Exhibit 10.1

Aduro Biotech, Inc.
Non-Employee Director Compensation Policy

Approved by the Board of Directors on March 30, 2015

As Amended on June 21, 2016

 

Each member of the Board of Directors (the “Board”) who is not also serving as
an employee of Aduro Biotech, Inc. (“Aduro”) or any of its subsidiaries (each
such member, an “Eligible Director”) will receive the compensation described in
this Non-Employee Director Compensation Policy (the “Director Compensation
Policy”) for his or her Board service following the closing of the initial
public offering of the common stock of Aduro (the “IPO”).  

 

The Director Compensation Policy will be effective upon the date of the
underwriting agreement between Aduro and the underwriters managing the initial
public offering of common stock of Aduro (the “Common Stock”), pursuant to which
the Common Stock is priced in the IPO.  The Director Compensation Policy may be
amended at any time in the sole discretion of the Board or the Compensation
Committee of the Board.

 

Annual Cash Compensation

 

Commencing with closing of the IPO, each Eligible Director shall receive the
cash compensation described below. The annual cash compensation amount set forth
below is payable in equal quarterly installments, payable in arrears on the last
day of each fiscal quarter in which the service occurred. If an Eligible
Director joins the Board or a committee of the Board (“Committee”) at a time
other than effective as of the first day of a fiscal quarter, each annual
retainer set forth below will be pro-rated based on days served in the
applicable fiscal year, with the pro-rated amount paid for the first fiscal
quarter in which the Eligible Director provides the service, and regular full
quarterly payments thereafter. All annual cash retainer fees are vested upon
payment.

 

1.

Annual Board Service Retainer:

 

a.

Eligible Directors other than the Non-Executive Chairperson: $35,000

 

b.

Non-Executive Chairperson: $60,000

 

2.

Annual Committee Chair Service Retainer:1

 

a.

Chairperson of the Audit Committee: $15,000

 

b.

Chairperson of the Compensation Committee: $10,000

 

c.

Chairperson of the Nominating & Corporate Governance Committee: $8,000

 

3.

Annual Committee Member Service Retainer:

 

a.

Member of the Audit Committee: $7,500

 

b.

Member of the Compensation Committee: $5,000

 

c.

Member of the Nominating & Corporate Governance Committee: $4,000

 

d.

Member of the Science & Technology Committee: $10,000

 

 

1 

Eligible Directors who serve as a Committee Chair will not receive the annual
retainer for service as a member on such Committee.

1.

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Equity Compensation

 

The equity compensation set forth below will be granted under the Aduro, Inc.
2015 Equity Incentive Plan (the “Plan”), and will be documented on the
applicable form of equity award agreement most recently approved for use by the
Board (or a duly authorized committee thereof) for Eligible Directors. All stock
options granted under the Director Compensation Policy will be nonstatutory
stock options, with an exercise price per share equal to 100% of the Fair Market
Value (as defined in the Plan) of the underlying Common Stock on the date of
grant, and a term of ten years from the date of grant (subject to earlier
termination in connection with a termination of service as provided in the
Plan).  

 

1.Initial Option Grant: On the date of the Eligible Director’s initial election
to the Board (or, if such date is not a market trading day, the first market
trading day thereafter), the Eligible Director automatically will be granted,
without further action by the Board or Compensation Committee of the Board, a
stock option to purchase 15,000 shares of Common Stock (the “Initial Option
Grant”).  The Initial Option Grant will vest one-third after the first year,
with the remaining shares vesting quarterly in years two and three following the
grant date, such that the Initial Option Grant will be fully vested on the third
anniversary of the date of grant, subject to the Eligible Director’s Continuous
Service on each applicable vesting date.  In addition, in the event of a Change
in Control or a Corporate Transaction, any unvested portion of the Initial
Option Grant will fully vest and become exercisable as of immediately prior to
the effective time of such Change in Control or Corporate Transaction, subject
to the Eligible Director’s Continuous Service on the effective date of such
transaction.

