivery of any such payment.  This Bonus Plan does not constitute a contract or
other agreement concerning employment with Depomed.  Employment at Depomed is
and remains “at will” and may be terminated at any time by Depomed or by the
employee, either with or without cause.

 

All payments made under this Bonus Plan shall be subject to recovery or clawback
by the Company under any clawback policy adopted by the Company, whether before
or after the date of any payment made under this Bonus Plan.

 

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Exhibit A to Depomed, Inc. Bonus Plan

Bonus Targets

(effective as of February 12, 2016)

 

Title / Level

 

Bonus Target

 

Weighting of
Corporate
Goals

 

Weighting of
Personal
Goals

 

President and Chief Executive Officer

 

100

%

100

%

 

 

Chief Financial Officer*

General Counsel*

Chief Medical Officer*

Chief Commercial Officer*

 

50

%

65

%

35

%

All other Vice Presidents on the Executive Team which currently includes:

SVP, Business Development*

VP, Human Resources

VP, Tech Development and Quality

 

40

%

65

%

35

%

All other Vice Presidents

 

30

%

60

%

40

%

Sr. Directors / Directors

 

25

%

60

%

40

%

Associate Directors

 

20

%

55

%

45

%

Sr. Managers / Managers

 

15

%

50

%

50

%

Supervisors

 

10

%

40

%

60

%

Senior Scientific / Technical Individual Contributors

 

10

%

30

%

70

%

Individual Contributors

 

5

%

30

%

70

%

 

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* Bonus Target set by the Compensation Committee

 

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