 

2.Annual Option Grant: On the date of each Aduro annual stockholder meeting held
after the effective date of the IPO, each Eligible Director automatically, and
without further action by the Board or Compensation Committee of the Board, will
be granted a stock option to purchase 13,000 shares of Common Stock (the “Annual
Option Grant”).  The Annual Option Grant will vest quarterly over one year from
the grant date, such that the Annual Option Grant will be fully vested on the
first anniversary of the date of grant, subject to the Eligible Director’s
Continuous Service on each applicable vesting date.  In addition, in the event
of a Change in Control or a Corporate Transaction, any unvested portion of the
Annual Option Grant will fully vest and become exercisable as of immediately
prior to the effective time of such Change in Control or Corporate Transaction,
subject to the Eligible Director’s Continuous Service on the effective date of
such transaction.

 

Election to Receive Annual Cash Compensation in the Form of Stock Options

 

Each Eligible Director may elect, in writing, to receive his or her annual cash
compensation in the form of stock options.  Such election would apply to all
annual cash compensation payable during the subsequent year of service.  If
elected, all stock options will be granted under the Plan and will be documented
on the applicable form of equity award agreement most recently approved for use
by the Board (or a duly authorized committee thereof) for Eligible Directors.
All stock options granted under the Director Compensation Policy will be
nonstatutory stock options with an exercise price per share equal to 100% of the
Fair Market Value (as defined in the Plan) of the underlying Common Stock on the
date of grant, will be granted on the date of the annual meeting of our
stockholders, will vest monthly over one year from the grant date, and will have
a term of ten years from the date of grant (subject to earlier termination in
connection with a termination of service as provided in the Plan).  

 

The number of stock options that an Eligible Director will receive in lieu of
such annual cash compensation will be determined by dividing (i) the amount of
annual cash compensation that would otherwise be paid during the upcoming year
of service, by (ii) the Black-Scholes value of a share of Common Stock on the
applicable grant date.  Any election to receive stock options in lieu of annual
cash compensation must be made by the Eligible Director at least five (5)
business days prior to the date of the

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annual meeting of stockholders and such election will be irrevocable until the
next annual meeting of the stockholders.    

 

Expenses

 

The Company will reimburse Eligible Directors for ordinary, necessary and
reasonable out-of-pocket travel expenses to cover in-person attendance at and
participation in Board and/or Committee meetings; provided, that Eligible
Directors timely submit to the Company appropriate documentation substantiating
such expenses in accordance with the Company’s travel and expense policy, as in
effect from time to time.

 

Philosophy

 

The Director Compensation Policy is designed to attract and retain experienced,
talented individuals to serve on the Board.  The Board anticipates that the
Board, or a duly authorized committee thereof, will generally review Eligible
Director compensation on an annual basis following the IPO.  The Director
Compensation Policy, as amended from time to time, may take into account the
time commitment expected of Eligible Directors, best practices and market rates
in director compensation, the economic position of Aduro, broader economic
conditions, historical compensation structure, the advice of the compensation
consultant that the Compensation Committee or the Board may retain from time to
time, and the potential dilutive effect of equity awards on our stockholders.  

Under the Director Compensation Policy, Eligible Directors receive cash
compensation in the form of retainers to recognize their level of responsibility
as well as the necessary time commitment involved in serving in a leadership
role and/or on Committees.  Eligible Directors also receive equity compensation
because we believe that stock ownership provides an incentive to act in ways
that maximize long-term stockholder value.  Further, we believe that stock-based
awards are essential to attracting and retaining talented Board members.  When
stock options are granted, these stock options will have an exercise price at
least equal to the Fair Market Value of Common Stock on the date of grant, so
that stock options provide a return only if the Fair Market Value appreciates
over the period in which the stock option vests and remains exercisable.  We
believe that the vesting acceleration provided in the case of a Change in
Control or other Corporate Transaction is consistent with market practices and
is critical to attracting and retaining high quality directors.

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